Valaris objects to motion for appointment of equity committee

By Sarah Lizee

Olympia, Wash., Oct. 28 – Valaris plc objected to a motion for appointment of an equity committee filed by Alexander E. Parker of the Buxton Helmsley Group, Inc., according to a Tuesday filing in the U.S. Bankruptcy Court Southern District of Texas.

“The debtors are disappointed with the impact this restructuring will have on their equity holders,” Valaris said in its objection.

“But appointing an equity committee is an extraordinary measure in any Chapter 11 case and not justified where, as here, the debtor is ‘hopelessly insolvent.’”

The debtors said that as of the petition date, they owed $7.1 billion in funded debt obligations that must be satisfied before equity holders are “in the money.”

“Unfortunately, there is no scenario where that is even remotely likely to occur,” Valaris said.

Valaris said that Parker’s main argument for an equity committee “rests on the flawed premise that equity recoveries are determined based on the book value of assets under GAAP and therefore liquidating the company would result in a multi-billion dollar recovery to equity here.”

“He is wrong. A company’s book value of assets under GAAP does not measure whether there is sufficient value to provide equity with a recovery. That is why courts and valuation experts do not use GAAP principles to establish solvency or enterprise value.”

The company said that appointing an equity committee will only add expense to, and potentially delay, the Chapter 11 cases.

Valaris is a London-based offshore drilling company. The company filed bankruptcy on Aug. 19 under Chapter 11 case number 20-34114.

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