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""I
On behalf of the Applicants David Soden
First 19 May 2017
' DS1
IN THE HIGH COURT OF JUSTICE CR-2017-003729
CHANCERY DIVISION: T ^
COMPANIES COURT • ' : :
IN THE MATTER OF PARAGON OFFSHORE PLC
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
EXHIBIT DS1
This is the exhibit marked "DSL"' referred to in the First Witness Statement of David Soden dated 19 May 2017. .
David Soden
Date: 19 May 2017
WEIL:S6148668\1\6S 878.0004
WEIL:\96146666\1\66879.0004
IN THE HIGH COURT OF JUSTICE CR-2017-003729
CHANCERY DIVISION
COMPANIES COURT
IN THE MATTER OF PARAGON OFFSHORE PLC
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
_______________________________________
INDEX TO EXHIBIT DS1
_______________________________________
DOCUMENT DATE PAGE NO
Draft copy of Deloitte’s SIP 16 statement 16.05.2017 1-16
Statement of Insolvency Practice 16 Undated 17-23
E-mail from Michael Hammersley to David Soden 16.05.2017 24
Par
ago
n O
ffsh
ore
Plc
D
raft
Sta
tem
ent
of I
nsol
venc
y Pr
actic
e 16
(En
glan
d &
Wal
es)
(“SIP
16”
) 19
May
201
7 |
Str
ictly
Priva
te a
nd C
onfid
entia
l S
tric
tly
Pri
vate
an
d C
on
fid
enti
al ©
20
17
Del
oit
te L
LP.
Del
oit
te L
LP is
au
tho
rise
d a
nd
reg
ula
ted
by
the
Fin
anci
al C
on
du
ct A
uth
ori
ty.
Cou
rt C
ase
No.
CR
-201
7-00
3729
H
igh
Cou
rt C
hanc
ery
Div
isio
n Com
pany
Num
ber:
088
1404
2
Reg
iste
red
Offic
e:
c/o
Del
oitt
e LL
P Fo
ur B
rind
ley
Plac
e Bir
min
gham
, B1
2HZ
1
© 2
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oitt
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1
Con
ten
ts
Bac
kgro
und
info
rmat
ion
2
The
Tran
sact
ion
6
Sta
tuto
ry p
urpo
se a
nd in
itial
intr
oduc
tion
8
Pre-
appo
intm
ent
cons
ider
atio
ns
9
Alte
rnat
ive
optio
ns
10
Str
uctu
re
11
Con
nect
ed p
arty
tra
nsac
tion
13
Gen
eral
mat
ters
to
be b
roug
ht t
o th
e at
tent
ion
of c
redi
tors
14
2
2
© 2
017
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oitt
e LL
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ate
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017
SIP
16
sta
tem
ent
Para
gon
Offsh
ore
Plc
(the
“Com
pany
”)
Bac
kgro
un
d
Info
rmat
ion
Bac
kgro
un
d
Nob
le C
orpo
ration
Plc
(“N
oble
”) w
as s
et u
p in
192
1,
com
men
cing
ope
ration
s in
the
US a
nd t
he G
ulf.
In
Sep
tem
ber
2013
, N
oble
ann
ounc
ed it
wou
ld c
reat
e a
sepa
rate
sta
ndar
d sp
ecifi
cation
dri
lling
com
pany
(th
e “N
oble
Sp
in O
ff”)
.
On
30 A
pril
2014
, N
oble
com
men
ced
plan
s to
effec
t th
e N
oble
Spi
n O
ff,
whi
ch c
ompl
eted
on
1 Aug
ust
2014
.
The
spun
off e
ntity
beca
me
the
Com
pany
and
its
subs
idia
ries
(to
geth
er, th
e “G
rou
p”)
. T
he C
ompa
ny is
a
publ
ic li
mited
com
pany
und
er t
he la
ws
of E
ngla
nd a
nd
Wal
es w
ith
a pr
inci
pal p
lace
of bu
sine
ss in
Hou
ston
, Te
xas.
Th
e G
roup
is a
n in
tern
atio
nal o
ffsh
ore
drill
ing
serv
ices
pro
vide
r ow
ning
sta
ndar
d sp
ecifi
cation
dri
lling
ri
gs,
whi
ch it
con
trac
ts t
o oi
l maj
ors.
Dur
ing
2014
, fo
llow
ing
the
Nob
le S
pin
Off,
the
Gro
up
iden
tifie
d in
dica
tors
of im
pair
men
t, in
clud
ing
low
er
crud
e oi
l pri
ces,
a d
ecre
ase
in c
ontr
actu
al a
ctiv
itie
s pa
rtic
ular
ly f
or flo
atin
g ri
gs,
and
resu
ltan
t pr
ojec
ted
decl
ines
in d
ay r
ates
and
utilis
atio
n. I
n th
e fo
urth
qu
arte
r of
201
4 th
e G
roup
con
clud
ed t
hat
a tr
igge
ring
ev
ent
occu
rred
req
uiri
ng it
to
perf
orm
an
impa
irm
ent
anal
ysis
of its
drill
ing
rigs
res
ulting
in a
n im
pair
men
t lo
ss o
f $1
.1bn
for
the
yea
r en
ded
31 D
ecem
ber
2014
. Th
e im
plem
enta
tion
of th
e N
oble
Spi
n O
ff h
as t
here
fore
be
en a
key
con
cern
for
the
sha
reho
lder
s.
The
righ
t to
as
sert
cla
ims
agai
nst
Nob
le in
rel
atio
n to
the
Nob
le S
pin
Off (
the
“Nob
le C
laim
s”)
will
be
incl
uded
in t
he F
ifth
Cha
pter
11
Plan
(de
fined
bel
ow).
D
ue t
o th
eir
cont
inue
d fin
anci
al d
iffic
ulties
, on
14
Febr
uary
201
6, t
he C
ompa
ny a
nd c
erta
in s
ubsi
diar
ies
(the
“C
hap
ter
11
Deb
tors
”) c
omm
ence
d ch
apte
r 11
pr
ocee
ding
s in
the
US B
ankr
uptc
y Cou
rt (
the
“Ch
apte
r 1
1 P
roce
edin
gs”
).
On
2 M
ay 2
017,
the
Cha
pter
11
Deb
tors
file
d th
eir
fifth
cha
pter
11
plan
(t
he “
Fift
h
Pla
n”)
whi
ch c
onte
mpl
ates
an
adm
inis
trat
ion
of t
he
Com
pany
in o
rder
to
impl
emen
t th
e co
mpr
omis
e pr
opos
ed w
ith
cert
ain
of t
he C
ompa
ny’s
cre
dito
rs in
the
Fi
fth
Plan
.
It is
the
refo
re p
ropo
sed
that
Nev
ille
Kah
n an
d D
avid
Sod
en (
the
“Pro
pos
ed A
dm
inis
trat
ors”
) ar
e ap
poin
ted
as a
dmin
istr
ator
s of
the
Com
pany
in o
rder
to
impl
emen
t th
e Fi
fth
Plan
fol
low
ing
conf
irm
atio
n of
the
Fift
h Pl
an b
y th
e U
S B
ankr
uptc
y Cou
rt.
Op
erat
ion
s Th
e G
roup
’s o
pera
ted
fleet
incl
udes
32
jack
u ps
(sel
f-el
evat
ing,
buo
yant
mob
ile p
latf
orm
s w
ith
mov
able
legs
ca
pabl
e of
rai
sing
the
pla
tfor
ms
abov
e th
e se
a),
incl
udin
g tw
o hi
gh-s
peci
ficat
ion,
hea
vy d
uty/
hars
h en
viro
nmen
t ja
ckup
s an
d fiv
e flo
ater
s (f
our
drill
ship
s an
d on
e se
mis
ubm
ersi
ble)
.
The
Gro
up’s
pri
mar
y bu
sine
ss is
con
trac
ting
its
rigs
, re
late
d eq
uipm
ent
and
wor
k cr
ews
to c
ondu
ct o
il an
d ga
s dr
illin
g an
d w
orko
ver
oper
atio
ns for
its
expl
orat
ion
and
prod
uction
cus
tom
ers
on a
day
rat
e ba
sis
arou
nd
the
wor
ld.
Non
e of
the
rig
s ar
e ow
ned
by t
he C
ompa
ny
itse
lf w
hich
onl
y ha
s on
e em
ploy
ee.
Giv
en t
he v
ery
publ
ic a
nd lo
ng-r
unni
ng r
estr
uctu
ring
pr
oces
s, t
he G
roup
has
bee
n un
able
to
capi
talis
e on
the
sl
ow u
ptic
k in
thi
s hi
ghly
com
petitive
mar
ket
and
is n
ow
only
ope
rating
a s
mal
l num
ber
of r
igs
in t
he N
orth
Sea
, M
iddl
e Ea
st a
nd I
ndia
. D
ebt
The
Gro
up h
as c
.$2.
4bn
of d
ebt
whi
ch is
imm
edia
tely
du
e an
d pa
yabl
e. T
he d
ebt
is m
ade
up a
s fo
llow
s.
(a)
Sec
ured
deb
t, fro
m:
- le
nder
s un
der
the
revo
lvin
g cr
edit a
gree
men
t (t
he “
RC
F”)
date
d 17
Jun
e 20
14 (
the
“RC
F Le
nd
ers”
) of
c.$
756m
out
stan
ding
; an
d -
lend
ers
unde
r th
e te
rm lo
an a
gree
men
t (t
he
“Ter
m L
oan
”) d
ated
18
June
201
4 (t
he “
Term
Lo
an L
end
ers”
) of
c.
$642
m o
utst
andi
ng,
tota
lling
c.$
1.4b
n (t
he R
CF
Lend
ers
and
the
Term
Lo
an L
ende
rs,
toge
ther
, th
e “S
ecu
red
Len
der
s”).
(b
) U
nsec
ured
deb
t, fr
om:
- 20
22 n
otes
of c.
$475
m o
utst
andi
ng (
the
“20
22
N
otes
”);
and
- 20
24 n
otes
of c.
$546
m o
utst
andi
ng(t
he “
20
24
N
otes
”),
tota
lling
c.$
1bn
(the
hol
ders
of th
e 20
22 N
otes
and
th
e 20
24 N
otes
, to
geth
er, th
e “S
enio
r N
oteh
old
ers”
and
the
Sec
ured
Len
ders
and
the
Sen
ior
Not
ehol
ders
, to
geth
er, th
e “L
end
ers”
).
The
Sec
ured
Len
ders
hol
d se
curi
ty a
gain
st c
erta
in
asse
t s o
f th
e Com
pany
and
aga
inst
cer
tain
sub
sidi
arie
s.
3
3
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oitt
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SIP
16
sta
tem
ent
Para
gon
Offsh
ore
Plc
(the
“Com
pany
”)
Bac
kgro
un
d
Info
rmat
ion
Res
tru
ctu
rin
g P
lan
Th
e G
roup
file
d th
e Cha
pter
11
Proc
eedi
ngs
in t
he
Uni
ted
Sta
tes
in F
ebru
ary
2016
. Th
e G
roup
rem
ains
su
bjec
t to
the
Cha
pter
11
Proc
eedi
ngs
and
has
been
in
disc
ussi
ons
with
its
vari
ous
stak
ehol
ders
ove
r th
e la
st
c.15
mon
ths
to s
eek
to a
gree
to
a fin
anci
al
rest
ruct
urin
g.
The
Fift
h Pl
an h
as b
een
agre
ed in
pri
ncip
le w
ith
the
stee
r ing
com
mitte
e of
the
RCF
Lend
ers,
the
ste
erin
g co
mm
itte
e of
the
Ter
m L
oan
Lend
ers
and
the
offic
ial
com
mitte
e of
uns
ecur
ed c
redi
tors
(“U
CC
”) a
nd
cont
empl
ates
, am
ong
othe
r th
ings
, a
debt
-for
-equ
ity
swap
whi
ch w
ill in
volv
e th
e tr
ansf
er o
f ce
rtai
n of
the
Com
pany
’s a
sset
s to
the
Sec
ured
Len
ders
and
the
Sen
ior
Not
ehol
ders
(th
e “T
ran
sact
ion
”).
Th
e Pr
opos
ed A
dmin
istr
ator
s ar
e be
ing
appo
inte
d pr
imar
ily t
o im
plem
ent
the
Tran
sact
ion
follo
win
g th
e co
nfir
mat
ion
of t
he F
ifth
Plan
by
the
US B
ankr
uptc
y Cou
rt.
The
ste
ps r
equi
red
to im
plem
ent
the
Tran
sact
ion
will
, in
sum
mar
y, in
volv
e th
e fo
llow
ing
action
s:
•th
e in
corp
orat
ion
of a
new
Cay
man
hol
ding
com
pany
(“R
eorg
anis
ed P
arag
on”)
, w
hich
will
be
inco
rpor
ated
as
a di
rect
sub
sidi
ary
of t
he C
ompa
ny;
•a
dire
ct o
r in
dire
ct t
rans
fer
of c
erta
in a
sset
s of
the
Com
pany
to
Reo
rgan
ised
Par
agon
for
nom
inal
cons
ider
atio
n (o
n th
e ba
sis
that
, at
the
tim
e of
the
tran
sfer
, th
e Com
pany
’s a
sset
s ar
e st
ill s
ubje
ct t
o th
ese
curi
ty a
nd g
uara
ntee
s se
curi
ng a
ll th
e de
btou
tsta
ndin
g an
d th
eref
ore
have
no
econ
omic
val
uean
d Reo
rgan
ised
Par
agon
is 1
00%
ow
ned
by t
heCom
pany
);•
the
Com
pany
will
pro
cure
the
dis
trib
utio
n of
the
shar
es in
Reo
rgan
ised
Par
agon
and
dis
trib
ute
othe
ras
sets
incl
udin
g ca
sh t
o th
e Sec
ured
Len
ders
and
Sen
ior
Not
ehol
ders
in s
ettlem
ent
of t
he C
ompa
ny’s
finan
cial
liab
ilities
to
the
Sec
ured
Len
ders
and
the
Sen
ior
Not
ehol
ders
;•
cons
ider
atio
n to
the
Com
pany
for
the
tra
nsfe
r or
dist
ribu
tion
of its
asse
ts t
o th
e Sec
ured
Len
ders
and
Sen
ior
Not
ehol
ders
will
the
refo
re b
e th
e re
leas
e of
all
debt
ow
ed b
y th
e Com
pany
to
the
Sec
ured
Len
ders
and
Sen
ior
Not
ehol
ders
, in
acc
orda
nce
with
the
Fift
hPl
an.
The
cred
itor
s w
ill r
ecei
ve t
heir
res
pect
ive
entitlem
ents
to
cas
h, s
hare
s in
Reo
rgan
ised
Par
agon
and
pro
ceed
s fr
om t
he N
oble
Cla
ims,
as
appl
icab
le, an
d, in
the
cas
e of
th
e Sec
ured
Len
ders
onl
y, s
enio
r se
cure
d fir
st li
en d
ebt
of $
85 m
illio
n.
Onc
e th
e Fi
fth
Plan
is c
onfir
med
by
the
US B
ankr
uptc
y Cou
r t,
the
Adm
inis
trat
ors
prop
osed
to
impl
emen
t th
e Tr
ansa
ctio
n. T
he c
onfir
mat
ion
hear
ing
for
the
Fift
h Pl
an
is s
ched
uled
to
com
men
ce o
n 7
June
201
7 (t
he “
Fift
h Pl
an C
onfir
mat
ion
Hea
ring
”).
A d
etai
led
hist
ory
of t
he C
hapt
er 1
1 pr
ocee
ding
s is
set
ou
t in
slid
es 4
and
5.
4
4
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oitt
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ate
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16
sta
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ent
Para
gon
Offsh
ore
Plc
(the
“Com
pany
”)
Bac
kgro
un
d
Info
rmat
ion
– C
hap
ter
11
Pro
cess
Ove
rvie
w o
f th
e C
hap
ter
11
pro
cess
Th
e G
roup
file
d Cha
pter
11
Proc
eedi
ngs
in t
he U
nite
d Sta
tes
in F
ebru
ary
2016
. P
revi
ous
pla
ns
Firs
t Pl
an
An
initia
l pla
n w
as f
iled
on 1
4 Fe
brua
ry 2
016,
whe
n th
e Cha
pter
11
Deb
tors
file
d vo
lunt
ary
petition
s to
co
mm
ence
the
Cha
pter
11
Proc
eedi
ngs.
On
19 A
pril
2016
, th
e Cha
pter
11
Deb
tors
file
d th
e Sec
ond
Am
ende
d Jo
int
Cha
pter
11
Plan
(th
e “O
rig
inal
Pla
n”)
.
The
Ori
gina
l Pla
n pr
ovid
ed for
, am
ong
othe
r th
ings
:
•pa
rtia
l pay
dow
n of
the
RCF;
•a
dow
nsiz
ing
of t
he S
enio
r N
oteh
olde
rs’ c
laim
s in
retu
rn f
or 3
5% e
quity
in t
he G
roup
, ca
sh p
aym
ent
of$3
45m
and
fur
ther
def
erre
d ca
sh p
aym
ents
; an
d•
rein
stat
emen
t of
the
Ter
m L
oan
debt
.Th
e U
S B
ankr
uptc
y Cou
rt s
ubse
quen
tly
held
a
conf
irm
atio
n he
arin
g on
the
Ori
gina
l Pla
n w
hich
co
mm
ence
d on
21
June
201
6. O
n 8
July
201
6 th
e Ban
krup
tcy
Cou
rt c
ondu
cted
a c
ham
bers
con
fere
nce
with
repr
esen
tative
s of
the
Cha
pter
11
Deb
tors
, th
e RCF
Lend
ers,
the
Ter
m L
oan
Lend
ers
and
the
Sen
ior
Not
ehol
ders
.
At
that
cha
mbe
rs c
o nfe
renc
e, t
he U
S B
ankr
uptc
y Cou
rt
com
mun
icat
ed it
s co
ncer
ns r
egar
ding
the
fea
sibi
lity
of
the
Ori
gina
l Pla
n, in
clud
ing
with
resp
ect
to t
he
achi
evab
ility
of th
e pr
ojec
ted
day
rate
s an
d ri
g ut
ilisa
tion
con
tem
plat
ed b
y th
e pr
ojec
tion
s in
the
Cha
pter
11
Deb
tors
’ bus
ines
s pl
an.
Sec
ond
Am
ende
d Pl
an
T o a
ddre
ss t
he U
S B
ankr
uptc
y Cou
rt’s
con
cern
s, o
n 15
Aug
ust
2016
, th
e Cha
pter
11
Deb
tors
file
d a
mod
ified
pl
an w
ith
upda
ted
proj
ection
s (t
he “
Sec
ond
Am
end
ed
Pla
n”)
, w
hich
ref
lect
ed t
he C
hapt
er 1
1 D
ebto
rs’ a
ctua
l fin
anci
al r
esul
ts f
or t
he p
erio
d en
ding
30
June
201
6.
The
Sec
ond
Am
ende
d Pl
an a
lso
acco
unte
d fo
r a
dow
nsid
e se
nsitiv
ity
anal
ysis
pre
pare
d by
the
Cha
pter
11
Deb
tors
and
the
ir a
dvis
ers
that
ass
umed
a d
elay
ed
mar
ket
reco
very
and
low
er d
ay r
ates
and
utiliz
atio
n ra
tes.
The
Sec
ond
Am
ende
d Pl
an h
ad t
he s
uppo
rt o
f th
e ad
ho
c co
mm
itte
e of
Sen
ior
Not
ehol
ders
and
the
age
nt for
th
e RCF
Lend
ers.
It
did
not
hav
e th
e su
ppor
t of
the
Te
rm L
oan
Lend
ers,
who
opp
osed
the
pla
n on
the
bas
is
that
it w
as n
ot fea
sibl
e. By
orde
r da
ted
15 N
ovem
ber
2016
, th
e U
S B
ankr
uptc
y Cou
rt d
enie
d co
nfir
mat
ion
of
the
Sec
ond
Am
ende
d Pl
an o
n th
e ba
sis
that
it d
id n
ot
leav
e su
ffic
ient
cas
h in
the
Gro
up t
o “s
urvi
ve t
he
chal
leng
ing
busi
ness
env
iron
men
t of
off-s
hore
oil
and
gas
prod
uction
ove
r th
e ne
xt s
ever
al y
ears
and
to
be
reas
onab
ly a
ble
to r
efin
ance
the
ir d
ebt
in 2
021”
. Th
ird
Plan
Th
e Cha
pter
11
Deb
tors
the
refo
re d
evel
oped
a n
ew
busi
ness
pla
n, u
sing
sig
nific
antly
mor
e co
nser
vative
day
ra
tes
and
rig
utili
sation
ass
umpt
ions
tha
n th
e bu
sine
ss
plan
on
whi
ch t
he O
rigi
nal P
lan
and
the
Sec
ond
Am
ende
d Pl
an w
ere
base
d (t
he “
New
Bu
sin
ess
Pla
n”)
. Th
e Cha
pter
11
Deb
tors
spe
nt c
onsi
dera
ble
tim
e m
eeting
and
neg
otia
ting
with
cert
ain
of t
he R
CF
Lend
ers,
the
Ter
m L
oan
Lend
ers
and
the
Sen
ior
Not
ehol
ders
reg
ardi
ng p
oten
tial
pro
posa
ls f
or a
co
nsen
sual
res
truc
turi
ng p
lan
base
d on
the
New
Bus
ines
s Pl
an.
Th
e Cha
pter
11
Deb
tors
arr
ived
at
a se
ttle
men
t an
d ag
reem
ent
in p
rinc
iple
with
the
ad h
oc c
omm
itte
e of
Te
rm L
oan
Lend
ers
and
the
stee
ring
com
mitte
e of
the
RCF
Lend
ers
(but
not
the
Sen
ior
Not
ehol
ders
), w
hich
w
as r
efle
cted
in a
thi
rd c
hapt
er 1
1 pl
an,
whi
ch w
as f
iled
on 7
Feb
ruar
y 20
17 (
the
“Th
ird
Pla
n”)
(an
d an
am
ende
d ve
rsio
n w
as f
iled
on 1
0 M
arch
201
7).
Und
er t
he T
hird
Pla
n, t
he e
xist
ing
shar
ehol
ders
did
not
re
ceiv
e an
y co
mpe
nsat
ion
and
the
exis
ting
sha
res
issu
ed b
y th
e Com
pany
wer
e de
emed
wor
thle
ss.
Th
e Th
ird
Plan
pro
pose
d th
at a
ll ne
w e
quity
in t
he
reor
gani
sed
grou
p w
ould
be
issu
ed t
o th
e Com
pany
’s
finan
cial
cre
dito
rs w
ith
appr
oxim
atel
y 52
% o
f th
e eq
uity
to
be
held
by
the
Sec
ured
Len
ders
and
the
rem
aini
ng
appr
oxim
atel
y 48
% b
y th
e Sen
ior
Not
ehol
ders
. Th
e Th
ird
Plan
was
not
app
rove
d by
all
cred
itor
s an
d in
an
atte
mpt
to
reac
h a
cons
ensu
al r
estr
uctu
ring
a fou
rth
plan
was
pro
pose
d as
set
out
in s
lide
5.
5
5
© 2
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oitt
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ate
and
Con
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ct P
earl
| 1
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sta
tem
ent
Para
gon
Offsh
ore
Plc
(the
“Com
pany
”)
Bac
kgro
un
d
Info
rmat
ion
– C
hap
ter
11
Pro
cess
Four
th P
lan
To r
esol
ve t
he p
arties
’ dis
pute
s re
lating
to
the
Thir
d Pl
an a
nd r
each
a ful
ly c
onse
nsua
l re
stru
ctur
ing
of t
he
Gro
up (
a “G
lob
al S
ettl
emen
t”),
in A
pril
2017
, th
e Cha
pter
11
Deb
tors
, th
e st
eeri
ng c
omm
itte
e of
RCF
Lend
ers,
the
ste
erin
g co
mm
itte
e of
Ter
m L
oan
Lend
ers
and
the
UCC p
artici
pate
d in
a m
edia
tion
.
Altho
ugh
a G
loba
l Set
tlem
ent
had
not
yet
been
rea
ched
th
roug
h th
e m
edia
tion
, on
21
Apr
il 20
17, th
e D
ebto
rs
filed
a fou
rth
chap
ter
11 p
lan
(the
“Fo
urt
h P
lan
”),
whi
ch,
amon
g ot
her
thin
gs,
cont
empl
ated
a c
orpo
rate
re
orga
nisa
tion
of th
e G
roup
tha
t is
nec
essa
ry t
o co
mpr
omis
e ce
rtai
n m
ater
ial l
iabi
litie
s in
the
Gro
up a
nd
enab
le t
he C
hapt
er 1
1 D
ebto
rs t
o ab
ando
n a
sett
lem
ent
agre
emen
t w
ith
Nob
le a
nd p
ursu
e th
e N
oble
Cla
ims.
C
urr
ent
pla
n
Fift
h Pl
an
As
note
d in
slid
e 6,
the
Fift
h Pl
an is
con
sens
ual a
nd is
cu
r ren
tly
subj
ect
to c
onfir
mat
ion
by t
he U
S B
ankr
uptc
y Cou
rt a
t th
e Fi
fth
Plan
Con
firm
atio
n H
eari
ng.
6
6
© 2
017
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oitt
e LL
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ate
and
Con
fiden
tial
| P
roje
ct P
earl
| 1
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ay 2
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16
sta
tem
ent
Para
gon
Offsh
ore
Plc
(the
“Com
pany
”)
The
Tran
sact
ion
-
Ove
rvie
w
The
Tran
sact
ion
- O
verv
iew
Th
e Fi
fth
Plan
file
d w
ith
the
US B
ankr
uptc
y Cou
rt o
n 2
May
201
7 re
flect
ed t
he o
utco
me
of e
xten
sive
ne
gotiat
ions
with
cred
itor
s du
ring
the
med
iation
and
in
clud
ed,
amon
g ot
her
thin
gs,
the
follo
win
g ke
y te
rms:
•
cash
of $5
15m
to
be s
plit b
etw
een
the
Sec
ured
Len d
ers
($41
0m)
and
Sen
ior
Not
ehol
ders
($1
05m
);•
“tak
e-ba
ck”
debt
of $8
5m t
o be
lent
by
the
Sec
ured
Lend
ers;
•50
/50
equi
ty s
plit in
the
res
truc
ture
d gr
oup
betw
een
the
Sec
ured
Len
ders
and
the
Sen
ior
Not
ehol
ders
;•
a ne
w b
oard
of di
rect
ors
cons
isting
of 7
peop
le:
3de
sign
ated
by
the
Sec
ured
Len
ders
; 3
desi
gnat
ed b
yth
e Sen
ior
Not
ehol
ders
; an
d th
e CEO
;•
form
atio
n of
a li
tiga
tion
tru
st (
the
“Li t
igat
ion
Tru
st”)
, to
whi
ch t
he N
oble
Cla
ims
will
be
tran
sfer
red
by t
he G
roup
, w
hich
sha
ll pr
osec
ute
the
Nob
le C
laim
s fo
r th
e be
nefit
of th
e Le
nder
s; a
nd•
in r
etur
n fo
r th
e ab
ove,
the
Len
ders
will
rel
ease
the
Gr o
up f
rom
c.$
2.4b
n of
sec
ured
and
uns
ecur
ed d
ebt
oblig
atio
ns.
Our
app
oint
men
t as
adm
inis
trat
ors
is p
rim
arily
to
impl
emen
t th
e ab
ove
step
s as
par
t of
the
Tra
nsac
tion
(d
escr
ibed
on
slid
e 3)
, w
hich
has
bee
n ag
reed
in
prin
cipl
e by
the
Gro
up’s
key
cre
dito
rs a
nd is
exp
ecte
d to
be
con
firm
ed b
y th
e U
S B
ankr
uptc
y Cou
rt a
t th
e Fi
fth
Plan
Con
firm
atio
n H
eari
ng.
The
Adm
inis
trat
ors
are
not
cons
ider
ing
alte
rnat
ive
rest
ruct
urin
g op
tion
s.
Rat
ion
ale
for
the
Tran
sact
ion
Th
e Tr
ansa
ctio
n w
ill h
ave
the
follo
win
g ef
fect
s:
•th
e Sec
ured
Len
ders
and
the
Sen
ior
Not
ehol
ders
beco
me
the
ultim
ate
shar
ehol
ders
of th
eReo
rgan
ised
Par
agon
gro
up;
•th
e ov
eral
l deb
t of
the
Reo
rgan
ised
Par
agon
gro
upis
red
uced
fro
m $
2.4b
n to
$85
m;
•vi
a a
seri
es o
f tr
ansa
ctio
ns,
the
inte
rcom
pany
pos i
tion
s w
ithi
n th
e Reo
rgan
ised
Par
agon
gro
up a
resi
mpl
ified
and
red
uced
; an
d•
the
Nob
le C
laim
s ar
e tr
ansf
erre
d to
the
Litig
atio
nTr
ust
for
the
bene
fit o
f th
e Le
nder
s.Th
e Tr
ansa
ctio
n w
ill t
here
fore
pro
vide
sta
bilit
y fo
r th
e Reo
rgan
ised
Par
agon
gro
up w
ith
sign
ifica
ntly
red
uced
de
bt a
nd w
ill m
axim
ise
valu
e fo
r al
l sta
keho
lder
s w
ith
an e
cono
mic
inte
rest
in t
he C
ompa
ny.
This
wou
ld n
ot b
e po
ssib
le u
nder
the
exi
stin
g fin
ance
doc
umen
tation
nor
w
ithi
n th
e G
roup
str
uctu
re p
rior
to
the
Tran
sact
ion.
Th
e Pr
opos
ed A
dmin
istr
ator
s pr
opos
e to
com
men
ce
impl
e men
tation
of th
e Tr
ansa
ctio
n in
acc
orda
nce
with
the
Fift
h Pl
an fol
low
ing
conf
irm
atio
n of
the
Fift
h Pl
an b
y th
e U
S B
ankr
uptc
y Ju
dge
at t
he F
ifth
Plan
Con
firm
atio
n H
eari
ng.
The
Tran
sact
ion
is n
ot e
xpec
ted
to c
ompl
ete
until e
ithe
r 3
July
201
7 or
31
July
201
7 w
hen
the
Fift
h Pl
an is
ef
fect
ive.
Altho
ugh
the
Tran
sact
ion
will
not
com
plet
e im
med
iate
ly a
fter
app
oint
men
t of
the
Pro
pose
d Adm
inis
trat
ors,
it h
as in
sub
stan
ce b
een
pre-
agre
ed
with
the
Com
pany
’s L
ende
rs a
nd is
the
refo
re b
eing
co
nsid
ered
a p
re-p
acka
ged
sale
. Th
e Adm
inis
trat
ors
are
satisf
ied
that
the
Tra
nsac
tion
th
ey p
ropo
se t
o ca
use
the
Com
pany
to
ente
r in
to is
ap
prop
riat
e in
ligh
t of
the
Com
pany
’s f
inan
cial
pos
itio
n.
The
Com
pany
is h
eavi
ly in
solv
ent.
The
tot
al
cons
ider
atio
n to
be
rece
ived
by
the
Com
pany
for
the
Tr
ansa
ctio
n is
the
rel
ease
of c.
$2.4
bn o
f de
bt o
wed
to
the
Com
pany
’s c
redi
tors
and
the
tot
al c
onsi
dera
tion
to
be r
ecei
ved
by t
he c
redi
tors
thr
ough
the
Fift
h Pl
an is
c.
$1.1
59bn
(co
nsis
ting
of eq
uity
in R
eorg
anis
ed P
arag
on
of c
.$50
5.4m
, ta
keba
ck d
ebt
of $
85m
and
cas
h of
$5
68.7
m).
It
is t
here
fore
cle
ar t
hat
the
Com
pany
is
rece
ivin
g m
ore
than
ade
quat
e co
nsid
erat
ion
for
the
Tran
sact
ion.
7
7
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017
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oitt
e LL
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ate
and
Con
fiden
tial
| P
roje
ct P
earl
| 1
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ay 2
017
SIP
16
sta
tem
ent
Para
gon
Offsh
ore
Plc
(the
“Com
pany
”)
The
Tran
sact
ion
-
Val
uat
ion
Val
uat
ion
ove
rvie
w
Laza
rd F
rère
s an
d C
o. L
LC (
“Laz
ard
”) (
outc
omes
fo
r cr
edit
ors
in a
goi
ng
con
cern
sal
e co
nte
mp
late
d
by
the
Tran
sact
ion
) La
zard
was
eng
aged
by
the
Gro
up t
o pr
ovid
e a
goin
g co
ncer
n va
luat
ion
of t
he R
eorg
anis
ed P
arag
on g
roup
an
d th
e Com
pany
and
pro
vide
d ev
iden
ce in
the
Cha
pter
11
Pro
ceed
ings
and
in r
elat
ion
to t
he p
ropo
sed
adm
inis
trat
ion.
In
sum
mar
y, t
heir
val
uation
wor
k is
ba
sed
on t
he fol
low
ing
assu
mpt
ions
and
met
hodo
logi
es:
•go
ing
conc
ern
valu
atio
n of
the
Gro
up u
pon
emer
genc
e fr
om t
he C
hapt
er 1
1 Pr
ocee
ding
s; a
nd•
real
isab
le e
quity
valu
es f
or t
he R
eorg
anis
edPa
rago
n gr
oup
are
driv
en b
y th
e N
ew B
usin
ess
Plan
; an
d•
Laza
rd u
sed
a co
mbi
nation
of D
CF
and
EBIT
DA
mul
tipl
es t
o ar
rive
at
a ra
nge
of v
alua
tion
s fo
r th
ere
stru
ctur
ed g
roup
. W
e ha
ve p
rese
nted
the
mid
-po
int
valu
atio
n of
the
hig
h an
d lo
w r
ange
Laz
ard
calc
ulat
ed;
and
•N
ote
the
figur
es p
rese
nted
for
the
Com
pany
excl
ude
cash
dis
trib
utio
ns t
o cr
editor
s fr
om o
ther
Gro
up e
ntitie
s.
Val
uat
ion
ove
rvie
w
Ali
xPar
tner
s LL
P (
“Ali
xPar
tner
s”)
(ou
tcom
es f
or
cred
itor
s in
a l
iqu
idat
ion
sce
nar
io)
Alix
Part
ners
was
eng
aged
by
the
Gro
up t
o pr
ovid
e on
goin
g fin
anci
al a
dvis
ory
supp
ort
as p
art
of t
he
rest
ruct
urin
g an
d pr
ovid
ed e
vide
nce
in t
he C
hapt
er 1
1 Pr
ocee
ding
s an
d in
rel
atio
n to
the
pro
pose
d ad
min
istr
atio
n. T
heir
ana
lysi
s de
mon
stra
tes
the
likel
y ou
tcom
e fo
r cr
editor
s sh
ould
the
Fift
h Pl
an n
ot b
e im
plem
ente
d an
d is
bas
ed o
n th
e fo
llow
ing
assu
mpt
ions
: •
thei
r an
alys
is a
ssum
es a
US C
hapt
er 7
liqu
idat
ion
proc
ess
whe
reby
a t
rust
ee is
app
oint
ed t
o re
alis
eth
e as
sets
of th
e Com
pany
(an
d th
e w
ider
Gro
up);
•th
ere
is s
igni
fican
t va
lue
dest
ruct
ion
as t
he r
igs
(the
Gr o
up’s
maj
or a
sset
s ot
her
than
cas
h) w
ould
be
sold
in a
dis
tres
sed,
acc
eler
ated
tra
nsac
tion
;•
asse
ts a
re r
ealis
ed a
nd c
ash
is d
istr
ibut
ed in
acco
rdan
ce w
ith
the
wat
erfa
ll fo
r di
stri
bution
s un
der
the
US B
ankr
uptc
y Cod
e; a
nd•
the
scen
ario
is b
road
ly c
ompa
rabl
e to
a U
Kliq
u ida
tion
pro
cess
(al
thou
gh t
he w
ater
fall
for
dist
ribu
tion
s w
ould
be
slig
htly
diff
eren
t).
Val
uat
ion
con
clu
sion
Bas
ed o
n th
e an
alys
is u
nder
take
n by
Laz
ard
and
Alix
Part
ners
(an
d te
sted
and
cha
lleng
ed b
y D
eloi
tte)
the
Tr
ansa
ctio
n is
cle
arly
in t
he b
est
inte
rest
s of
all
cred
itor
s w
hen
com
pare
d to
the
out
com
es f
or c
redi
tors
in
a li
quid
atio
n, w
hich
is t
he m
ost
likel
y al
tern
ativ
e sc
enar
io.
Su
mm
ary
valu
atio
n a
nal
ysis
of
the
Com
pan
y$'
000
Tran
sact
ion
Liqu
idat
ion
(mid
poin
t of h
igh
and
low
)La
zard
Alix
Part
ners
Proc
eeds
ava
ilabl
e to
cre
dito
rs84
3,48
3
387,
355
Se
cure
d Le
nder
sC
laim
1,39
7,63
9
1,39
7,63
9
R
ecov
ery
482,
384
31
1,74
1
% re
cove
ry35
%
22%
Se
nior
Not
esC
laim
1,02
0,75
0
1,02
0,75
0
R
ecov
ery
311,
527
55
,353
%
reco
very
31%
5%
Uns
ecur
ed c
redi
tors
Cla
im37
1
371
R
ecov
ery
111
20
% re
cove
ry30
%
5%
Sou
rce:
Laz
ard
and
Alix
Par
tner
s an
alys
is a
t at 1
6 M
ay 2
017
8
8
© 2
017
Del
oitt
e LL
P |
Priv
ate
and
Con
fiden
tial
| P
roje
ct P
earl
| 1
9 M
ay 2
017
SIP
16
sta
tem
ent
Para
gon
Offsh
ore
Plc
(the
“Com
pany
”)
Sta
tuto
ry P
urp
ose
and
In
itia
l In
trod
uct
ion
Sta
tuto
ry P
urp
ose
The
purp
ose
of a
n ad
min
istr
atio
n un
der
The
Ente
rpri
se
Act
200
2 is
spl
it in
to t
hree
par
ts:
1.To
res
cue
a co
mpa
ny a
s a
goin
g co
ncer
n (i
n ot
her
wor
ds,
a re
stru
ctur
ing
whi
ch k
eeps
the
act
ual
entity
inta
ct).
2.If
the
fir
st p
urpo
se is
not
rea
sona
bly
prac
tica
ble
(or
the
seco
nd p
urpo
se w
ould
cle
arly
be
bett
er fo
rth
e cr
editor
s as
a w
hole
), t
hen
the
Prop
osed
Adm
inis
trat
ors
mus
t pe
rfor
m t
heir
fun
ctio
ns w
ith
the
obje
ctiv
e of
ach
ievi
ng a
bet
ter
resu
lt f
orcr
editor
s as
a w
hole
tha
n w
ould
be
obta
ined
thro
ugh
an im
med
iate
liqu
idat
ion
of t
he c
ompa
ny.
This
wou
ld n
orm
ally
env
isag
e a
sale
of th
ebu
sine
ss a
nd a
sset
s as
a g
oing
con
cern
(or
am
ore
orde
rly
sale
s pr
oces
s th
an in
liqu
idat
ion)
.3.
If n
eith
er o
f th
e fir
st t
wo
part
s of
the
pur
pose
are
reas
o nab
ly p
ract
icab
le, th
e Pr
opos
edAdm
inis
trat
ors
mus
t pe
rfor
m t
heir
fun
ctio
ns w
ith
the
obje
ctiv
e of
rea
lisin
g pr
oper
ty in
ord
er t
om
ake
a di
stri
bution
to
secu
red
and/
or p
refe
rent
ial
cred
itor
s as
app
licab
le.
As
note
d ea
rlie
r, t
he C
ompa
ny h
as s
igni
fican
t se
cure
d an
d un
secu
red
cred
itor
liab
ilities
and
a r
efin
anci
ng o
f th
e Com
pany
’s d
ebts
was
not
ach
ieva
ble
witho
ut t
he
Tran
sact
ion,
whi
ch w
ill in
volv
e tr
ansf
erri
ng a
ll th
e Com
pany
’s a
sset
s re
quir
ed f
or t
he b
usin
ess
to c
ontinu
e as
a g
oing
con
cern
to
Reo
rgan
ised
Par
agon
; as
suc
h th
e Pr
opos
ed A
dmin
istr
ator
s co
nsid
er t
hat
the
first
pur
pose
is
not
pos
sibl
e to
ach
ieve
. Acc
ordi
ngly
, th
e pu
rpos
e of
the
adm
inis
trat
ion
is t
o ac
hiev
e a
bett
er r
esul
t fo
r cr
editor
s as
a w
hole
tha
n w
ould
be
obta
ined
thr
ough
an
imm
edia
te li
quid
atio
n of
th
e Com
pany
. Th
e pu
rpos
e of
the
adm
inis
trat
ion
will
be
achi
eved
thr
ough
the
Tra
nsac
tion
, w
hich
is t
he b
est
avai
labl
e ou
tcom
e fo
r th
e Com
pany
’s c
redi
tors
as
a w
hole
in t
he c
ircu
mst
ance
s.
Furt
her
deta
ils r
egar
ding
the
Tra
nsac
tion
are
pro
vide
d ea
rlie
r in
thi
s st
atem
ent
on s
lides
3 a
nd 6
.
Init
ial
Intr
odu
ctio
n
We
wer
e or
igin
ally
intr
oduc
ed t
o th
e G
roup
by
Wei
l G
otsh
al &
Man
ges
LLP,
the
Gro
up’s
law
yers
.
By
an e
ngag
emen
t le
tter
dat
ed 4
Jan
uary
201
7 w
e w
ere
enga
ged
to c
onsi
der
the
suitab
ility
of a
pre-
pack
aged
ad
min
istr
atio
n un
der
Engl
ish
inso
lven
cy le
gisl
atio
n to
im
plem
ent
a ch
apte
r 11
pla
n to
be
conf
irm
ed b
y th
e U
S
Ban
krup
tcy
Cou
rt.
In t
he in
tere
sts
of ful
l dis
clos
ure,
Del
oitt
e w
ere
owed
£9
85,0
00 b
y t h
e Com
pany
at
appo
intm
ent
as a
res
ult
of
the
tim
ing
and
proc
ess
for
payi
ng p
rofe
ssio
nal a
dvis
ers’
fe
es t
hrou
gh t
he C
hapt
er 1
1 Pr
ocee
ding
s.
Sav
e fo
r th
is a
ppoi
ntm
ent,
the
Pro
pose
d Adm
inis
trat
ors
hav e
had
no
prio
r in
volv
emen
t w
ith
eith
er t
he C
ompa
ny
or t
he G
roup
. Fo
r co
mpl
eten
ess,
we
wou
ld a
dvis
e th
at:
•D
eloi
tte
LLP
has
been
eng
aged
by
the
Com
pany
to
advi
se o
n th
e ta
x as
pect
s of
the
Tra
nsac
tion
to
ensu
re it
is a
s ta
x ef
ficie
nt a
s po
ssib
le;
and
•O
ther
mem
ber
firm
s w
ithi
n th
e gl
obal
Del
oitt
eTo
uche
Toh
mat
su L
imited
net
wor
k ha
ve b
een
enga
ged
to p
rovi
de a
dvic
e to
cer
tain
Gro
up e
ntitie
s,in
clud
ing
audi
t w
ork.
The
Pro
pose
d Adm
inis
trat
ors
have
had
no
invo
lvem
ent
with
thes
e en
gage
men
ts.
In a
ccor
danc
e w
ith
the
Ethi
cal C
ode
for
Inso
lven
cy
Pra c
tition
ers
issu
ed b
y th
e In
stitut
e of
Cha
rter
ed
Acc
ount
ants
in E
ngla
nd a
nd W
ales
, w
e do
not
con
side
r th
at t
hese
eng
agem
ents
rep
rese
nt a
sig
nific
ant
prof
essi
onal
rel
atio
nshi
p as
, am
ongs
t ot
her
thin
gs,
our
fees
are
not
con
side
red
eith
er s
igni
fican
t to
Del
oitt
e or
in
the
con
text
of th
e ov
eral
l lev
el o
f fe
es p
aid
by t
he
Gro
up t
o pr
ofes
sion
al a
dvis
ers
and
our
inde
pend
ence
is
not
impa
cted
by
any
of t
he e
ngag
emen
ts u
nder
take
n.
9
9
© 2
017
Del
oitt
e LL
P |
Priv
ate
and
Con
fiden
tial
| P
roje
ct P
earl
| 1
9 M
ay 2
017
SIP
16
sta
tem
ent
Para
gon
Offsh
ore
Plc
(the
“Com
pany
”)
Pre
-ap
poi
ntm
ent
con
sid
erat
ion
s
Pre
-ap
poi
ntm
ent
con
sid
erat
ion
s Pr
ior
to o
ur a
ppoi
ntm
ent,
we
carr
ied
out
a th
orou
gh
anal
ysis
of th
e st
eps
take
n by
the
Gro
up p
rior
to
our
enga
gem
ent
and
the
rem
aini
ng s
teps
in t
he
rest
ruct
urin
g pr
oces
s in
ord
er t
o de
term
ine
whe
ther
the
re
stru
ctur
ing
proc
ess
is in
the
bes
t in
tere
st o
f th
e Com
pany
and
the
Gro
up’s
cre
dito
rs.
We
have
und
erta
ken
the
follo
win
g st
eps:
•
met
and
/or
had
disc
ussi
ons
with
the
Gro
up’s
Eng
lish
and
US la
wye
rs t
o be
tter
und
erst
and
the
Fift
h Pl
anan
d th
e m
echa
nics
of im
plem
enting
the
rest
ruct
urin
g;•
met
and
had
dis
cuss
ions
with
repr
esen
tative
s of
the
Gr o
up in
clud
ing
the
dire
ctor
s of
the
Com
pany
and
seni
or m
anag
emen
t te
am;
•re
view
ed t
he fin
ance
arr
ange
men
ts e
nter
ed in
to b
yth
e G
roup
;•
part
icip
ated
in a
nd/o
r re
view
ed n
otes
of co
nfer
ence
calls
and
mee
ting
s be
twee
n th
e G
roup
and
cer
tain
cred
itor
s to
dis
cuss
the
pot
ential
adm
inis
trat
ion;
and
•re
view
ed t
he F
ifth
Plan
and
con
side
red
the
valu
atio
nan
alys
is u
nder
take
n by
Alix
Part
ners
and
Laz
ard
tosa
tisf
y ou
rsel
ves
that
the
Tra
nsac
tion
is in
the
bes
tin
tere
sts
of t
he C
ompa
ny’s
cre
dito
rs.
The
Gro
up h
ad b
een
in d
iscu
ssio
n w
ith
its
Lend
ers
to
seek
to
agre
e to
a fin
anci
al r
estr
uctu
ring
thr
ough
out
the
Cha
pter
11
Proc
eedi
ngs.
In
the
cour
se o
f th
ose
disc
ussi
ons,
we
unde
rsta
nd t
hat
the
follo
win
g op
tion
s ha
ve b
een
cons
ider
ed:
•Ref
inan
cing
: gi
ven
the
sign
ifica
nt le
vel o
f de
bt in
the
Gro
up,
the
decl
ine
in o
il pr
ices
and
the
fin
anci
alpe
rfor
man
ce o
f th
e G
roup
, a
full
refin
anci
ng o
f th
eG
roup
’s d
ebt
was
not
con
side
red
feas
ible
.•
A s
ale
of t
he b
usin
ess
and
asse
ts:
it w
as c
onsi
dere
dth
at a
ny a
ppro
ach
to m
arke
t th
e G
roup
wou
ld n
otre
sult in
a h
ighe
r re
alis
atio
n th
an t
he T
rans
action
give
n th
e di
stre
ss in
the
offsh
ore
drill
ing
mar
ket.
•Con
tinu
ing
to t
rade
in A
dmin
istr
atio
n: t
he C
ompa
nyac
ts a
s a
hold
ing
com
pany
and
is a
bor
row
er u
nder
the
RCF,
a g
uara
ntor
of th
e Te
rm L
oan
and
the
issu
er o
f th
e 20
22 N
otes
and
the
202
4 N
otes
. It
is a
non-
trad
ing
entity
with
man
y in
dire
ct t
radi
ngsu
bsid
iari
es in
a c
ompl
ex m
ulti-j
uris
dict
iona
l gro
upst
ruct
ure.
The
Gro
up is
als
o st
ill s
ubje
ct t
o th
eCha
pter
11
Proc
eedi
ngs.
As
a re
sult,
the
Prop
osed
Adm
inis
trat
ors
do n
ot b
elie
ve it
wou
ld b
eap
prop
riat
e or
pos
sibl
e fo
r th
e Com
pany
to
mon
itor
and
seek
to
cont
rol t
he t
radi
ng o
f th
e bu
sine
ss o
f its
subs
idia
ries
.Th
e Pr
opos
ed A
dmin
istr
ator
s in
tend
to
ente
r in
to a
m
emor
andu
m o
f un
ders
tand
ing
with
the
Boa
rd a
nd
seni
or m
anag
emen
t to
ens
ure
that
the
Gro
up’s
op
erat
ing
subs
idia
ries
con
tinu
e to
ope
rate
effec
tive
ly
and
effic
ient
ly o
nce
the
Com
pany
is in
adm
inis
trat
ion.
10
10
©
201
7 D
eloi
tte
LLP
| Pr
ivat
e an
d Con
fiden
tial
| P
roje
ct P
earl
| 1
9 M
ay 2
017
SIP
16
sta
tem
ent
Para
gon
Offsh
ore
Plc
(the
“Com
pany
”)
Alt
ern
ativ
e O
pti
ons
Alt
ern
ativ
e O
pti
ons
The
Prop
osed
Adm
inis
trat
ors
have
rev
iew
ed t
he
valu
atio
n w
ork
of A
lixPa
rtne
rs a
nd L
azar
d pr
ovid
ed in
re
lation
to
the
Cha
pter
11
Proc
eedi
ngs
and
in s
uppo
rt o
f th
e ap
plic
atio
n fo
r th
e ad
min
istr
atio
n of
the
Com
pany
, w
hich
set
s ou
t th
e es
tim
ated
ret
urns
to
cred
itor
s of
the
Com
pany
and
the
Gro
up t
hrou
gh t
he C
hapt
er 1
1 Pr
ocee
ding
s co
mpa
red
to t
he r
etur
ns t
o cr
editor
s th
roug
h a
US c
hapt
er 7
liqu
idat
ion.
Th
e Pr
opos
ed A
dmin
istr
ator
s ha
v e s
atis
fied
them
selv
es
that
the
Tra
nsac
tion
rep
rese
nts
the
best
out
com
e fo
r cr
editor
s as
a w
hole
. O
ur r
ole
as P
ropo
sed
Adm
inis
trat
ors
is p
rim
arily
to
impl
emen
t th
e Tr
ansa
ctio
n on
ce t
he F
ifth
Plan
is c
onfir
med
by
the
US B
ankr
uptc
y Cou
rt.
We
do n
ot c
onsi
der
ther
e to
be
any
viab
le
alte
rnat
ive
tran
sact
ions
giv
en t
he G
roup
has
bee
n tr
ying
to
rea
ch a
n ag
reem
ent
with
its
stak
ehol
ders
sin
ce
disc
ussi
ons
star
ted
arou
nd S
epte
mbe
r 20
15.
If
the
Tra
nsac
tion
doe
s no
t co
mpl
ete,
the
lik e
ly
alte
rnat
ive
outc
ome
in o
ur v
iew
is a
liqu
idat
ion
of t
he
Gro
up p
ursu
ant
to a
US c
hapt
er 7
pro
ceed
ing.
Mar
keti
ng
of
the
Bu
sin
ess
and
Ass
ets
With
rega
rds
to m
arke
ting
the
Gro
up’s
ass
ets,
as
our
prop
osed
app
oint
men
t as
adm
inis
trat
ors
is p
rim
arily
to
impl
emen
t th
e Tr
ansa
ctio
n (i
f co
nfir
med
by
the
US
Ban
krup
tcy
Cou
rt)
that
has
bee
n ag
reed
by
cred
itor
s,
the
Prop
osed
Adm
inis
trat
ors
have
not
con
duct
ed a
ny
mar
keting
of th
e Com
pany
’s a
sset
s on
the
bas
is t
hat
the
Gro
up a
nd it
s fin
anci
al a
dvis
ers
wou
ld h
ave
cond
ucte
d an
y m
arke
ting
of th
e G
roup
and
its
asse
ts a
s pa
rt o
f th
e Cha
pter
11
proc
ess,
if it
had
bee
n ap
prop
riat
e to
do
so.
W
e un
ders
tand
fro
m L
azar
d th
at n
o m
arke
ting
pro
cess
w
as c
onsi
dere
d by
the
Gro
up,
its
finan
cial
adv
iser
s or
an
y of
the
Gro
up’s
cre
dito
rs b
efor
e or
dur
ing
the
Cha
pter
11
Proc
eedi
ngs
beca
use,
giv
en t
he d
istr
ess
in
the
wid
er o
ffsh
ore
drill
ing
mar
ket,
it w
as c
onsi
dere
d th
at t
his
wou
ld n
ot r
esul
t in
a h
ighe
r va
luat
ion
than
the
va
luat
ion
met
hods
des
crib
ed o
n sl
ide
7 of
thi
s st
atem
ent
and
coul
d in
stea
d be
pot
ential
ly v
alue
de
stru
ctiv
e.
Mar
keti
ng
of
the
Bu
sin
ess
and
Ass
ets
(con
t.)
Cre
dito
rs h
ave
been
kep
t fu
lly a
war
e of
the
re
stru
ctur
ing
prop
osed
by
the
Fift
h Pl
an w
hich
has
bee
n fil
ed in
the
Cha
pter
11
Proc
eedi
ng a
nd w
ill b
e co
nsid
ered
by
the
US B
ankr
uptc
y Cou
rt a
t th
e Fi
fth
Plan
Con
firm
atio
n H
eari
ng.
Cre
dito
rs h
ave
ther
efor
e al
read
y ha
d th
e op
port
unity
to c
onsi
der
whe
ther
sep
arat
e m
arke
ting
of th
e as
sets
of th
e G
roup
or
the
Com
pany
sh
ould
tak
e pl
ace
and
have
not
req
uest
ed t
his.
Acc
ordi
ngly
, w
e do
not
con
side
r th
at a
dditio
nal o
r se
para
te m
arke
ting
of as
sets
withi
n a
UK a
dmin
istr
atio
n pr
oces
s is
eithe
r de
sira
ble
or n
eces
sary
in t
he
circ
umst
ance
s.
The
fact
tha
t th
e Tr
ansa
ctio
n w
ill o
nly
occu
r if
appr
oved
an
d co
nfir
med
by
the
US B
ankr
uptc
y Cou
rt a
lso
illus
trat
es t
hat
the
rest
ruct
urin
g ha
s be
en c
onsi
dere
d an
d in
vest
igat
ed b
y th
e U
S B
ankr
uptc
y Cou
rt,
the
Com
pany
and
the
Gro
up’s
cre
dito
rs,
whi
ch w
ill e
nsur
e th
at p
rope
r va
lue
is a
chie
ved
for
the
sale
of th
e as
sets
of
the
Com
pany
and
the
Gro
up.
In
the
se c
ircu
mst
ance
s it is
our
opi
nion
tha
t th
e tr
ansf
er
of t
he C
ompa
ny’s
ass
ets
as p
ropo
sed,
if c
onfir
med
by
the
US B
ankr
uptc
y Cou
rt,
is in
the
bes
t in
tere
sts
of
cred
itor
s an
d th
eref
ore
the
Tran
sact
ion,
as
prop
osed
, is
in
cre
dito
rs’ b
est
inte
rest
s an
d ap
prop
riat
e an
d se
nsib
le
in t
he c
ircu
mst
ance
s.
Pot
enti
al f
un
din
g f
or t
he
Gro
up
G
iven
the
leve
l of ca
sh in
the
Gro
up a
nd s
uppo
rt f
rom
th
e G
roup
’s c
redi
tors
to
reac
h a
cons
ensu
al
rest
ruct
urin
g, t
he A
dmin
istr
ator
s di
d no
t co
nsid
er it
ne
cess
ary
to a
ppro
ach
pote
ntia
l fun
ders
to
prov
ide
addi
tion
al w
orki
ng c
apital
fun
ding
.
Cre
dit
or C
onsu
ltat
ion
Th
e G
roup
’s p
rinc
ipal
cre
dito
rs h
ave
reac
hed
a co
nsen
sual
agr
eem
ent
to im
plem
ent
the
Tran
sact
ion
and
have
bee
n co
nsul
ted
thro
ugho
ut t
he e
ntir
e Cha
pter
11
Pro
ceed
ings
. Th
e Adm
inis
trat
ors
have
par
tici
pate
d in
and
/or
revi
ewed
no
tes
of c
onfe
renc
e ca
lls a
nd m
eeting
s w
ith
the
Gro
up’s
cr
editor
s, b
ut h
ave
not
been
invo
lved
dir
ectly
in t
he
med
iation
pro
cess
bet
wee
n th
e Cha
pter
11
Deb
tors
, th
e Sec
ured
Len
ders
and
the
UCC.
11
11
©
201
7 D
eloi
tte
LLP
| Pr
ivat
e an
d Con
fiden
tial
| P
roje
ct P
earl
| 1
9 M
ay 2
017
SIP
16
sta
tem
ent
Para
gon
Offsh
ore
Plc
(the
“Com
pany
”)
Gro
up
Str
uct
ure
Gro
up
str
uct
ure
ove
rvie
w
•Th
e Com
pany
was
pre
viou
sly
liste
d on
the
NYS
E an
d un
til 1
8 D
ecem
ber
2015
the
Com
pany
’s s
hare
s w
ere
tra d
ing.
•
The
prin
cipa
l bor
row
ers
of t
he G
roup
’s d
ebt
are
the
Com
pany
, Pa
rago
n O
ffsh
ore
Fina
nce
Com
pany
and
Par
agon
Inte
rnat
iona
l Fin
ance
Com
pany
. •
The
Gro
up h
as o
pera
tion
al s
truc
ture
s in
eac
h of
the
jur
isdi
ctio
ns in
whi
ch it
ope
rate
s.•
Each
jur
isdi
ctio
n ha
s a
serv
ice
com
pany
whi
ch p
rovi
des
onsh
ore
and
offs
hore
em
ploy
ees
and
cont
ract
ors
as w
ell
as m
anag
emen
t an
d su
ppor
t fu
nction
s.•
The
Reo
rgan
ized
Par
agon
gro
up o
n sl
ide
12 w
ill b
e co
nsis
t of
onl
y th
ose
entities
in t
he c
urre
nt G
roup
str
uctu
rere
quir
ed f
or t
he g
o fo
rwar
d bu
sine
ss.
The
rem
aini
ng e
ntitie
s w
ill b
e w
ound
dow
n as
par
t of
the
adm
inis
trat
ion.
90%
Para
gon
Off
shor
e Fi
nanc
e Com
pany
Para
gon
Off
shor
e Pl
c
Para
gon
Inte
rnat
iona
l Fi
nanc
e Com
pany
Para
gon
Hol
ding
SCS
2 Lt
d
Para
gon
Inte
rnat
iona
l In
vest
men
t Lt
d
Para
gon
Off
shor
e H
oldi
ngs
US
Inc
Para
gon
Off
shor
e D
rilli
ng L
LC
Para
gon
Off
shor
e (G
OM
) In
c
Para
gon
Off
shor
e Ser
vice
s LL
C
Para
gon
FDR
Hol
ding
s Lt
d
Para
gon
Off
shor
e (L
uxem
bour
g)S.a
.r.l.
Para
gon
Off
shor
e H
unga
ry L
td
Para
gon
Off
shor
e D
rilli
ng A
S
Para
gon
Off
shor
e AS
Para
gon
Off
shor
e D
rilli
ng
(Cyp
rus)
Ltd
Fron
tier
D
rilli
ng
Nig
eria
Ltd
Para
gon
Off
shor
e U
SA I
nc
Fron
tier
O
ffsh
ore
Expl
orat
ion
Indi
a Lt
d
Para
gon
Off
shor
e (A
sia)
Pte
. Lt
d
Para
gon
Sei
llean
AS
Para
gon
Off
shor
e D
rilli
ng d
o Bra
sil L
tda
Para
gon
(Sei
llean
) KS
Kul
lurk
Art
ic
Ser
vice
s In
c
Para
gon
Off
shor
e Ste
rlin
g Lt
d
Pros
pect
or
Off
shor
e D
rilli
ng S
.a.r
.l.
Para
gon
Off
shor
e In
vest
men
t Lt
d
Para
gon
Off
shor
e (C
anad
a)
Ltd
Baw
den
Dri
lling
In
tern
atio
nal
Ltd
Baw
den
Dri
lling
Inc
Res
olut
e In
sura
nce
Gro
up L
td
Para
gon
Duc
hess
Ltd
Para
gon
Off
shor
e (L
abua
n)
Pte.
Ltd
PGN
Off
shor
e D
rilli
ng
(Mal
aysi
a)
Sdn
. Bhd
.
Oth
er
Sub
sidi
arie
s
10%
49%
Para
gon
Off
shor
e Bra
sil
Inve
stim
ento
E
Part
icip
acoe
s Lt
da
99%
1%
Para
gon
Dri
lling
N
iger
ia L
td
Para
gon
Off
shor
e In
tern
atio
nal
Ltd
Para
gon
Dri
lling
Ven
C.A
.
Para
gon
Off
shor
e Ven
C.A
.
Para
gon
Ass
et
Com
pany
Lt
d
Art
ik D
rilli
ng
Ltd
Inc
99.5
%
Para
gon
Ass
et (
ME)
Lt
d
Para
gon
Ope
rating
(M
E) L
td
0.5%
Oth
er
Sub
sidi
arie
s
82%
Para
gon
Off
shor
e do
Bra
sil L
tda.
99%
1%
=
Equi
ty
Key
:
=
Prop
osed
adm
inis
trat
ion
=
Cha
pter
11
debt
ors
=
Dor
man
t
Term
loan
B (
$642
m)
2022
Sen
ior
note
s ($
500m
) 20
24 S
enio
r no
tes
($58
0m)
Rev
olvi
ng
cred
it
faci
lity
($77
7m)
=
Rig
ow
ning
ent
ity
Sim
pli
fied
Gro
up
str
uct
ure
ch
art
12
12
©
201
7 D
eloi
tte
LLP
| Pr
ivat
e an
d Con
fiden
tial
| P
roje
ct P
earl
| 1
9 M
ay 2
017
SIP
16
sta
tem
ent
Para
gon
Offsh
ore
Plc
(the
“Com
pany
”)
Pu
rch
aser
Pu
rch
aser
an
d R
elat
ed P
arti
es
The
Tran
sact
ion
will
res
ult
in t
he L
ende
r s o
wni
ng
100%
of th
e Reo
rgan
ised
Par
agon
gro
up.
The
Lend
ers
are
a la
rge
disp
arat
e gr
oup
of fin
anci
al
inst
itut
ions
and
ret
ail i
nves
tors
. A
sset
s Th
e st
ruct
ure
char
t ab
ove
show
s th
e en
tities
the
P r
opos
ed A
dmin
istr
ator
s in
tend
to
sell
to t
he L
ende
rs
as p
art
of t
he T
rans
action
. T
his
will
be
effe
cted
pu
rsua
nt t
o an
impl
emen
tation
agr
eem
ent
whi
ch w
ill
be a
gree
d w
ith
the
Lend
ers
on o
r be
fore
the
Fift
h Pl
an C
onfir
mat
ion
Hea
ring
.
The
Tran
sact
ion
incl
udes
the
sal
e of
ope
rating
su
bsid
iari
es in
eac
h ju
risd
iction
man
agem
ent
has
iden
tifie
d as
long
ter
m m
arke
ts f
or t
he G
roup
.
Sub
ject
to
conf
irm
atio
n of
the
Fift
h Pl
an,
the
Prop
osed
Adm
inis
trat
ors
also
inte
nd t
o (a
) se
ll th
e ri
ghts
to
purs
ue
the
Nob
le C
laim
s to
the
Litig
atio
n Tr
ust
as p
art
of t
he
cons
ider
atio
n fo
r th
e re
leas
e of
c.$
2.4b
n of
deb
t an
d (b
) di
stri
bute
all
cash
to
the
Lend
ers
in a
ccor
danc
e w
ith
the
Fift
h Pl
an,
incl
udin
g c.
$344
m o
f ca
sh c
urre
ntly
hel
d by
the
Com
pany
. S
ale
con
sid
erat
ion
As
cons
ider
atio
n fo
r t h
e tr
ansf
er o
f th
e Com
pany
’s a
sset
s pu
rsua
nt t
o th
e Tr
ansa
ctio
n, t
he P
ropo
sed
Adm
inis
trat
ors
will
rec
eive
d c.
$2.4
bn b
y w
ay o
f re
leas
e of
all
debt
ow
ed b
y th
e G
roup
to
the
Sec
ured
Len
ders
and
the
Sen
ior
Not
ehol
ders
(se
e sl
ide
6 fo
r fu
rthe
r de
tails
).
Para
gon
Off
shor
e In
vest
men
t Lt
d
Pros
pect
or
Off
shor
e D
rilli
ng
S.a
.r.l.
Para
gon
Off
shor
e M
anag
emen
t S.
de R
.L. de
C.V
.
Para
gon
Off
shor
e (L
abua
n) P
te.
Ltd
Para
gon
Off
shor
e H
oldi
ngs
US
Inc.
Para
gon
Off
shor
e Le
asin
g (S
witze
rlan
d)
Gm
bH
Para
gon
Off
shor
e (N
eder
land
) BV
Para
gon
Off
shor
e (L
and
Sup
port
) Lt
d
Para
gon
Off
shor
e En
terp
rise
s Lt
d
Para
gon
Ass
et
Com
pany
Ltd
PGN
Off
shor
e D
rilli
ng
(Mal
aysi
a)
Sdn
. Bhd
.
Para
gon
(Mid
dle
East
) Lt
d
Para
gon
Ass
et (
UK)
Ltd
Para
gon
Off
shor
e (N
orth
Sea
) Lt
d
Para
gon
Off
shor
e Cam
eroo
n S.a
.r.l.
Para
gon
Off
shor
e Ser
vice
s LL
C
Reo
rgan
ised
Pa
rago
n
99%
1%
Para
gon
Off
shor
e (G
OM
) In
c.
Para
gon
Off
shor
e D
rilli
ng L
LC
Para
gon
Inte
rnat
iona
l Fi
nanc
e Com
pany
Lend
ers
= E
quity
Key
:
= R
ig o
wni
ng e
ntity
Oth
er
Sub
sidi
arie
s O
ther
Sub
sidi
arie
s
Reo
rgan
ised
Par
agon
gro
up
str
uct
ure
ch
art
13
13
©
201
7 D
eloi
tte
LLP
| Pr
ivat
e an
d Con
fiden
tial
| P
roje
ct P
earl
| 1
9 M
ay 2
017
SIP
16
sta
tem
ent
Para
gon
Offsh
ore
Plc
(the
“Com
pany
”)
Con
nec
ted
par
ty
tran
sact
ion
Pre
-Pac
k P
ool
- B
ackg
rou
nd
Th
e Pr
e Pa
ck P
ool (
the
” Poo
l”)
was
set
up
in r
espo
nse
to a
ser
ies
of r
ecom
men
dation
s co
ntai
ned
in a
n in
depe
nden
t re
view
of pr
e-pa
ckag
ed a
dmin
istr
atio
ns
(The
Gra
ham
Rev
iew
). I
ts fun
ctio
n is
to
prov
ide
an
inde
pend
ent
revi
ew o
f th
e pu
rcha
se o
f a
busi
ness
and
/
or it
s as
sets
by
a pa
rty
conn
ecte
d to
a c
ompa
ny w
here
a
pre-
pack
aged
sal
e is
pro
pose
d. T
he P
ool h
as n
o po
wer
s, a
s su
ch.
App
licat
ion
to t
he P
ool i
s m
ade
by t
he c
onne
cted
par
ty.
Eac h
app
licat
ion
will
be
deal
t w
ith
by a
sin
gle
Pool
m
embe
r. T
he P
ool m
embe
r w
ill c
onsi
der
the
reas
onab
lene
ss o
f th
e gr
ound
s of
the
pro
pose
d pr
e-pa
ckag
ed s
ale
outlin
ed in
the
app
licat
ion,
and
will
issu
e on
e of
the
fol
low
ing
thre
e op
inio
ns:
1.N
othi
ng f
ound
to
sugg
est
that
the
gro
unds
for
the
prop
o sed
pre
-pac
kage
d sa
le a
re u
nrea
sona
ble.
2.Ev
iden
ce p
rovi
ded
has
been
lim
ited
in s
ome
area
s,bu
t o t
herw
ise
noth
ing
has
been
fou
nd t
o su
gges
tth
at t
he g
roun
ds f
or t
he p
ropo
sed
pre-
pack
aged
sale
are
unr
easo
nabl
e.3.
Ther
e is
a la
ck o
f ev
iden
ce t
o su
ppor
t a
stat
emen
tth
a t t
he g
roun
ds f
or t
he p
ropo
sed
pre-
pack
aged
sale
are
rea
sona
ble.
The
opin
ion
will
not
det
erm
ine
whe
ther
or
not
a sa
le t
o a
conn
ecte
d pa
rty
can
or c
anno
t pr
ocee
d. R
espo
nsib
ility
fo
r a
sale
will
res
t ul
tim
atel
y w
ith
the
adm
inis
trat
or.
Ap
pli
cati
on t
o th
e P
ool
The
Prop
osed
Adm
inis
trat
ors
and
the
Lend
ers
have
bee
n
cons
ider
ing
whe
ther
the
tra
nsac
tion
wou
ld b
e a
conn
ecte
d pa
rty
tran
sact
ion
whi
ch w
ould
req
uire
Reo
rgan
ised
Par
agon
to
cons
ider
app
roac
hing
the
Poo
l. O
nce
the
iden
tity
of th
e ne
w b
oard
of Reo
rgan
ised
Pa
rago
n ha
s be
en c
onfir
med
it w
ill b
e po
ssib
le t
o fin
ally
de
term
ine
whe
ther
or
not
the
Tran
sact
ion
is a
co
nnec
ted
part
y tr
ansa
ctio
n.
This
will
be
know
n be
fore
th
e Fi
fth
Plan
Con
firm
atio
n H
eari
ng a
nd in
any
eve
nt
befo
re t
he P
ropo
sed
Adm
inis
trat
ors
circ
ulat
e th
e fin
al
vers
ion
of t
his
stat
emen
t to
cre
dito
rs.
The
Prop
osed
Adm
inis
trat
ors’
vie
w is
tha
t, e
ven
if th
is is
a
conn
ecte
d pa
rty
tran
sact
ion,
it w
ould
be
neithe
r ap
prop
riat
e no
r ne
cess
ary
to a
ppro
ach
the
Pool
bec
ause
th
e Tr
ansa
ctio
n ha
s be
en d
iscl
osed
to
cred
itor
s an
d w
ill
be v
ette
d by
the
US B
ankr
uptc
y Cou
rt in
the
Cha
pter
11
Proc
eedi
ngs
so t
he t
rans
action
will
alr
eady
be
the
subj
ect
of c
lose
and
, in
our
vie
w,
suffic
ient
, ex
tern
al
scru
tiny
. I
f th
e ad
min
istr
atio
n or
der
is g
rant
ed,
the
Prop
osed
Adm
inis
trat
ors
will
fin
ally
det
erm
ine
with
the
Lend
ers
whe
ther
or
not
to a
ppro
ach
the
Pool
.
Via
bil
ity
stat
emen
t
The
conn
ecte
d pa
rty
wis
hing
to
mak
e a
pre-
pack
aged
pu
rcha
se s
houl
d be
enc
oura
ged
to p
repa
re a
sta
tem
ent
sett
ing
out
how
it, th
e pu
rcha
sing
ent
ity,
will
sur
vive
for
at
leas
t 12
mon
ths
from
the
dat
e of
the
pro
pose
d pu
rcha
se.
The
conn
ecte
d pa
rty
shou
ld c
onsi
der
prov
idin
g a
shor
t na
rrat
ive
deta
iling
wha
t th
e pu
rcha
sing
ent
ity
will
do
differ
ently
to e
nsur
e th
at t
he
busi
ness
will
not
fai
l (th
e “V
iab
ilit
y S
tate
men
t”).
H
owev
er,
in t
his
case
, gi
ven
that
the
Tra
nsac
tion
will
be
cons
ider
ed b
y th
e U
S B
ankr
uptc
y Ju
dge
at t
he F
ifth
Plan
Con
firm
atio
n H
eari
ng,
whi
ch w
ill in
clud
e a
revi
ew o
f th
e N
ew B
usin
ess
Plan
and
the
fea
sibi
lity
of t
he F
ifth
Plan
, th
e Pr
opos
ed A
dmin
istr
ator
s do
not
bel
ieve
it is
ne
cess
ary
to p
rovi
de a
Via
bilit
y Sta
tem
ent,
altho
ugh
ultim
atel
y th
is is
the
dec
isio
n fo
r th
e Le
nder
s (a
s sh
areh
olde
rs o
f Reo
rgan
ised
Par
agon
) if
they
det
erm
ine
that
the
Tra
nsac
tion
is a
con
nect
ed p
arty
tra
nsac
tion
.
We
will
not
ify a
ll cr
editor
s sh
ould
the
Len
ders
see
k an
ap
plic
atio
n to
the
Poo
l and
mak
e a
Via
bilit
y Sta
tem
ent.
14
14
©
201
7 D
eloi
tte
LLP
| Pr
ivat
e an
d Con
fiden
tial
| P
roje
ct P
earl
| 1
9 M
ay 2
017
SIP
16
sta
tem
ent
Para
gon
Offsh
ore
Plc
(the
“Com
pany
”)
Gen
eral
mat
ters
to
be
bro
ug
ht
to t
he
atte
nti
on o
f cr
edit
ors
Gen
eral
Mat
ters
Th
e ef
fect
of an
adm
inis
trat
ion
appo
intm
ent
is
esse
ntia
lly t
o gi
ve p
rote
ctio
n to
the
Com
pany
and
pr
even
t an
y pe
rson
tak
ing
action
aga
inst
it. D
urin
g th
e pe
riod
of th
e ad
min
istr
atio
n th
e Com
pany
can
not
norm
ally
be
wou
nd u
p, n
o ad
min
istr
ativ
e re
ceiv
er c
an
be a
ppoi
nted
, no
r ca
n st
eps
be t
aken
by
any
cred
itor
to
enfo
rce
secu
rity
, re
poss
ess
good
s or
com
men
ce a
ny
lega
l pro
ceed
ings
aga
inst
the
Com
pany
witho
ut t
he
cons
ent
of t
he a
dmin
istr
ator
s. I
f th
ey a
re a
ppoi
nted
, th
e Pr
opos
ed A
dmin
istr
ator
s w
ill m
anag
e th
e af
fair
s,
busi
ness
and
pro
pert
y of
the
Com
pany
for
the
dur
atio
n of
the
adm
inis
trat
ion.
If
an
adm
inis
trat
ion
orde
r is
gra
nted
, th
e Pr
opos
ed
Ad m
inis
trat
ors
have
req
uest
ed t
hat
relie
f is
gra
nted
so
that
:
(a)
if, for
any
rea
son,
it is
not
pos
sibl
e fo
r th
e Fi
fth
Cha
pter
11
Plan
to
beco
me
effe
ctiv
e on
the
inte
nded
ef
fect
ive
date
of 3
July
201
7 (w
hich
wou
ld b
e w
ithi
n th
e ei
ght
wee
k pe
riod
for
sen
ding
pro
posa
ls)
then
the
ef
fect
ive
date
of th
e Fi
fth
Cha
pter
11
Plan
will
be
31 J
uly
2017
(w
hich
wou
ld b
e af
ter
the
eigh
t w
eek
peri
od for
se
ndin
g pr
opos
als
expi
red)
, in
whi
ch c
ase
the
dead
line
for
send
ing
the
adm
inis
trat
ors’
pro
posa
ls t
o cr
editor
s pu
rsua
nt t
o pa
ragr
aph
49 o
f Sch
edul
e B1
is e
xten
ded
purs
uant
to
para
grap
hs 4
9(8)
and
107
of Sch
edul
e B1
until 4
Aug
ust
2017
; an
d (b
) th
e in
itia
l dec
isio
n da
te for
a d
ecis
ion
from
the
Com
pany
’s c
redi
tors
as
to w
heth
er t
hey
appr
ove
the
adm
inis
trat
or’s
pro
posa
ls is
ext
ende
d pu
rsua
nt t
o pa
ragr
aphs
51(
4) a
nd 1
07 o
f Sch
edul
e B1
to t
he d
ate
twen
ty-o
ne d
ays
afte
r th
e da
te o
f th
e de
adlin
e fo
r se
ndin
g th
e ad
min
istr
ator
s’ p
ropo
sals
to
cred
itor
s, a
s ex
tend
ed p
ursu
ant
to p
arag
raph
64(
a) a
bove
. An
addi
tion
al s
even
day
s is
req
uest
ed o
n to
p of
the
fo
urte
en d
ays
prov
ided
und
er R
ules
15.
2(2)
and
15.
11
to p
rovi
de a
dditio
nal t
ime
to d
eliv
er t
he p
ropo
sals
to
over
seas
cre
dito
rs.
Imp
orta
nt
Not
ice
This
doc
umen
t ha
s no
t be
en p
repa
red
in c
onte
mpl
atio
n of
it b
eing
use
d, a
nd is
not
sui
tabl
e to
be
used
, to
in
form
any
inve
stm
ent
deci
sion
in r
elat
ion
to t
he d
ebt
of
or a
ny f
inan
cial
inte
rest
in t
he C
ompa
ny.
Any
est
imat
ed o
utco
mes
for
cre
dito
rs in
clud
ed in
thi
s do
cum
ent
are
illus
trat
ive
only
and
can
not
be r
elie
d up
on
as g
uida
nce
as t
o th
e ac
tual
out
com
es for
cre
dito
rs.
Any
per
son
that
cho
oses
to
rely
on
this
doc
umen
t fo
r an
y pu
rpos
e do
es s
o at
the
ir o
wn
risk
. To
the
ful
lest
ex
tent
per
mitte
d by
law
, th
e Pr
opos
ed A
dmin
istr
ator
s do
not
ass
ume
any
resp
onsi
bilit
y an
d w
ill n
ot a
ccep
t an
y lia
bilit
y fo
r th
is s
tate
men
t.
The
Prop
osed
Adm
inis
trat
ors
will
, if
appo
inte
d as
ad
min
istr
ator
s, a
ct a
s ag
ents
of th
e Com
pany
and
co
ntra
ct w
itho
ut p
erso
nal l
iabi
lity.
The
app
oint
men
ts o
f th
e Pr
opos
ed A
dmin
istr
ator
s w
ill b
e pe
rson
al t
o th
em
and,
to
the
fulle
st e
xten
t pe
rmitte
d by
law
, D
eloi
tte
LLP
will
not
ass
ume
any
resp
onsi
bilit
y an
d w
ill n
ot a
ccep
t an
y lia
bilit
y to
any
per
son
in r
espe
ct o
f th
is d
ocum
ent
or
the
cond
uct
of t
he p
ropo
sed
adm
inis
trat
ion.
All
licen
sed
Inso
lven
cy P
ract
itio
ners
of D
eloi
tte
LLP
are
licen
sed
in t
he U
K t
o ac
t as
Ins
olve
ncy
Prac
tition
ers.
15
This
doc
umen
t is
con
fiden
tial a
nd p
repa
red
sole
ly f
or y
our
info
rmat
ion.
The
refo
re y
ou s
houl
d no
t, w
ithou
t ou
r pr
ior
writt
en c
onse
nt,
refe
r to
or
use
our
nam
e or
thi
s do
cum
ent
for
any
othe
r pu
rpos
e, d
iscl
ose
them
or
refe
r to
the
m in
any
pro
spec
tus
or o
ther
doc
umen
t, o
r m
ake
them
ava
ilabl
e or
co
mm
unic
ate
them
to
any
othe
r pa
rty.
No
othe
r pa
rty
is e
ntitl
ed t
o re
ly o
n ou
r do
cum
ent
for
any
purp
ose
wha
tsoe
ver
and
thus
we
acce
pt n
o lia
bilit
y to
any
oth
er p
arty
who
is s
how
n or
gai
ns a
cces
s to
thi
s do
cum
ent.
Del
oitt
e LL
P is
a li
mite
d lia
bilit
y pa
rtne
rshi
p re
gist
ered
in E
ngla
nd a
nd W
ales
with
reg
iste
red
num
ber
OC
3036
75 a
nd it
s re
gist
ered
offic
e at
2 N
ew
Str
eet
Squ
are,
Lon
don
EC4A
3BZ,
Uni
ted
Kin
gdom
.
Del
oitt
e LL
P is
the
Uni
ted
Kin
gdom
mem
ber
firm
of
Del
oitt
e To
uche
Toh
mat
su L
imite
d (“
DTT
L”),
a U
K p
riva
te c
ompa
ny li
mite
d by
gua
rant
ee, w
hose
m
embe
r fir
ms
are
lega
lly s
epar
ate
and
inde
pend
ent
entit
ies.
Ple
ase
see
ww
w.d
eloi
tte.
co.u
k/ab
out
for
a de
taile
d de
script
ion
of t
he le
gal s
truc
ture
of
DTT
L an
d its
mem
ber
firm
s.
Mem
ber
of
Del
oit
te T
ou
che
To
hm
atsu
Lim
ited
16
STATEMENT OF INSOLVENCY PRACTICE 16
PRE-PACKAGED SALES IN ADMINISTRATIONS
INTRODUCTION
1. The term ‘pre-packaged sale’ refers to an arrangement under which the sale of all or
part of a company’s business or assets is negotiated with a purchaser prior to the
appointment of an administrator and the administrator effects the sale immediately on,or shortly after, appointment.
2. The particular nature of an insolvency practitioner’s position in these circumstances
renders transparency in all dealings of primary importance. Administration is acollective insolvency proceeding - creditors and other interested parties should beconfident that the insolvency practitioner has acted professionally and with objectivity;failure to demonstrate this clearly may bring the insolvency practitioner and theprofession into disrepute.
3. An insolvency practitioner should recognise the high level interest the public and thebusiness community have in pre-packaged sales in administration. The insolvencypractitioner should assume, and plan for, greater interest in and possible scrutiny ofsuch sales where the directors and/or shareholders of the purchasing entity are thesame as, or are connected parties of, the insolvent entity.
4. It is equally important that the insolvency practitioner acts and is seen to be acting inthe interests of the company’s creditors as a whole and is able to demonstrate this.
PRINCIPLES
5. An insolvency practitioner should differentiate clearly the roles that are associatedwith an administration that involves a pre-packaged sale, that is, the provision ofadvice to the company before any formal appointment and the functions andresponsibilities of the administrator following appointment. The roles are to beexplained to the directors and the creditors. For the purposes of this Statement ofInsolvency Practice only, the role of "insolvency practitioner" is to be read as relatingto the advisory engagement that an insolvency practitioner or their firm and or/anyassociates may have with a company in the period prior to the company enteringadministration. The role of "administrator" is to be read as the formal appointment as
17
administrator after the company has entered administration. An insolvency practitioner should recognise that a different insolvency practitioner may be the eventual administrator.
6. The administrator should provide creditors with sufficient information ("the SIP 16statement") such that a reasonable and informed third party would conclude that thepre-packaged sale was appropriate and that the administrator has acted with dueregard for the creditors’ interests. In a connected party transaction the level of detailmay need to be greater.
KEY COMPLIANCE STANDARDS
Preparatory work
7. An insolvency practitioner should be clear about the nature and extent of the role ofadvisor in the pre-appointment period. When instructed to advise the company orcompanies in a group, the insolvency practitioner should make it clear that the role isnot to advise the directors or any parties connected with the purchaser, who shouldbe encouraged to take independent advice. This is particularly important if there is apossibility that the directors may acquire an interest in the business or assets in a pre-packaged sale.
8. An insolvency practitioner should bear in mind the duties and obligations which areowed to creditors in the pre-appointment period. The insolvency practitioner shouldrecognise the potential liability which may attach to any person who is party to adecision that causes a company to incur credit and who knows that there is no goodreason to believe it will be repaid. Such liability is not restricted to the directors.
9. The insolvency practitioner should ensure that any connected party considering a pre- packaged purchase is aware of their ability to approach the pre-pack pool (seeappendix) and the potential for enhanced stakeholder confidence from the connectedparty approaching the pre-pack pool and preparing a viability statement for thepurchasing entity.
10. An insolvency practitioner should keep a detailed record of the reasoning behind boththe decision to undertake a pre-packaged sale and all alternatives considered.
11. The insolvency practitioner should advise the company that any valuations obtainedshould be carried out by appropriate independent valuers and/or advisors, carryingadequate professional indemnity insurance for the valuation performed.
12. If the administrator relies on a valuation or advice other than by an appropriateindependent valuer and/or advisor with adequate professional indemnity insurancethis should be disclosed and with the reason for doing so and the reasons that theadministrator was satisfied with the valuation, explained.
Marketing
13. Marketing a business is an important element in ensuring that the best availableconsideration is obtained for it in the interests of the company’s creditors as a whole,and will be a key factor in providing reassurance to creditors. The insolvency
18
practitioner should advise the company that any marketing should conform to the marketing essentials as set out in the appendix to this Statement of Insolvency Practice.
14. Where there has been deviation from any of the marketing essentials, theadministrator is to explain how a different strategy has delivered the best availableoutcome.
After appointment
15. When considering the manner of disposal of the business or assets the administratorshould be able to demonstrate that the duties of an administrator under the legislationhave been met.
Disclosure
16. An administrator should provide creditors with a detailed narrative explanation andjustification (the SIP 16 statement) of why a pre-packaged sale was undertaken andall alternatives considered, to demonstrate that the administrator has acted with dueregard for their interests. The information disclosure requirements in the appendixshould be included in the SIP 16 statement unless there are exceptionalcircumstances, in which case the administrator should explain why the informationhas not been provided. In any sale involving a connected party, it is very unlikely thatcommercial confidentiality alone would outweigh the need for creditors to be providedwith this information.
17. The explanation of the pre-packaged sale in the SIP 16 Statement should be providedwith the first notification to creditors and in any event within seven calendar days ofthe transaction. If the administrator has been unable to meet this requirement, theadministrator will provide a reasonable explanation for the delay. The SIP 16statement should be included in the administrator’s statement of proposals filed at
Companies House.
18. The administrator should recognise that, if creditors have had to wait until, or near, thestatutory deadline for the proposals to be issued there may be some confusion on thepart of creditors when they do receive them, the sale having been completed sometime before. Accordingly, when a pre-packaged sale has been undertaken, theadministrator should seek any requisite approval of the proposals as soon aspracticable after appointment and, ideally, the proposals should be sent with thenotification of the sale. If the administrator has been unable to meet this requirementthe proposals should include an explanation for the delay.
19. The Insolvency Act 1986 and the Insolvency (Northern Ireland) Order 1989 permits anadministrator not to disclose information in certain limited circumstances. ThisStatement of Insolvency Practice will not restrict the effect of those statutoryprovisions.
Effective date: This SIP applies to insolvency appointments starting on or after 1 November 2015
19
Appendix
Marketing essentials
Marketing a business is an important element in ensuring that the best available consideration is obtained for it in the interests of creditors, and will be a key factor in providing reassurance to creditors. Any marketing should conform to the following:
Broadcast – the business should be marketed as widely as possible proportionateto the nature and size of the business – the purpose of the marketing is to make thebusiness’s availability known to the widest group of potential purchasers in the time
available, using whatever media or other sources are likely to achieve this outcome.
Justify the marketing strategy – the statement to creditors should not simply be alist of what marketing has been undertaken. It should explain the reasonsunderpinning the marketing and media strategy used.
Independence - where the business has been marketed by the company prior tothe insolvency practitioner being instructed, this should not be used as a justificationin itself to avoid further marketing. The administrator should be satisfied as to theadequacy and independence of the marketing undertaken.
Publicise rather than simply publish - marketing should have been undertakenfor an appropriate length of time to satisfy the administrator that the best availableoutcome for creditors as a whole in all the circumstances has been achieved.Creditors should be informed of the reason for the length of time settled upon.
Connectivity - include online communication alongside other media by default. Theinternet offers one of the widest populations of any medium. If the business is notmarketed via the internet, this should be justified.
Comply or explain – particularly with sales to connected parties where the level ofinterest is at its highest, the administrator needs to explain how the marketingstrategy has achieved the best available outcome for creditors as a whole in all thecircumstances.
Information disclosure requirements in the SIP 16 statement
The administrator should include a statement explaining the statutory purpose pursued, confirming that the transaction enables the statutory purpose to be achieved and that the outcome achieved was the best available outcome for creditors as a whole in all the circumstances.
The following information should be included in the administrator’s explanation of a pre-packaged sale, as far as the administrator is aware after making appropriate enquiries:
Initial introductions
The source (to be named) of the initial introduction to the insolvency practitioner and the date of the administrator’s initial introduction.
Pre-appointment matters
20
The extent of the administrator’s (and that of their firm, and/or any associates) involvement prior to appointment.
The alternative options considered, both prior to and within formal insolvency by the insolvency practitioner and the company, and on appointment the administrator with an explanation of the possible outcomes.
Whether efforts were made to consult with major or representative creditors and the upshot of any consultations. If no consultation took place, the administrator should explain the reasons.
Why it was not appropriate to trade the business and offer it for sale as a going concern during the administration.
Details of requests made to potential funders to fund working capital requirements. If no such requests were made, explain why.
Details of registered charges with dates of creation.
If the business or business assets have been acquired from an insolvency process within the previous 24 months, or longer if the administrator deems that relevant to creditors’
understanding, the administrator should disclose both the details of that transaction and whether the administrator, administrator’s firm or associates were involved.
Marketing of the business and assets
The marketing activities conducted by the company and/or the administrator and the effect of those activities. Reference should be made to the marketing essentials above. Any divergence from these essentials is to be drawn to creditor’s attention, with the reasons for such divergence, together with an explanation as to why the administrator relied upon the marketing conducted.
Valuation of the business and assets
The names and professional qualifications of any valuers and /or advisors and confirmation that they have confirmed their independence and that they carry adequate professional indemnity insurance. In the unlikely event that valuers and /or advisors who do not meet these criteria have been employed, the reasons for doing so should be explained.
The valuations obtained for the business or its underlying assets. Where goodwill has been valued, an explanation and basis for the value given.
A summary of the basis of valuation adopted by the administrator or the valuers and/or advisors.
The rationale for the basis of the valuations obtained and an explanation of the value achieved of the assets compared to those valuations.
If no valuation has been obtained, the reason for not having done so and how the administrator was satisfied as to the value of the assets.
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The transaction
The date of the transaction.
Purchaser and related parties
- The identity of the purchaser. - Any connection between the purchaser and the directors, shareholders or secured
creditors of the company or their associates. - The names of any directors, or former directors (or their associates), of the
company who are involved in the management, financing, or ownership of the purchasing entity, or of any other entity into which any of the assets are transferred.
- In transactions impacting on more than one related company (e.g. a group transaction) the administrator should ensure that the disclosure is sufficient to enable a transparent explanation (for instance, allocation of consideration paid).
- Whether any directors had given guarantees for amounts due from the company to a prior financier and whether that financier is financing the new business.
Assets
- Details of the assets involved and the nature of the transaction.
Sale consideration
- The consideration for the transaction, terms of payment and any condition of the contract that could materially affect the consideration.
- The consideration disclosed under broad asset valuation categories and split between fixed and floating charge realisations (where applicable) and the method by which this allocation of consideration was applied.
- Any options, buy-back agreements, deferred consideration or other conditions attached to the transaction.
- Details of any security taken by the administrator in respect of any deferred consideration. Where no such security has been taken, the administrator’s reasons
for this and the basis for the decision that none was required. - If the sale is part of a wider transaction, a description of the other aspects of the
transaction.
Connected Party transactions only
Where the sale has been undertaken to a connected party the additional details should be included in the SIP 16 statement.
In this context only, a connected party is as defined in section 249 and 435 of the Insolvency Act 1986 and Article 7 and Article 4 of the Insolvency (NI) Order 1989, provided that in determining whether any person or company has control under section 435(10) and Article 4(10), sales to secured lenders who hold security for the granting of the loan (with related voting rights) as part of the secured lender’s normal business activities, over one third or more of the shares in the insolvent company, are not included.
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Pre-pack pool
The administrator should include one of the following in the SIP 16 statement –
- a statement that the pre-pack pool has been approached by the connected party, or not;
- a statement that the administrator has requested a copy of the opinion given by the pool member.
If an opinion is made by the pre –pack pool and is provided by the connected party to the administrator, a copy of that opinion is to be included within the SIP 16 statement, clearly stating the date of that opinion.
Viability statement
A viability review can be drawn up by a connected party wishing to make a pre-packaged purchase, stating how the purchasing entity will survive for at least 12 months from the date of the proposed purchase. The connected party should consider providing a short narrative detailing what the purchasing entity will do differently in order that the business will not fail (“the viability statement).
The administrator should request that the connected party considering a pre-packaged purchase provide a copy of their viability statement.
- If provided, it should be attached to the SIP 16 statement. - If the viability statement has been requested but not provided, the administrator
should notify creditors of this in the SIP 16 statement.
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From: Michael Hammersley [mailto:[email protected]]
Sent: 16 May 2017 22:46
To: Soden, David (UK - London) <[email protected]>
Subject: Paragon Offshore Administration Complaint
Mr. Soden,
I hope this finds you well. I wanted to send along to you the complaint that the shareholders of Paragon Offshore made with regard to the Officers and Directors of the company. I understand that you will be serving as Administrator in the United Kingdom if the Debtors' Fifth Plan is confirmed.
As you are aware, a transaction such as the contemplated UK Administration/UK Sale requires the consent of shareholders pursuant to the Companies Act of 2006. Such as transaction is also prohibited under the Insolvency Act of 1986 due to the undervaluation of such a transfer.
I hope that we can reach a consensual resolution in these matters and I look forward to speaking with you further about this.
I wanted to also confirm that your authorizing body is currently the ICAEW? Please let me know.
Best Regards,
Michael R. Hammersley
--
Michael R. HammersleyManaging DirectorBrightleaf Advisory Group, LLPGreensboro, North Carolina(336) 209-3559
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