Seadrill Unit Files for Bankruptcy Seeking 24-hour Turnaround

January 12, 2022

Illustration - Credit: Mike Mareen/AdobeStock
Illustration - Credit: Mike Mareen/AdobeStock

A unit of offshore driller Seadrill Ltd on Tuesday filed a fast-tracked reorganization plan in Houston bankruptcy court, where it expects to seek approval of the proposal on Wednesday. 

The case comes just a few months after its parent entity emerged from its own bankruptcy proceeding. That reorganization plan is scheduled to go into effect early this year. Seadrill New Finance Ltd’s Chapter 11 case is intended to be the “final component” of the entire Seadrill Group’s restructuring efforts, according to a declaration from financial controller Tyson de Souza. 

De Souza said there are no objections to the plan and that "there can be no question that this is in the best interests" of the company, which is represented by Kirkland & Ellis. A representative for Seadrill Ltd did not immediately respond to a request for comment. Seadrill New Finance, which has around $535 million in secured debt, does not have its own operations. 

It serves as a holding company for a joint venture with an investment fund controlled by Fintech Holdings Ltd. The joint venture, SeaMex Ltd, holds five rigs in Mexico and underwent a restructuring last year after the state-owned petroleum company Pemex, a top customer, failed to pay up. Under the proposed plan, secured noteholders will take over most of the equity in Seadrill New Finance. 

The company, which says it has lined up the votes it needs from creditors, will ask U.S. Bankruptcy Judge David Jones to approve the plan on Wednesday afternoon. 

Seadrill Ltd went through bankruptcy in 2018, emerging with billions of dollars shed from its debt stack and $1 billion in new investments. It returned to Chapter 11 in 2021, blaming the sustained downturn in the oil and gas market and the economic impact of the COVID-19 pandemic. 

Jones signed off on Seadrill Ltd's most recent restructuring plan, which sought to reduce the company’s $5.6 billion debt by $4.9 billion, in October. Though unusual, one-day Chapter 11 cases have popped up occasionally in recent years. Kirkland, which also represented the parent entity in its Chapter 11 cases, has previously guided companies through these types of speedy in-court restructurings. 

The case is In re Seadrill New Finance Ltd, U.S. Bankruptcy Court, Southern District of Texas, 22-90001. 

For Seadrill New Finance: Anup Sathy, Ross Kwasteniet, Spencer Winters, Christopher Marcus and Jaimie Fedell of Kirkland & Ellis; and Matthew Cavenaugh, Jennifer Wertz, Vienna Anaya, and Victoria Argeroplos of Jackson Walker



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