Parker Drilling examiner reports Barings was not improperly excluded

By Caroline Salls

Pittsburgh, March 4 – The examiner appointed in Parker Drilling Co.’s Chapter 11 case reported Monday that the company and consenting stakeholders did not improperly exclude Barings, LLC from participating in the cases, and Barings was not prohibited from arguing against allegedly improper plan provisions by proposing that it be allowed to benefit from those same provisions.

According to the report filed with the U.S. Bankruptcy Court for the Southern District of Texas by examiner Sylvia Mayer, Barings was encouraged to object to Parker Drilling’s Chapter 11 plan if it chose to do so “without delay” after Parker rejected its settlement proposal, contradicting an argument that the company or the stakeholders relied on Barings’ conduct during settlement negotiations in determining whether to proceed with confirmation.

In addition, Mayer said Barings did not even tell Parker Drilling until February, “a few weeks before the confirmation hearing,” that it was interested in participating in the company’s restructuring support agreement and backstop commitment.

“The overwhelming weight of the evidence supports a conclusion that the consenting stakeholders did not exclude Barings from participating in these bankruptcy cases on a pre-petition basis,” the report said.

As previously reported, Barings manages funds and accounts that hold $35 million of Parker Drilling’s 6¾% unsecured senior notes due 2022.

In its motion, Barings said Parker Drilling’s proposed plan of reorganization “provides substantial value to [backstop commitment parties] at the expense of Barings and other similarly situated creditors, who were excluded from the plan negotiations and from obtaining many of the substantial benefits under the plan.”

Specifically, Barings said the equityholders are slated to receive “an extremely disproportionate allocation of subscription rights to a heavily discounted rights offering,” and the backstop commitment parties have the exclusive right to backstop the offering and receive additional plan value.

Parker Drilling is a Houston-based provider of drilling services and rental tools to the energy industry. The company filed bankruptcy on Dec. 12, 2018 under Chapter 11 case number 18-36958.

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