Davis Polk is advising the administrative agent and working with a steering committee of lenders under a $1.2 billion prepetition secured credit facility in the chapter 11 restructuring of HGIM Holdings, LLC and certain of its affiliates, which do business as Harvey Gulf. On May 23, 2018, Harvey Gulf’s plan of reorganization was confirmed by the U.S. Bankruptcy Court for the Southern District of Texas.

Harvey Gulf filed its chapter 11 plan of reorganization on March 8, 2018, with the support of lenders holding more than 75% of the loans, including most of the members of the steering committee. Under Harvey Gulf’s chapter 11 plan, prepetition lenders will receive their pro rata share of a $350 million term loan and additional distributions of equity and warrants. Following emergence from chapter 11, the prepetition lenders will control the significant majority of the new equity in Harvey Gulf and will have appointed a majority of the new board of directors.

One dissenting lender filed an objection to confirmation, threatening Harvey Gulf’s ability to emerge from bankruptcy quickly and with appropriate protections for future minority equity holders. In response, a coordinated team of Davis Polk litigation, restructuring and corporate attorneys defended the interests of the majority of lenders by filing an extensive reply brief in consultation with the steering committee, successfully resisting burdensome discovery demands, preparing for a contested confirmation hearing, and negotiating with the dissenting lender.

Just prior to the scheduled confirmation hearing, the steering committee reached a global settlement with the objector, which resulted in a confirmed plan that is substantially similar to the plan that had previously been bargained for and agreed to by the vast majority of lenders. As confirmed by the Bankruptcy Court, the plan preserves each of the major protections that the steering committee had bargained for, including a limitation on equity holders’ ability to vote shares out of proportion with their economic interests in Harvey Gulf, and certain board and governance protections.

Davis Polk’s success in reaching a favorable settlement clears the way for Harvey Gulf to emerge as a stable industry leader, by deleveraging Harvey Gulf’s capital structure, ensuring sufficient protections for minority equity holders, maintaining Harvey Gulf’s status as a Jones Act company, forming a new board of directors, restructuring Harvey Gulf’s relationship with the Gulf Coast Shipyard and preserving Harvey Gulf’s investment in certain non-debtor affiliates.

Harvey Gulf is a provider of offshore supply vessels and marine support services to support offshore oil and gas exploration and production and is headquartered in New Orleans, Louisiana. Harvey Gulf provides offshore production and drilling vessel support services, including the transportation of supplies, equipment and personnel to support drilling and production activities, offshore construction, remotely operated underwater vehicles and subsea support services and a variety of other specialized vessel services.

The Davis Polk restructuring team includes partner Damian S. Schaible and associates Angela M. Libby and Benjamin M. Schak. The litigation team includes partner James I. McClammy and associate J. Stan Barrett. The finance team includes partner Jinsoo H. Kim. The mergers and acquisitions team includes partners William L. Taylor and Stephen Salmon and counsel Ajay B. Lele. The executive compensation team includes counsel Ron M. Aizen. Members of the Davis Polk team are based in the New York and Northern California offices.

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