Lawyers for Pacific Drilling SA, in bankruptcy for the second time in three years, and company lenders assured a federal judge on Monday that the offshore oil-and-gas drilling contractor’s latest trip to chapter 11 will be its last, WSJ Pro Bankruptcy reported. Pacific Drilling, which emerged from chapter 11 in late 2018, intends in its second time through bankruptcy to trim $1.1 billion in debt from its balance sheet and hand control of the business to senior lenders. Like many other energy companies, publicly traded Pacific Drilling blamed the filing on significant disruption to its operations caused by the coronavirus pandemic and low oil prices. Bankruptcy Judge David Jones of the U.S. Bankruptcy Court in Houston said he was “genuinely concerned” about whether the business would be adequately capitalized if the proposed restructuring is completed. Pacific Drilling’s lawyers said the company would be well capitalized after exiting chapter 11 with $132 million in cash on hand at that time, including a partial drawdown on an $80 million exit loan. The company has additional sources of liquidity available if that becomes necessary, the lawyers said. Judge Jones said he doesn’t want to oversee a chapter 11 case where a company has to make a return trip to bankruptcy court, referred to as a chapter 22. Lenders backing the proposal include Pimco LLC, Whitebox Advisors LLC, GoldenTree Asset Management LP and Hayfin Capital Management LLP, which together hold more than two-thirds of Pacific Drilling’s senior bonds and a portion of its junior bonds. The Luxembourg-based company owes about $750 million in senior bonds and about $326 million in junior bonds, court papers said. Under the restructuring plan, which must be approved in court, senior bondholders would recover 82 cents on the dollar and junior noteholders would recover 32 cents while unsecured creditors and shareholders would be wiped out.
