Paragon Offshore files for Chapter 11

Offshore drilling contractor Paragon Offshore on Monday elected to start proceedings under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court in the District of Delaware. 

As announced on Friday, February 12, 2016, Paragon entered into a Plan Support Agreement (PSA) to support a restructuring of the company’s balance sheet.

Paragon said that, as of February 15, 2016, the PSA has been signed by an ad hoc committee representing approximately 77% in the aggregate of holders of its senior unsecured notes and a group comprising approximately 96% of the amounts outstanding under Paragon’s Senior Secured Revolving Credit Agreement.

An additional member of the Revolving Credit Agreement group signed the PSA subsequent to the February 12, 2016 announcement. Approval of the transaction by the Revolver Lenders and the Bondholders will require that 2/3 in principal amount and 1/2 in number of those voting in each class to approve the transaction, Paragon explained.

The company also announced that it has filed certain “first-day” motions with the court to facilitate operating in the normal course throughout the Chapter 11 process. These motions will ensure that the company’s vendors, as well as employees, will continue to be paid.

Paragon said it expects to maintain sufficient liquidity throughout the restructuring process to maintain its business operations.

Randall D. Stilley, President and Chief Executive Officer of Paragon, said, “Paragon has acted proactively to strengthen the company’s balance sheet in this challenging environment. We look forward to moving as quickly as possible through this process while maintaining our focus on delivering safe, reliable, and efficient operations as the industry’s High-Quality, Low-Cost drilling contractor.”

Stilley added: “We are confident that Paragon will emerge as an even stronger company, better positioned for long-term growth and success.”