Seahawk Drilling plan of reorganization confirmed by bankruptcy court

By Caroline Salls

Pittsburgh, Sept. 28 - Seahawk Drilling, Inc.'s plan of reorganization was confirmed Wednesday by the U.S. Bankruptcy Court for the Southern District of Texas.

According to the confirmation order, the plan is expected to take effect by Oct. 4.

As previously reported in May, the company filed its plan of reorganization and related disclosure statement after selling substantially all of its assets to Hercules Offshore, Inc. for 22.32 million shares of Hercules and $25 million in cash.

The plan calls for the distribution of sale proceeds and proceeds from the liquidation of remaining assets.

Last week, the company requested court approval to make several "non-material and non-adverse" changes to the plan.

Plan changes

Specific changes include the following:

• Specifically stating in the plan treatment of class 1 secured tax claims that these claimants are entitled to interest at the applicable statutory rate under non-bankruptcy law;

• On the plan effective date, the reorganized company and the liquidating trustee will make an allocation of the Hercules common stock between allowed claims reserves and the disputed claim reserves;

• Clarifying that initial distributions to creditors can be made only after disputed claims reserves have been reserved in full;

• A provision that, rather than being dissolved on the effective date, the creditors committee and equity committee will exist until the initial distribution date, and their post-effective date fees and expenses will be paid as liquidating trust expenses;

• A provision that, after the effective date, former holders of interests may transfer their rights to receive distributions from reorganized Seahawk, and setting the procedures by which the interest register may be maintained and updated to reflect these transfers;

• Clarifying that, upon the cancellation of the existing interests, Seahawk will take steps necessary to terminate the registration of its stock and cease filing reports with the Securities and Exchange Commission;

• Modification of the language of the releases between the company and Hercules to conform more closely to the requirements of their asset purchase agreement; and

• Setting the administrative claims bar date as five days after entry of the confirmation order.

Creditor treatment

Treatment of creditors will include:

• Holders of secured tax claims will be paid in full in cash;

• Holders of other secured claims will receive either Hercules common stock and a fractional cash payment or the collateral securing their claims;

• Holders of priority non-tax claims, disputed pride claims and general unsecured claims will receive Hercules common stock and a fractional cash payment;

• Holders of litigation and other contingent unsecured claims will receive Hercules common stock and a fractional cash payment after the application of insurance proceeds and other third-party payments;

• Holders of subordinated claims will receive a distribution of Hercules common stock and a fractional cash payment after all senior claims are paid in full; and

• Holders of interests will receive a share of Hercules common stock and the net cash proceeds from the liquidation of liquidating trust assets after all other claims and liquidating trust expenses have been paid in full.

Seahawk, a Houston-based offshore drilling company, filed for bankruptcy on Feb. 11, 2011. The Chapter 11 case number is 11-20089.

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