Offshore driller Noble Corp may have to defend itself against a $2.7 billion fraudulent transfer lawsuit as it embarks on a chapter 11 case in which it is trying to wipe out $3.4 billion in debt, Reuters reported. The company, which filed for bankruptcy on Friday, has been tied up in litigation surrounding its 2014 spinoff of Paragon Offshore. Paragon creditors, via a litigation trust, sued Noble in 2017 after Paragon completed its own bankruptcy, saying the spinoff was a fraudulent transfer. The Paragon creditors and Noble defendants filed competing motions for partial summary judgment, which were slated for a trial to begin on September 14 in Delaware bankruptcy court. That trial is on hold as a result of Noble's bankruptcy and the automatic stay protecting chapter 11 debtors from litigation. But a lawyer for the Paragon creditors, Jeffrey Zeiger of Kirkland & Ellis, said during Noble's first bankruptcy hearing on Monday that the creditor trust will seek relief from the stay, which would allow the trial to continue, absent a settlement of the creditors' claims. Despite mediation before retired U.S. Bankruptcy Judge Kevin Gross, the two sides have been unable to resolve the claims, Zeiger said during Monday's hearing. Gross has said in court papers that he believes the parties will ultimately settle, but Zeiger and Noble lawyer George Panagakis of Skadden, Arps, Slate, Meagher & Flom said that they are preparing to deal with the litigation if no agreement is reached.
