Hercules Offshore files for Chapter 11 for second timeCompany News // June 9, 2016
Hercules Offshore has confirmed that, after receiving votes on the company's pre-packaged Chapter 11 Plan from lenders holding approximately 99.7 per cent of the company's first lien debt, with all such lenders voting to accept the plan, the company and certain of its US subsidiaries have filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code. This is the second time that Hercules Offshore has filed for bankruptcy, having come out of Chapter 11 proceedings only a few months ago.
Under the terms of the new plan, all of the company's assets will be marketed for sale, and those left unsold at the completion of the Chapter 11 process will be placed into a wind-down vehicle to ensure their continued, safe operation until sales are finalized. The company's international subsidiaries are not included as part of the Chapter 11 cases but will be part of the sale process.
The plan provides that unsecured creditors will be paid in full in the ordinary course of business or at the completion of the Chapter 11 process. Shareholders will receive cash recoveries and interests in the wind-down vehicle if they vote as a class to accept the plan or just interests in the wind-down vehicle if the class votes against the plan.
Importantly, shareholders will have to wait until the lenders are paid in full before receiving any recovery on their interests if the class votes to reject the plan as opposed to receiving their pro rata share of US$12.5 million on the effective date of the plan and incremental cash distributions thereafter based on the success of the sale process if the class votes to accept the plan. The lenders also will receive cash payments largely dependent on the success of the sale process but have agreed to compromise their own recoveries to pay unsecured claims in full and provide a recovery to the company's shareholders before being paid in full if the shareholder class votes to accept the plan.
Hercules plans to operate its rigs and vessels as usual throughout the sale process and to meet its commitments to employees, customers and suppliers worldwide.