Paragon Offshore filed with the U.S. Bankruptcy Court an objection to the ad hoc equity shareholders committee’s motion for appointment of an official committee.
The objection explains, “This Court should deny the request of the Unofficial Equity Committee (the ‘Shareholders’) for the appointment of an official committee of equity security holders. The Shareholders have not provided any evidence beyond mere speculation that equity is substantially likely to receive a meaningful distribution in these chapter 11 cases.”
In addition, “Mere speculation is not enough to satisfy their heavy burden to show that extraordinary circumstances exist here to warrant appointment of an equity committee. The Debtors are insolvent, and there is a $1.337 billion gap at the midpoint value before equity could begin to realize a recovery. Equity has no likelihood of any recovery, let alone a substantial likelihood of a meaningful recovery. On this basis alone, the Court should deny the Motion.”
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