The judge overseeing Ocean Rig’s scheme sanction trial in the Cayman Islands will issue his ruling on the matter by 20 September.
Mr Justice Raj Parker made his announcement at the end of a three-day trial over the Greek offshore driller’s plans to wipe out more USD 3.7bn in debt, while repaying creditors part of their claims with a mix of cash and stock. The self-imposed deadline gives the judge time to compose his ruling ahead of a previously scheduled 20 September hearing in the company’s Chapter 15 proceedings, in the US Bankruptcy Court for the Southern District of New York, when Judge Martin Glenn will consider whether to enforce the schemes in the US.
Highland Capital Management, holder of USD 74m in Ocean Rig’s unsecured notes due 2019, is the only creditor objecting to any of Ocean Rig’s four separate-but-interdependent schemes. Highland claims that term loan lenders are receiving a better recovery at the expense of unsecured noteholders. Highland’s lawyers have told the judge it would forego a cash or equity recovery on its claims in exchange for permission to pursue litigation against Ocean Rig management and third parties.
Ocean Rig barrister Daniel Bayfield QC, of South Square, gave his closing arguments today, reiterating to the court today that the purpose of a scheme sanction hearing is not to determine whether the proposed plan is the best possible restructuring, but only whether it meets the statutory requirements.
“It’s critical not to lose sight of what the court’s role is at this stage and go on a roving inquiry on how the scheme might have been developed and the clauses it might have contained,” Bayfield said. “The role is to apply the well-established test for sanction, to focus on the scheme which [Ocean Rig] has proposed and creditors have overwhelmingly approved and put to the side the Highland proposal.”
Bayfield argued that Highland is attempting to “subvert… and turn on its head” the “fairness” test of the restructuring scheme by seeking to establish that all creditors must find the plan fair instead of whether a creditor could reasonably find the plan to be fair. He noted that the eight other holders of 2019 notes support the plan.
The barrister also defended Ocean Rig’s USD 30m consent fee available to creditors who were early adopters to the plan. Highland barrister Michael Todd QC, of Erskine Chambers, criticized the consent fee, asking the court why Ocean Rig needed to offer such a fee if its plan was worth approving on its own. But Bayfield said there was “no magic” to offering the consent fee, only that it helped secure votes for a plan the company believed should be approved.
“This restructuring of the group has been designed to treat all creditors fairly, to reflect legal and economic reality, and to ensure that each and every creditor gets the right level of scheme consideration to reflect the value of its rights,” Bayfield said.
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