Seadrill files Chapter 11 for Asia Offshore Drilling

Offshore drilling contractor Seadrill Limited has been forced to file Chapter 11 cases for several of its wholly-owned subsidiaries in Asia.

Seadrill said on Sunday that it filed for bankruptcy protection in the Southern District of Texas for Seadrill GCC Operations, Asia Offshore Drilling, Asia Offshore Rig 1 Limited, Asia Offshore Rig 2 Limited, and Asia Offshore Rig 3 Limited – jointly referred to as AOD Companies.

The company added that the Chapter 11 cases were filed as a protective measure to support Seadrill’s broader comprehensive financial restructuring and will in no way affect the safe and efficient operation of the AOD offshore drilling units.

Seadrill “will request authority to pay its key trade creditors and employee wages and benefits without change or interruption and expects it will pay all suppliers and vendors in full under normal terms for goods and services provided during the Chapter 11 cases”.

This also has implications regarding other agreements the company made recently. Namely, in late January, forbearance agreements entered into by Seadrill with certain creditors in respect of the group’s senior secured credit facility agreements expired.

The forbearance agreements in question were agreed to with certain creditors in respect of nine out of the group’s twelve senior secured credit facility agreements in late December 2020.

Then, Seadrill announced that it was able to find a solution and again enter into a forbearance agreement for the nine senior secured credit facility agreements earlier this month.

The three agreements without forbearance were for the company’s New Secured Notes, leasing arrangements for the West Hercules, West Linus, and West Taurus rigs and a bilateral guarantee facility with Danske Bank. Now – as a consequence of the Chapter 11 filings – the most recent forbearance agreement has terminated.

It is worth reminding that Seadrill has bought the minority holding of the share capital of Asia Offshore Drilling (AOD) from Mermaid Maritime in September 2020. As a result, Seadrill holds the entire share capital of AOD.