Seadrill committee eyes ruling on unsecured bank claims classification

By Caroline Salls

Pittsburgh, Dec. 22 – Seadrill Ltd.’s official committee of unsecured creditors is asking the U.S. Bankruptcy Court for the Southern District of Texas to rule that the company’s proposed Chapter 11 plan misclassifies holders of credit agreement unsecured claims, according to a motion filed Thursday.

The committee said the proposed investment package provided by Hemen Holdings Ltd., an investment trust controlled by Seadrill board chairman John Fredriksen, and “a club of selected investors” favors the insider-led investment group and is “disadvantageous to unsecured creditors generally.”

The creditor group said Seadrill has $2.1 billion of unpledged assets and a total enterprise value exceeding the banks’ secured debt by more than $5 billion, yet its plan “offers unsecured creditors with claims between $2.8 billion and $4.5 billion, new stock valued at approximately $571 million,” as well as the opportunity to buy new notes and new stock “at a small fraction of their value.”

“The plan, which cannot be changed without Hemen’s consent, offers Hemen and Centerbridge returns aggregating more than three times their new money investment,” the motion said.

“It also offers the select commitment parties 180 cents on the dollar on claims they once threatened to vote against the plan.

“In contrast, the plan offers other unsecured creditors in classes B3, D3, and F3 an average return of 40 cents – and only if their class votes to allow shareholders (including Hemen) to receive 2% of the equity on account of prepetition equity interests.”

Although the plan calls for payment of the banks’ interest and principal in full, the committee said Seadrill also claims that the banks will also hold unsecured guaranty or co-obligor claims.

“In an apparent effort to control the vote on their plan, the debtors classified these claims together with general unsecured creditors,” the motion said.

“This classification is improper. The banks’ credit agreement unsecured claims included in classes B3, D3 and F3 are not substantially similar to the general unsecured claims in those classes.”

A hearing is scheduled for Jan. 10.

Hamilton, Bermuda-based Seadrill owns and operates offshore drilling rigs. The company filed bankruptcy on Sept. 12 under Chapter 11 case number 17-60079.

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