November 20, 2020 – The Debtors’ Modified Second Amended Plan was confirmed by the Court [Docket No. 723].

On July 31, 2020, Noble Corporation plc and 39 affiliated Debtors (NYSE: NE; “Noble” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Southern District of Texas, lead case number 20-33826 (Judge Isgur). At filing, the Debtors, a leading offshore drilling contractor, noted estimated assets of $7,261,099,000 and estimated liabilities of $4,664,567,000. 

Plan Overview

The Debtors' memorandum in support of Plan confirmation (the "Memorandum") [Docket No. 686] provides the following pre-Plan confirmation hearing summation: "Specifically, the Plan reduces the Company’s debt from approximately $4 billion to $400 million, provides for an exit revolving credit facility of up to $675 million, and effectuates a successful rights offering, raising $200 million in proceeds. On top of that, the Plan reflects and incorporates settlements of two long-running litigations—with the Paragon Litigation Trust and with Transocean Ltd. and its affiliates (collectively, ‘Transocean”)—collectively claiming billions of dollars in damages. These accomplishments are the product of months of hard work and careful planning by the Debtors’ management team, key creditor groups, and the supporting parties in these chapter 11 cases.

The Debtors are now poised to complete the final step of their restructuring by confirming the Plan. To arrive here, the Debtors navigated a complex, multi-step process that required engagement with stakeholders on multiple fronts and in multiple jurisdictions, as well as tireless coordination with the parties to the Restructuring Support Agreement (the ‘RSA’) to implement the fully backstopped Rights Offering, Exit Revolving Credit Facility, and related Restructuring Transactions. Throughout it all, the Debtors focused on building consensus by employing a transparent and inclusive process.

As contemplated by the RSA, the Plan will equitize over $3 billion of face amount of Priority Guaranteed Notes and Legacy Notes. The Revolving Credit Facility Lenders will fund a new Exit Revolving Credit Facility. Moreover, Go-Forward Trade Claims are unimpaired, and nearly two thousand jobs have been saved.

As to outstanding Plan objections, the Memorandum notes: "The Debtors received informal comments and two formal objections to confirmation of the Plan. Since the objection deadline, the Debtors have worked extensively with parties-in-interest to resolve all objections, formal and informal. As a result of these efforts, the Debtors are pleased to report that all outstanding objections have been resolved."

The Disclosure Statement [Docket No. 520] provides: “The Plan contemplates a restructuring pursuant to which the Company’s debt will be reduced from approximately $4.0 billion to approximately $450 million on the Effective Date [NB: $450.0mn reflecting $200.0mn in Exit Second Lien Notes with a $16.0mn  paid-in-kind Backstop Premium, and approximately $225.0mn drawn on the Exit Revolving Credit Facility]. To achieve that goal, over $3 billion worth of Priority Guaranteed Notes and Legacy Notes will be equitized, and the Debtors’ prepetition revolving credit facility will receive a significant paydown in exchange for the Revolving Credit Facility Lenders providing the Exit Revolving Credit Facility. The Company will also issue $200 million in notes (the ‘Exit Second Lien Notes’), which will be funded pursuant to a rights offering (the ‘Rights Offering’) of Exit Second Lien Notes and shares of common stock in the reorganized Company (the ‘Reorganized Company Stock’). The Rights Offering will be fully backstopped by the Ad Hoc Guaranteed Group and Ad Hoc Legacy Group (together, the ‘Ad Hoc Groups’). The Plan contemplates payment of all Allowed Go- Forward Trade Claims in full, plus annual payments of interest at the federal judgment rate, ten years after the effective date of the Plan (the ‘Effective Date’).

As set forth in the Plan, the Debtors will emerge from the Chapter 11 Cases with a streamlined and deleveraged capital structure. Thus, the Reorganized Debtors will be well positioned to respond to industry developments and best prepare the Company for future growth. The contemplated reorganization is designed to strengthen the Company, offering benefits and increased commercial reliability for the Company’s customers and trade counterparties. The Debtors intend to emerge from bankruptcy on an expedited timeline within six months following the Petition Date.

The Debtors have determined that accomplishing an efficient and expeditious resolution of the Chapter 11 Cases is essential to preserving and maximizing the going-concern value of the Debtors’ estates and successfully restructuring the Company. The terms of the RSA, as amended by the First Amendment to the Restructuring Support Agreement, dated as of August 20, 2020, and the Debtors’ post-petition financing arrangements reflect that intention through the inclusion of certain milestones, which set forth an achievable timeline for the Debtors’ emergence from Chapter 11.”

The Disclosure Statement provides: “The value of the recovery that each Claim receives under the Plan is dictated by the structural seniority of the Debtor against which such Claim is asserted. Thus, as a general matter, Claims asserted against structurally senior Debtor Groups receive a more valuable recovery. In order of structural seniority, Debtor Group A is most senior, followed by Debtor Groups B, C, D, E and F.”

The following is a summary of classes, claims, voting rights and expected recoveries for the Debtor Group (defined terms are as defined in the Plan and/or Disclosure Statement):

• Class 1A – 1F (“Other Secured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The aggregate amount of claims is $– and the estimated recovery is 100%.
• Class 2A – 2F (“Other Priority Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The aggregate amount of claims is $– and the estimated recovery is 100%.
• Class 3A, 3D, 3E (“Revolving Credit Facility Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $– and the estimated recovery is 100%. Each Holder of a Revolving Credit Facility Claim shall receive, at the election of such Holder, (a) if such Holder elects to participate in the Exit Revolving Credit Facility, its pro rata share of: (i) the Exit Revolving Credit Facility Commitments and (ii) the Exit Revolving Credit Facility Effective Date Cash Amount; or (b) if such Holder does not elect to participate in the Exit Revolving Credit Facility, an Alternative Treatment Promissory Note. Only with respect to Holders electing to participate in the Exit Revolving Credit Facility shall contingent or unasserted indemnification obligations under the Revolving Credit Agreement remain in full force and effect to the maximum extent permitted by applicable law and not be discharged, impaired, or otherwise affected by this Plan. 
• Class 4A – 4F (“Go-Forward Trade Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The aggregate amount of claims is $– and the estimated recovery is 100%.
• Class 5A – 5E (“Transocean Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $– and the estimated recovery is 100%. Each Holder of a Transocean Claim shall receive such treatment as set forth in Section 2.1 of the Transocean Settlement Agreement.
• Class 6A – 6E (“Paragon Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $– and the estimated recovery is at least 8.8%. Each Holder of a Paragon Claim shall receive such treatment as set forth in Section 2.2 of the Paragon Settlement Agreement.
• Class 7A (“General Unsecured Claims against Debtor Group A”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $– and the estimated recovery is 100%. Each Holder of a General Unsecured Claim against Debtor Group A shall receive, on the date that is not more than ten (10) years after the Effective Date, Cash in the aggregate amount of such General Unsecured Claim against Debtor Group A plus annual payments of Cash interest at the federal judgment rate as of the Petition Date beginning on the date that such Claim becomes Allowed.
• Class 7B (“General Unsecured Claims against Debtor Group B”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $– and the estimated recovery is approximately 86%. Each Holder of a General Unsecured Claim against Debtor Group B shall receive its Pro Rata share of (i) 63.5% of the Reorganized Parent Stock (subject to dilution by the Management Incentive Plan and the Warrants but post-dilution by the Rights Offering) and (ii) the Debtor Group B Subscription Rights.
• Class 7C (“General Unsecured Claims against Debtor Group C”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $– and the estimated recovery is approximately 6.4%. Each Holder of a General Unsecured Claim against Debtor Group C shall receive its Pro Rata share of (i) 4.1% of the Reorganized Parent Stock (subject to dilution by the Management Incentive Plan and the Warrants but post-dilution by the Rights Offering), (ii) the Tranche 1 Warrants, (iii) the Tranche 2 Warrants and (iv) the Debtor Group C Subscription Rights, provided that any General Unsecured Claim that is Allowed against both debtor Group B and Debtor Group C shall not receive a distribution with respect to Debtor Group C.
• Class 7D (“General Unsecured Claims against Debtor Group D”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $– and the estimated recovery is 1% – 78%. Each Holder of a General Unsecured Claim against Debtor Group D shall receive Cash in the aggregate amount of the Face Amount of such General Unsecured Claim against Debtor Group D multiplied by the Applicable Percentage, payable in three annual installment payments, with the first payment made one year after the later of (i) the Effective Date and (ii) the date that such Claim becomes Allowed.

“Applicable Percentage” means the following, with respect to Allowed Claims asserted against the respective Debtor:

• Class 7E (“General Unsecured Claims against Debtor Group E”) is impaired, deemed to reject and not entitled to vote on the Plan. The aggregate amount of claims is $– and the estimated recovery is 0%.
• Class 7F (“General Unsecured Claims against Debtor Group F”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $– and the estimated recovery is 18%. Each Holder of a General Unsecured Claim against Debtor Group F shall receive Cash in the aggregate amount of the Face Amount of such General Unsecured Claim against Debtor Group F multiplied by 18%, payable in three annual installment payments, with the first payment made one year after the later of (i) the Effective Date and (ii) the date that such Claim becomes Allowed.
• Class 8A – 8F (“Intercompany Claims”) is unimpaired or impaired, deemed to accept/deemed reject and not entitled to vote on the Plan. The aggregate amount of claims is $– and the estimated recovery is 0% or 100%.
• Class 9A – 9F (“Section 510(b) Claims”) is impaired, deemed to reject and not entitled to vote on the Plan. The aggregate amount of claims is N/A and the estimated recovery is 0%.
• Class 10A – 10E (“Interests in Debtor Subsidiaries”) is unimpaired or impaired, deemed to accept/deemed reject and not entitled to vote on the Plan. The aggregate amount of claims is $– and estimated recovery is 0% or 100%.
• Class 11F (“Interests in Parent”) is impaired, deemed to reject and not entitled to vote on the Plan. The aggregate amount of claims is N/A and the estimated recovery is 1%.

The Debtor Groups:

• A – Noble John Sandifer LLC, Noble Johnnie Hoffman LLC
• B – Noble 2018-I Guarantor LLC, Noble 2018-II Guarantor LLC, Noble 2018-III Guarantor LLC, Noble 2018-IV Guarantor LLC
• C – Noble Holding International Limited
• D – Bully 1 (Switzerland) GmbH, Bully 2 (Switzerland) GmbH, Noble Asset Mexico LLC, Noble BD LLC, Noble Bill Jennings LLC, Noble Cayman Limited, Noble Cayman SCS Holding Ltd, Noble Contracting II GmbH, Noble Corporation Holding LLC, Noble Drilling Americas LLC, Noble Drilling (Guyana) Inc., Noble Drilling (TVL) Ltd, Noble Drilling (U.S.) LLC, Noble Drilling Exploration Company, Noble Drilling Holding LLC, Noble Drilling International GmbH, Noble Drilling NHIL LLC, Noble Drilling Services Inc., Noble DT LLC, Noble Earl Frederickson LLC,        Noble FDR Holdings Limited, Noble Holding (U.S.) LLC, Noble International Finance Company, Noble Leasing (Switzerland) GmbH, Noble Leasing III (Switzerland) GmbH, Noble Resources Limited, Noble SA Limited, Noble SA LLC Noble Services International Limited, 
• E – NDSI Holding Limited, Noble Corporation, Noble Corporation Holdings Ltd, Noble Holding UK Limited, Noble International Services LLC, Noble Mexico Limited, Noble NEC Holdings Limited, Noble Rig Holding I Limited, Noble Rig Holding 2 Limited
• F – Noble Corporation plc

Voting Results

On November 18, 2020, the Debtors' claims agent notified the Court of the Plan voting results [Docket No. 689], which were as follows:

• Class 3D-3E (“Revolving Credit Facility Claims”) 11 claim holders, representing $495,726,954.81 in amount and 100% in number, accepted the Plan.
• Class 5D-5F (“Transocean Claims”) 1 claim holder, representing $12,000,000.00 in amount and 100% in number, accepted the Plan.
• Class 6C-6F (“Paragon Claims”) 1 claim holder, representing $85,000,000.00 in amount and 100% in number, accepted the Plan.
• Class 7B (“General Unsecured Claims”) 158 claim holders, representing $716,251,200.45 (or 99.99%) in amount and 99.37% in number, accepted the Plan. 1 claim holder, representing $49,890.00 (or 0.01%) in amount and 0.63% in number, rejected the Plan.
• Class 7C (“General Unsecured Claims”) 977 claim holders, representing $2,463,062,295.99 (or 98.96%) in amount and 88.90% in number, accepted the Plan. 122 claim holders, representing $25,796,954.30 (or 1.04%) in amount and 11.10% in number, rejected the Plan.
• Class 7D (“General Unsecured Claims”) 1 claim holder, representing $0 (or 100.00%) in amount and 100.00% in number, rejected the Plan.

Paragon and Transocean Litigation

The Paragon Claims stem from the Debtors' 2014 spinoff of wholly owned subsidiary Paragon Offshore, plc. According to the Second Amended Disclosure Statement "In the spin- off, Noble contributed the vast majority of its standard specification drilling rigs and a floating Issue production, storage, and offloading unit to Paragon in exchange for $1.73 billion, while retaining all of its high specification and ultra-deepwater assets." As a result of "strong industry headwinds related to an unexpected decline in oil prices," Paragon filed Chapter 11 on February 14, 2016, and Paragon Litigation Trust was established under Paragon's plan to pursue claims against Noble and its officers and directors arising from the spin-off.

The original lawsuit filed on December 15, 2017 by the Paragon Litigation Trust sought approximately $1.7 billion in damages against Debtors Noble, Noble Corporation Holdings Ltd, Noble Corporation, Noble Holding International (Luxembourg) S.à.r.l, Noble Holding International (Luxembourg NHIL) S.à.r.l, Noble FDR Holdings Limited (collectively, the “Original Corporate Defendants”) and certain directors of Noble and Paragon (the “D&O Defendants”). The suit brings claims against the corporate defendants for actual and constructive fraudulent transfer, debt recharacterization and unjust enrichment and claims against the D&O Defendants for breach of fiduciary duty and aiding and abetting breach of fiduciary duty, all of which are subject to indemnity by Noble. On October 11, 2019, the Paragon Litigation Trust filed an amended complaint that tacked an additional $950.0mn in damages and three additional corporate defendants, including Debtors Noble Holding International Limited, Noble Holding (U.S.) LLC and Noble International Finance Company to the original suit.

The Second Amended Disclosure Statement states: "The Paragon Settlement Agreement provides for the Paragon Litigation Trust to receive an Allowed Claim in the amount of $85 million. To the extent that a global settlement is reached with the D&O Defendants, the insurers and the Paragon Litigation Trust on or before a date set forth in the Paragon Settlement Agreement, the Corporate defendants have agreed to pay $10 million in cash toward such settlement. To the extent that a global resolution is not reached by that date, the Corporate Defendants have agreed to make an up-front payment of $7.5 million and pursue coverage claims against their insurers for defense costs (the “Noble Defense Cost Claim”) and for the Paragon Litigation Trust’s $85 million claim (the “Noble Indemnity Claim”). With respect to the Noble Defense Cost Claim, the first $10 million recovered would be paid to the Paragon Litigation Trust; the next $16 million would be retained by the Corporate Defendants; and any amounts in excess of $26 million would be split evenly between the Corporate Defendants and the Paragon Litigation Trust. On the Noble Indemnity Claim, the Paragon Litigation Trust would receive all of the proceeds. However, the Paragon Litigation Trust’s recovery in respect of both claims is capped at $85 million. While trial would still move forward in the Delaware bankruptcy court against the D&O Defendants, the Paragon Litigation Trust would also agree to limit its recovery to insurance proceeds by virtue of (x) agreeing to not to seek damages in excess of policy proceeds (the “Damages Limitation”),and (y) covenanting not to collect against the D&O Defendants’ personal assets (the “Collection Covenant”). The Damages Limitation and the Collection Covenant fall away if the Trust does not receive an aggregate of $17.5 million in proceeds from (1) the Debtors’ $7.5 million upfront payment, (2) the claims against the Insurers and (3) any other source, excluding insurance recoveries on account of the D&O Claims. The Collection Covenant is expressly void if it is determined that it negatively impacts the Defendants’ rights under the D&O Insurance."

Meanwhile, In January 2017, a subsidiary of Transocean Ltd. (“Transocean”) filed suit against Debtors Noble Corporation plc, Noble Corporation, Noble Drilling Services Inc., Noble Drilling (U.S.) LLC, Noble Drilling Exploration Company, Noble Drilling Holding LLC, Noble Drilling Americas LLC and Noble Leasing III (Switzerland) GmbH, seeking damages for patent infringement in the U.S. District Court for the Southern District of Texas. The Second Amended Disclosure Statement provides: "The suit claims that five of the Company’s newbuild rigs that operated in the U.S. Gulf of Mexico violated Transocean patents relating to what is generally referred to as dual-activity drilling, and Transocean is seeking royalties of a $10 million fee and a five percent license fee for the pertinent period of operation for each vessel and damages for the breach of contract.

The patents are now expired in the United States and most other countries and the Company does not believe that its rigs infringe the Transocean patents. In February 2019, Transocean also added another claim alleging that Noble Drilling Services Inc. and Noble Corporation breached a 2007 settlement agreement that the Company entered into with Transocean relating to patent claims in respect of another Noble rig. The Company also does not believe there has been any breach of the 2007 settlement agreement."

Prepetition Indebtedness

The Disclosure Statement provides the following overview:

Key Documents

The Disclosure Statement attached the following documents [Docket No. 520]:

• Exhibit A: Amended Joint Chapter 11 Plan of Reorganization (filed separately at Docket No. 519]
• Exhibit B: Liquidation Analysis 
• Exhibit C: Valuation Analysis 
• Exhibit D: Financial Projections 
• Exhibit E: Rights Offering Procedures 
• Exhibit F: Disclosure Statement Approval Order

The Debtors filed a Plan Supplement on November 6th [Docket No. 665], and an Amended Plan Supplement on November 19th [Docket No. 708] which attached the following documents:

Plan Supplement

• Exhibit 1: Terms and Conditions of Warrants
• Exhibit 2.1: Administrative Claim Request Form
• Exhibit 7.4(a): Exit Second Lien Notes Indenture
• Exhibit 7.4(b): Terms and Conditions of Exit Revolving Credit Facility
• Exhibit 7.11: Reorganized Parent Organizational Documents
• Exhibit 7.16(a)(1): Rejected Employment Agreements
• Exhibit 7.16(a)(2): New Employment Arrangements
• Exhibit 7.17: Retained Causes of Action
• Exhibit 8.1: Rejected Contracts and Unexpired Leases

Amended Plan Supplement

• Exhibit 1: Revised Terms and Conditions of Warrants
• Exhibit 1-1: Redline of Terms and Conditions of Warrants against version filed on November 6, 2020
• Exhibit 7.4(a): Revised Exit Second Lien Notes Indenture
• Exhibit 7.4(a)-1: Redline of Exit Second Lien Notes Indenture against version filed on November 6, 2020
• Exhibit 7.11: Revised Reorganized Parent Organizational Documents
• Exhibit 7.11-1: Redline of Reorganized Parent Organizational Documents against version filed on November 6, 2020
• Exhibit 7.13: New Board of Reorganized Parent
• Exhibit 7.16(a)(2): Revised New Employment Arrangements
• Exhibit 7.16(a)(2)-1: Redline of New Employment Arrangements against version filed on November 6, 20202
• Exhibit 8.1: Revised Rejected Contracts and Unexpired Leases 

Liquidation Analysis (See Exhibit B of the Disclosure Statement [Docket No. 520] for notes)

About the Debtors

According to the Debtors: “Noble is a leading offshore drilling contractor for the oil and gas industry. The Company owns and operates one of the most modern, versatile and technically advanced fleets in the offshore drilling industry. Noble performs, through its subsidiaries, contract drilling services with a fleet of 24 offshore drilling units, consisting of 12 drillships and semisubmersibles and 12 jackups, focused largely on ultra- deepwater and high-specification jackup drilling opportunities in both established and emerging regions worldwide. Noble is a public limited company registered in England and Wales with company number 08354954 and registered office at 10 Brook Street, London, W1S 1BG England.”

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