Paragon Offshore Plc’s reorganization proposal is so unrealistic that the oil-rig company will run out of cash in less than three years, dissident lenders said at the opening of a bankruptcy court hearing, Bloomberg News reported yesterday. Paragon is asking Bankruptcy Judge Christopher Sontchi to approve its plan to cut debt to $1.4 billion from $2.6 billion, to use its dwindling cash to pay two groups of favored creditors and to let the current owners retain a majority stake. The proposal is built on an assumption that the company can use its aging fleet of oil-drilling rigs to win contracts more quickly in the future than it has in the past, Madlyn Gleich Primoff, an attorney for lenders opposed to the plan, told the judge. There are hundreds of idled drilling rigs around the world and 100 more being built that Paragon will have to compete against, Primoff said, adding that Paragon’s rigs are so old, it will be harder for the Houston-based company to win new business. Read more.
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