McDermott International cross-border restructuring

Davis Polk advised an ad hoc group of crossover lenders and equityholders of McDermott International, Ltd. in connection with a cross-border restructuring of roughly $4 billion of McDermott’s secured and unsecured indebtedness. The restructuring was implemented in the United Kingdom through Part 26A of the Companies Act 2006, in the Netherlands through the Dutch Act on Confirmation of Extrajudicial Plans (Wet homologatie onderhands akkoord or “WHOA”) and chapter 15 recognition proceedings in the United States. It is believed to be the first time that concurrent U.K. and Dutch restructuring plans were recognized in the United States under chapter 15.

In the U.K. proceedings, McDermott’s plan was sanctioned including its use of the cross-class cramdowns under the Companies Act on February 27, 2024, following a six-day trial. In the Dutch WHOA proceedings, a restructuring expert was appointed for only the second time in the history of the WHOA and the Dutch plans were subsequently sanctioned by the District Court of Amsterdam on March 21, 2024, after the restructuring expert adopted and ultimately filed the plan put forth by the lenders and the company. Although the proceedings were initially contested by secured and unsecured creditors, the ad hoc group represented by Davis Polk played a critical role in months-long multilateral settlement discussions with the various objecting creditors, including Refinería de Cartagena S.A.S., which held an approximately $1.3 billion arbitration award.

The restructuring plans involved an extension of the maturities of McDermott’s existing letter of credit and term loan facilities by several years. The plans also involved a complex set of interconnected financing transactions, including scheduled reductions in the commitments under McDermott’s letter of credit facilities, the migration of approximately $320 million of letter of credit commitments to an unrestricted subsidiary and the discharge of approximately $2 billion in liabilities. The ad hoc group had previously funded a $250 million term loan as part of a $475 million financing package to support McDermott’s restructuring in September 2023.

Both the U.K. and Dutch plans were recognized and granted enforcement by the United States Bankruptcy Court for the Southern District of Texas on March 22, 2024.

McDermott is a fully integrated provider of engineering, procurement, construction and installation and technology solutions to the energy industry. McDermott’s proprietary technologies and services are utilized for offshore, subsea, power, liquefied natural gas and downstream energy projects around the world. Its customers include national, major integrated and other oil and gas companies and producers of petrochemicals and electric power.

The Davis Polk restructuring team included partners Damian S. Schaible and Natasha Tsiouris and associates Jarret Erickson, Luke F. Porcari and Kevin L. Winiarski. The finance team included partner Christian Fischer, counsel Bernard Tsepelman and associate Theodore N. Batis. The litigation team included partner Frances E. Bivens and counsel Marc J. Tobak. All members of the Davis Polk team are based in the New York office.