Paragon Offshores Files Pre-Packaged Chapter 11 Bankruptcy

by San Antonio Attorney

Offshore drilling rig operator Paragon OffshorePLC joined the bandwagon of companies by filing for Chapter 11 bankruptcy last Sunday.  This was done with a proposed turnaround plan, which was aimed at reducing debts at approximately $1.1 billion.

Paragon Offshores previously released a statement last Friday, stating its intention to file bankruptcy protection due to financial woes.  Paragon Offshoes will also implement a strategy to restructure the company, with the aid unsecured bondholders and its senior lenders.

When plummeting prices occurred, a lot of companies also crashed along with it.  Paragon Offshores joined the list as well.

Lower cost of oil have slightly halted drilling and production as these greatly affect oil companies such as Paragon, who have been struggling due to an extinct form of business.

Other oil companies such as Petróleos Mexicanos of Mexico and Brazil-based state oil company Petróleo Brasileiro, also known as Petrobas, were large scale customers for Paragon.  However, they recently moved back to cut contracts due to related financial crisis.

In bankruptcy filing held last Sunday in the U.S.  Bankruptcy Court located in Wilmington, Delaware.  This was one aspect of the agreement which was reached with the lending creditors following a debt reducing plan.  Paragon aims that this plan will help the company push through the slump of a dwindling industry.

Bondholders are given a monetary fund and equity shares under the reorganized company.  Paragon has also proposed to pay in full cash to reduce the current loan and also extend the timeline of paying the debt.

Under the reorganization plan, the equity holders will retain 65% stake in Paragon.

The oil company’s Chapter 11 restructure stemmed out of several months of negotiating with lenders on dealing with a $2.6 billion debt as the oil business declined.

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