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October 12, 2017

Precedent Setting Ocean Rig Restructuring Expected to Serve as Model for Future Multinational Restructurings

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$3.7B restructuring expected to serve as a model for future multinational restructurings and workouts

Milbank, Tweed, Hadley & McCloy LLP acted as lead counsel for an ad hoc group of lenders holding approximately $3 billion of the $3.7 billion of debt restructured by Ocean Rig UDW Inc. (NASDAQ: ORIG), a leading international offshore drilling services contractor. 

The successful first-of-its-kind restructuring was implemented through a combination of interrelated Cayman Islands provisional liquidations and schemes of arrangements as well as US Chapter 15 proceedings. Although the schemes obtained nearly unanimous support, the company and ad hoc group defended the transaction against a fiercely fought, but ultimately unfounded, series of challenges in the Cayman Islands and the US Bankruptcy Court. The Ocean Rig restructuring is expected to serve as a model for future, complex multinational restructurings and workouts. 

Milbank advised the lenders in navigating numerous challenges presented by a multinational restructuring involving many jurisdictions, governing laws, and worldwide customer relationships. 

The Milbank team was led by Financial Restructuring partners Gerard Uzzi, Mark Shinderman, and Peter Newman, Corporate partners Brett Goldblatt and James Ball, Finance partner James Cameron and special counsel Jennifer Harris, and associates Najeh Baharun, James Behrens, Mia Cromarty, Jonathan Cripps, Matt Czyzyk, Scott Jardine and Stuart Swift.

“We were able to do what we do best – use our expertise across multiple offices and jurisdictions to think creatively and find the best solution for our clients,” said Gerard Uzzi, New York-based Financial Restructuring partner.

“This transaction demonstrated our firm’s expertise in developing cutting-edge cross-border restructuring solutions for our clients and the companies in which they invest.  It also shows the exceptional flexibility of the scheme of arrangement to implement a chapter 11-like restructuring of a multi-debtor group with a complex capital structure in a multi-jurisdictional situation,” added Peter Newman, London-based Restructuring partner. 

Mark Shinderman, Los Angeles-based Financial Restructuring partner, noted: “While many in the market expected a chapter 11 implementation route often used in similar restructurings, the use of schemes of arrangement presented the most efficient mechanism for maximizing lender value. Through the schemes of arrangement, the lenders efficiently restructured their debt while preserving valuable customer and vendor relationships.”