Seadrill restructured in 2017 — four years later it was back in Chapter 11

Seadrill, the offshore drilling contractor, had been through this before: its 2017 bankruptcy had raised $1 billion of new financing, relieved $2.4 billion of unsecured bond debt, and pushed the maturities on $5.7 billion of bank loans out to 2022 — betting that dayrates would recover first. They did not. When forbearance with its largest creditors expired on 29 January 2021, Seadrill could not obtain consent to defer payments, and on 10 February it filed in the Southern District of Texas with $7.3 billion of debt and $650 million of cash, its second bankruptcy in about four years.

The plan was confirmed on 26 October 2021, and Seadrill emerged on 23 February 2022. Roughly $4.9 billion of secured bank debt was equitized: holders of the credit-agreement claims received 83% of the new common shares, rights-offering participants and backstop parties 16.75%, and holders of existing shares were reduced to 0.25% of their holdings. The fleet of 35 rigs continued operating, with the company carrying $683 million of second-lien takeback debt, $50 million of convertible bonds, and $486 million of cash.

The first restructuring had bought time; it had not bought a market. Seadrill deferred its debt to 2022 on the strength of a recovery that never arrived, and the second filing transferred the company to its lenders — the shareholders who had owned the 2017 fix kept a quarter of one percent of what came out the other side.