Multiple parties – including Pacific Drilling’s ad hoc group of debtholders, Wilmington Trust, Citibank and Deutsche Bank Trust Company Americas – filed with the U.S. Bankruptcy Court separate objections to Pacific Drilling’s motion for an exclusivity extension.
The ad hoc group of debtholders asserts, “On this record, the Debtors have failed to show ’cause’ to extend exclusivity and their Motion should be denied. This is so for two principal reasons. First, there is an utter lack of diligence on the part of the Debtors in preparing for and prosecuting these Chapter 11 Cases. Notwithstanding that the Debtors saw these cases coming months, if not years, away, they apparently did little to prepare for them – and have squandered the first four months in chapter 11. In short, the Debtors cannot point to any progress they have made to show cause to extend exclusivity. Second, what makes this failure even more egregious is the comparative simplicity of the task at hand: a balance sheet restructuring to be negotiated among well-organized creditor groups with experienced counsel. Deepwater drilling is undoubtedly complex; these cases, however, are not, and the Debtors’ motion attempts mightily to conflate the two in an effort to magnify the complexity of what must be accomplished.”
In addition, “The Debtors have $3,094 billion in secured debt with a market value as of March 13, 2018 of $1,986 billion and an equity market value of approximately $13.1 million – nothing more than mere option value – of which 70.3% (or approximately $9.2 million) is held by Quantum Pacific. In sum, the equity sponsor is out-of-the-money by over $1 billion. Yet the Debtors have devoted most of their efforts to entertaining proposals from an equity sponsor that is, by any measure, out of the money. And there is nothing to indicate that the Debtors will ever propose a plan that does not have the blessing of Quantum Pacific. The secured creditors, who it is beyond dispute will be the post-reorganization owners of the company, should be afforded the opportunity now to put forward a reorganization proposal for the Court’s consideration, and to bring these cases to a swift conclusion.”
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