IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION ) ) ) ) ) ) ) ) Chapter 11 Case No. 20-32307 (DRJ) (Jointly Administered) In re:
DIAMOND OFFSHORE DRILLING, INC., et al.,1
Debtors.
DEBTORS’ MOTION FOR ENTRY OF AN ORDER (I) AUTHORIZING, BUT NOT DIRECTING, REJECTION OF THE HYDRIL USA DISTRIBUTION LLC CONTRACTUAL SERVICE AGREEMENT EFFECTIVE AS OF THE PLAN
EFFECTIVE DATE AND (II) GRANTING RELATED RELIEF
THIS MOTION SEEKS ENTRY OF AN ORDER THAT MAY ADVERSELY AFFECT YOU. IF YOU OPPOSE THE MOTION, YOU SHOULD IMMEDIATELY CONTACT THE MOVING PARTY TO RESOLVE THE DISPUTE. IF YOU AND THE MOVING PARTY CANNOT AGREE, YOU MUST FILE A RESPONSE AND SEND A COPY TO THE MOVING PARTY. YOU MUST FILE AND SERVE YOUR RESPONSE WITHIN 21 DAYS OF THE DATE THIS WAS SERVED ON YOU. YOUR RESPONSE MUST STATE WHY THE MOTION SHOULD NOT BE GRANTED. IF YOU DO NOT FILE A TIMELY RESPONSE, THE RELIEF MAY BE GRANTED WITHOUT FURTHER NOTICE TO YOU. IF YOU OPPOSE THE MOTION AND HAVE NOT REACHED AN AGREEMENT, YOU MUST ATTEND THE HEARING. UNLESS THE PARTIES AGREE OTHERWISE, THE COURT MAY CONSIDER EVIDENCE AT THE HEARING AND MAY DECIDE THE MOTION AT THE HEARING.
REPRESENTED PARTIES SHOULD ACT THROUGH THEIR ATTORNEY.
1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification
number, as applicable, are: Diamond Offshore Drilling, Inc. (1760), Diamond Offshore International Limited (4671), Diamond Offshore Finance Company (0712), Diamond Offshore General Company (0474), Diamond Offshore Company (3301), Diamond Offshore Drilling (UK) Limited (1866), Diamond Offshore Services Company (3352), Diamond Offshore Limited (4648), Diamond Rig Investments Limited (7975), Diamond Offshore Development Company (9626), Diamond Offshore Management Company (0049), Diamond Offshore (Brazil) L.L.C. (9572), Diamond Offshore Holding, L.L.C. (4624), Arethusa Off-Shore Company (5319), Diamond Foreign Asset Company (1496). The Debtors’ primary headquarters and mailing address is 15415 Katy Freeway, Houston, TX 77094.
TO THE HONORABLE UNITED STATES BANKRUPTCY JUDGE:
The debtors and debtors in possession (collectively, the “Debtors”) in the above-captioned cases seek entry of an order in the form attached hereto (the “Proposed Order”) (a) authorizing, but not directing, the Debtors to reject the Contractual Services Agreement between Diamond Offshore Company and Hydril USA Distribution LLC dated February 5, 2016, effective as of the Effective Date, and (b) granting related relief. A sealed copy of the CSA is attached hereto as
Exhibit A. In support of this motion (the “Motion”), the Debtors respectfully state as follows: BACKGROUND
A. Chapter 11 Cases
1. On April 26, 2020 (the “Petition Date”), each Debtor filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code (the “Chapter 11 Cases”). The Debtors are operating their business and managing their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. On May 11, 2020, the Office of the United States Trustee for the Southern District of Texas (the “U.S. Trustee”) appointed the Official Committee of Unsecured Creditors (the “Committee”) [Docket No. 147]. On June 11, 2020, the U.S. Trustee filed the Notice of Reconstituted Committee of Unsecured Creditors [Docket No. 357]. On September 14, 2020, the U.S. Trustee filed the Notice of Reconstituted Committee of
Unsecured Creditors [Docket No. 588]. No request for the appointment of a trustee or examiner
has been made in these Chapter 11 Cases.
2. A detailed description of the facts and circumstances of these Chapter 11 Cases is set forth in the Declaration of Marc Edwards in Support of Chapter 11 Petitions and First Day
3. After months of negotiations, on January 22, 2021, the Debtors entered into a Plan Support Agreement (the “PSA”) with the Consenting RCF Lenders and the Consenting Noteholders, who hold more than two-thirds in aggregate amount of the RCF Claims and the Senior Notes Claims respectively. Among other things, the PSA provides that if the PCbtH Contracts (as defined below) cannot be renegotiated on terms reasonably acceptable to the Requisite Consenting Stakeholders (as defined in the PSA), then the Plan shall provide for alternative treatment of the PCbtH Contracts (including the CSA) that is reasonably acceptable to the Requisite Consenting Stakeholders and the Debtors. The PSA also includes a milestone for entry of an order confirming the Plan by April 8, 2021. In addition, the Backstop Agreement and Commitment Letter, which provide commitments for the new-money financing necessary to consummate the Plan (as defined below), contain similar conditions.
4. On January 22, 2021, the Debtors filed their Joint Chapter 11 Plan of
Reorganization of Diamond Offshore Drilling, Inc. and Its Debtor Affiliates (the “Plan”)2 and their
Disclosure Statement for the Joint Chapter 11 Plan of Reorganization of Diamond Offshore Drilling, Inc. and Its Debtor Affiliates (the “Disclosure Statement”). A hearing on approval of the
Disclosure Statement and solicitation procedures for the Plan has been set for February 26, 2021. 5. The key terms of the Plan are summarized as follows:
a. Exit Facilities. On the Effective Date, the applicable Reorganized Debtors will enter into Exit
Facilities consisting of (a) the $300 to 400 million aggregate principal amount first lien, first out Exit Revolving Credit Facility, (b) the $100 to 200 million aggregate principal amount first lien, last out Exit Term Loan Facility, and (c) $110 million aggregate principal amount in first lien, last out Exit Notes, which are pari passu with the Exit Term Loan Facility. The Exit Revolving Credit Facility will be fully-committed, with up to $100 million drawn as of the Effective Date. $75 million of the Exit Notes (the Funded Notes) will be issued and outstanding as of the Effective Date, excluding any Exit Notes issued on account of the Commitment Premium (as defined in the Backstop Agreement), while $35 million of the Exit Notes (the Delayed Draw Notes) will remain fully-committed but undrawn as of the Effective Date and
will be accessible through delayed draw mechanics. The Debtors have secured commitments from certain RCF Lenders pursuant to a Commitment Letter that ensures that at least $300 million and up to $400 million aggregate principal amount of the Exit Revolving Credit Facility is fully-committed on the Effective Date.
b. Funding of the Exit Notes. The Debtors have secured commitments from certain Holders of
the Senior Notes pursuant to a Backstop Agreement that ensures the Exit Notes are fully-funded or committed to, as applicable, on the Effective Date through (a) certain Private Placements set forth in the Backstop Agreement and (b) two fully-backstopped Rights Offerings pursuant to which eligible Holders of Senior Notes will receive Subscription Rights to purchase or commit to purchase the Exit Notes not sold or committed to pursuant to the Private Placements.
c. New Equity. Holders of Senior Notes Claims will receive 70% of the New Diamond Common
Shares, subject to dilution by the MIP Equity Shares and the New Warrants, on account of the full equitization of their Senior Notes Claims pursuant to the Plan. The remaining 30% of the New Diamond Common Shares shall be issued on the Effective Date to purchasers of the Exit Notes pursuant to the Private Placements and the Rights Offerings, subject to dilution by the MIP Equity Shares and the New Warrants.
d. General Unsecured Claims. Each Holder of an Allowed General Unsecured Claim shall
receive, at the option of the Debtors (subject to the reasonable consent of the Requisite Consenting Stakeholders): (i) payment in full in Cash (inclusive of post-petition interest at the Federal Judgment Rate, any applicable contract rate solely to the extent such rate applies, or such other rate as agreed to among the Debtors and such Holder or as determined by the Bankruptcy Court (in any adversary proceeding, contested matter, or otherwise), on the later of (w) the Effective Date or as soon as reasonably practicable thereafter, (x) the date such Claim becomes Allowed or as soon as reasonably practicable thereafter, (y) the date such Claim comes due under applicable Law or in the ordinary course of business in accordance with the terms and conditions of the particular transaction giving rise to such Claim, or (z) such other date as agreed between the Debtors or the Reorganized Debtors and such Holder; (ii) Reinstatement; or (iii) such other treatment sufficient to render such Claims Unimpaired.
e. New Warrants. Existing Parent Equity Interests will be cancelled pursuant to the Plan, and
Holders of Existing Parent Equity Interests will receive their Pro Rata share of the New Warrants on the Effective Date. The New Warrants are exercisable into 7% of the New Diamond Common Shares, subject to dilution by the MIP Equity Shares, struck at a total enterprise value implying a 100% recovery to Holders of Senior Notes Claims on the face value of their Senior Notes Claims (including accrued interest as of the Petition Date).
6. The sole remaining material Plan confirmation issue is the treatment of the CSA and the EFS BOP Contract (as defined below).
B. The CSA
7. On February 5, 2016, Diamond Offshore Limited (“DOL”) and EFS BOP, LLC (“EFS”), a special purpose entity owned by GE Energy Financial Services (“GE”), entered into two agreements concerning four blowout preventer systems and related well control equipment (“BOP Systems”) that were already owned and operated by DOL on its four drillships, the Ocean BlackHawk, Ocean BlackLion, Ocean BlackHornet and Ocean BlackRhino.
8. Pursuant to the Purchase and Sale Agreement Between DOL as Seller and EFS as Buyer dated February 5, 2016 (the “Purchase Agreement”), DOL sold the four BOP Systems to EFS for the purchase price of . Pursuant to the Purchase Agreement, at the closing of the sale, the BOP Systems “automatically” became part of a purported “Lease Agreement” between EFS, as Lessor, and DOL, as Lessee, dated February 5, 2016 (the “EFS BOP Contract”). 9. On the same date that the parties entered into the EFS BOP Contract, Diamond Offshore Company (“DOC”) entered into the Contractual Services Agreement with Hydril, an affiliate of GE and a subsidiary of Baker Hughes Company (“Baker”), also effective as of February 5, 2016 (the “CSA”, and collectively with the EFS BOP Contract, the “Pressure Control by the Hour”, or “PCbtH Contracts”). A sealed copy of the CSA is attached hereto as Exhibit A. Under the CSA, Hydril provides certain maintenance, repair and supply services with respect to drilling systems equipment, including the BOP Systems.
10. The Debtors, in consultation with the Consenting Stakeholders, evaluated value-maximizing alternatives with respect to the PCbtH Contracts in the Chapter 11 Cases, including the potential renegotiation, rejection, assumption, or recharacterization of these agreements. The PSA requires renegotiation of the PCbtH Contracts or, in the alternative, any rejection, recharacterization, assumption, or other treatment of the PCbtH Contracts under the Plan, be
reasonably acceptable to the Debtors and the Requisite Consenting Stakeholders. The Backstop Agreement and certain of the Exit Facilities Documents include similar conditions.
11. The Debtors engaged in extensive negotiations with Hydril regarding potential amendment of the CSA and engaged in preliminary discussions with EFS/GE regarding modifications to the EFS BOP Contract to bring the PCbtH Contracts in line with current market conditions. To date, those discussions have failed to result in a reasonably acceptable outcome for the Debtors, the Requisite Consenting Stakeholders, and the Requisite Financing Parties.
12. Thus, concurrently with the filing of this Motion, the Debtors filed their Emergency
Motion Pursuant to 11 U.S.C. §§ 105(a) and 502(c) for Entry of an (I) Order Establishing Procedures and Schedule for Estimating the Hydril Claims; and (II) Order Estimating the Hydril Claims for All Purposes (the “Estimation Proceeding”) and the Complaint for Declaratory Judgment (the “Complaint” and collectively with this Motion and the Estimation Proceeding, the
“PCbtH Litigation”). The Complaint seeks a declaration from this Court that EFS may not terminate the EFS BOP Contract as a result of the Debtors’ rejection of the CSA.
13. Rejection of the CSA will entitle Hydril to a Rejection Damages Claim. Pursuant to Article V.J of the Plan, the Debtors will make a determination whether to assume or reject the CSA after the Court has estimated the Hydril Claims in the Estimation Proceeding. The Estimation Proceeding seeks a determination on the amount of the Hydril Claims by the deadline to file the Plan Supplement to allow sufficient notice of assumption or rejection of the CSA prior to the proposed confirmation hearing. The Debtors seek authority, but not direction, to reject the CSA at this time to ensure all relevant issues necessary to resolve the PCbtH Litigation are litigated in parallel and avoid any unnecessary delays in their eventual exit from chapter 11.
RELIEF REQUESTED
14. By this motion, the Debtors seek entry of an order, substantially in the form attached hereto (the “Order”): (a) authorizing, but not directing, the Debtors to reject the CSA effective as of the Effective Date, and (b) granting related relief.
JURISDICTION AND VENUE
15. The United States Bankruptcy Court for the Southern District of Texas (the “Court”) has jurisdiction over this matter pursuant to 28 U.S.C. § 1334 and the Amended Standing
Order of Reference from the United States District Court for the Southern District of Texas, dated
May 24, 2012 (the “Amended Standing Order”). Venue is proper before this Court pursuant to 28 U.S.C. §§ 1408 and 1409.
16. The bases for the relief requested herein are sections 105 and 365 of title 11 of the United States Code (the “Bankruptcy Code”), Rules 6004, 6006, 9013 and 9014 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), Rule 9013-1 of the Bankruptcy Local Rules for the Southern District of Texas (“Local Rules”), and the Procedures for Complex Cases in the Southern District of Texas (the “Complex Case Procedures”).
CONTRACT TO BE REJECTED
17. In the lead up to and during the Chapter 11 Cases, the Debtors have undertaken a thorough analysis of their executory contracts in conjunction with their overall restructuring and negotiation of the PSA. As stated above, the PSA, Backstop Agreement, and certain of the Exit Facilities Documents require renegotiation of the PCbtH Contracts or, in the alternative, any rejection, recharacterization, assumption, or other treatment of the PCbtH Contracts under the Plan, be reasonably acceptable to the Debtors and the Requisite Consenting Stakeholders.
18. Pursuant to the CSA, Hydril provides services to maintain certain blowout preventer systems on certain of the Debtors’ mobile offshore drilling units, including related spare
parts and certification services, in exchange for a daily fee
Section 4.1.1 of the CSA provides for an initial term of approximately 10 years, subject to further modification for each rig based on down time throughout the term.
19. The Debtors will be able to exercise their reasonable business judgment in rejecting the CSA upon a determination of the Hydril Claims through the Estimation Proceeding. The Debtors believe they can in-source the services Hydril provides under the CSA if the CSA is rejected. The Debtors estimate that it would take approximately 90 to 120 days to complete the in-sourcing transition and that they would not require any additional services from Hydril beyond those provided for under the CSA during that period. The Debtors’ personnel already operate the relevant BOP systems on the remainder of their fleet.3 Accordingly, they possess the ability and
knowledge to in-source the services provided under the CSA if that agreement is rejected.
20. The Debtors also believe that, subject to outcome of the PCbtH Litigation and the amount of Hydril’s Rejection Damages Claim, in-sourcing those services may ultimately be value accretive to the Debtors’ estates. Although the Debtors expect to incur upfront costs during the in-sourcing period, the Debtors expect to recoup those costs and generate additional cost savings if the CSA services are successfully in-sourced. Moreover, the Debtors do not believe rejection of the CSA will adversely affect their existing customer contracts.
21. Finally, the Debtors believe, in their reasonable business judgment, that rejection of the CSA may be required in order to effectuate the overall restructuring of the Debtors for the benefit of the Debtors’ estates and stakeholders because rejection of the CSA may be required to
obtain the benefits and financial commitments under the PSA, Backstop Agreement, and certain of the Exit Facilities Documents.
22. While the Debtors have and continue to engage in negotiations with Hydril regarding potential amendment of the CSA, such negotiations have failed thus far. In conjunction with the Debtors’ Estimation Proceeding and the Complaint, the Debtors will exercise their business judgment in determining whether to reject the CSA. Such business judgment will necessarily be informed by the amount of Hydril’s estimated Rejection Damages Claim and whether EFS is prohibited from terminating the EFS BOP Contract if the Debtors reject the CSA.4
23. As such, by this Motion, the Debtors seek the authority, but not the direction, to reject the CSA attached as Exhibit A hereto, as of the Effective Date.
BASIS FOR RELIEF
I. Rejection of the CSA Constitutes a Sound Exercise of the Debtors’ Reasonable Business Judgment.
24. Section 365(a) of the Bankruptcy Code provides that a debtor in possession “subject to the court’s approval, may . . . reject any executory contract or unexpired lease of the debtor.” 11 U.S.C. § 365(a). “This provision allows a trustee to relieve the bankruptcy estate of burdensome agreements which have not been completely performed.” Stewart Title Guar. Co. v. Old Republic
Nat’l Title Ins. Co., 83 F.3d 735, 741 (5th Cir. 1996) (citing In re Murexco Petroleum, Inc., 15
F.3d 60, 62 (5th Cir. 1994)); see also In re Orion Pictures Corp., 4 F.3d 1095, 1098 (2d Cir. 1993) (noting that the purpose of rejection of executory contracts is to permit the debtor in possession to renounce title to and abandon burdensome property).
25. A debtor’s rejection of an executory contract or unexpired lease is ordinarily governed by the “business judgment” standard. See Richmond Leasing Co. v. Capital Bank, N.A., 762 F.2d 1303, 1309 (5th Cir. 1985) (“It is well established that ‘the question whether a lease should be rejected . . . is one of business judgment.’”) (quoting Grp. of Institutional Inv’rs v.
Chicago, M., St. P. & P. R. Co., 318 U.S. 523, 550 (1943)); see also In re Texas Sheet Metals, Inc.,
90 B.R. 260, 264 (Bankr. S.D. Tex. 1988) (“The traditional business judgment standard governs the rejection of ordinary executory contracts.”).
26. The business judgment rule is a highly deferential standard. If the debtor’s business judgment has been reasonably exercised, a court should approve the assumption or rejection of an unexpired lease or executory contract. See e.g., Richmond Leasing, 762 F.2d at 1309; In re Idearc
Inc., 423 B.R. 138, 162 (Bankr. N.D. Tex. 2009), aff’d, 662 F.3d 315 (5th Cir. 2011) (“In the
absence of a showing of bad faith or an abuse of discretion, the debtor’s business judgment will not be altered.”). Under the business judgment rule, a debtor’s decision to assume or reject an executory contract or unexpired lease should be “accepted by courts unless it is shown that the [debtor’s] decision was one taken in bad faith or in gross abuse of the [debtor’s] retained business discretion.” In re Idearc, 423 B.R. at 162 (quoting Lubrizol Enterprises, Inc. v. Richmond Metal
Finishers, Inc., 756 F.2d 1043, 1047 (4th Cir. 1985)); see also In re Trans World Airlines, Inc.,
261 B.R. 103, 121 (Bankr. D. Del. 2001) (holding that the business judgment standard requires a court to approve a debtor’s business decision unless that decision is the product of “bad faith, whim, or caprice”) (citing In re Wheeling-Pittsburgh Steel Corp., 72 B.R. 845, 849–50 (Bankr. W.D. Pa. 1987)).
(Bankr. S.D. Tex. 1985) (stating that, in the absence of a showing of bad faith or an abuse of business discretion, the debtor’s business judgment will not be altered); In re Chipwich, Inc., 54 B.R. 427, 430-31 (Bankr. S.D.N.Y. 1985) (finding that a court should not interfere with a debtor’s decision to assume or reject “absent a showing of bad faith or abuse of business discretion”). Accordingly, so long as a debtor’s decision is reasonable and in the best interests of the bankruptcy estate, courts generally defer to the business judgment of debtor’s management.
28. Rejection of an executory contract or an unexpired lease is appropriate where such rejection would benefit the estate. See In re Pisces Energy, LLC, No. 09-36591-H5-11, 2009 WL 7227880, at *6 (Bankr. S.D. Tex. Dec. 21, 2009) (“Courts apply the ‘business judgment test,’ which requires a showing that the proposed course of action will be advantageous to the estate and the decision be based on sound business judgment.”); see also Orion Pictures, 4 F.3d at 1098–99 (stating that section 365 of the Bankruptcy Code permits a debtor in possession, subject to court approval, to decide which executory contracts would be beneficial to reject); see also, In re
Extraction Oil & Gas, No. 20-11548 (CSS), 2020 WL 6389252, at *3-5 (Bankr. D. Del. Nov. 2,
2020) (holding that it was a proper exercise of the debtors’ business judgment to reject contracts with higher-than-market rates and seek alternate providers). Upon finding that a debtor exercised its sound business judgment in determining that rejection of certain contracts or leases is in the best interests of its creditors and all parties in interest, a court should approve the rejection under section 365(a) of the Bankruptcy Code. See In re Summit Land Co., 13 B.R. 310, 315 (Bankr. D. Utah 1981) (holding that absent extraordinary circumstances, court approval of a debtor’s decision to assume or reject an executory contract “should be granted as a matter of course”).
29. The Debtors may determine in their business judgment that, subject to the amount of Hydril’s Rejection Damages Claim and a determination that EFS is prohibited from terminating
the EFS BOP Contract if the Debtors reject the CSA, rejection of the CSA is in the best interest of their respective estates. The Debtors believe that they can in-source the services provided for under the CSA while maintaining equivalent quality and potentially increasing value for the go-forward business. Accordingly, rejecting the CSA may be appropriate under the circumstances as determined in the sound exercise of the Debtors’ business judgment following the conclusion of the PCbtH Litigation.
WAIVER OF BANKRUPTCY RULES 6004(a) and 6004(h)
30. To implement the foregoing successfully, the Debtors request that the Court enter an order providing that notice of the relief requested herein satisfies Bankruptcy Rule 6004(a) and that the Debtors have established cause to exclude such relief from the 14-day stay period under Bankruptcy Rule 6004(h). The Debtors further request that the Court enter an order waiving the 14-day stay period under Bankruptcy Rule 6006(d).
RESERVATION OF RIGHTS
31. Nothing contained in this Motion is or should be construed as: (a) an admission as to the validity of any claim against the Debtors; (b) a waiver of the Debtors’ rights to dispute any claim on any grounds or to seek to recharacterize the EFS BOP Contract; (c) a promise to pay any claim; (d) an assumption or rejection of any executory contract or unexpired lease, other than the CSA, pursuant to section 365 of the Bankruptcy Code; or (e) otherwise affect the Debtors’ rights under section 365 of the Bankruptcy Code to assume or reject any executory contract, other than the CSA, with any party.
NOTICE
whether by facsimile, electronic mail, overnight courier, or hand delivery, to parties-in-interest, including (a) the U.S. Trustee; (b) entities listed as holding the 50 largest unsecured claims against the Debtors (on a consolidated basis); (c) counsel to the Committee, Akin Gump Strauss Hauer & Feld LLP, One Bryant Park, New York, NY 10036-6745; (d) counsel to Wells Fargo Bank, National Association, as Prepetition RCF Agent, Bracewell LLP, 711 Louisiana Street, Suite 2300, Houston, TX 77002-2770; (e) counsel to the Noteholder Group of Senior Noteholders, Milbank LLP, 555 Hudson Yards, New York, NY 10001-2163; (f) counsel to The Bank of New York Mellon Trust Company, N.A., as Indenture Trustee for the Senior Notes, Reed Smith LLP, 1201 Market Street, Suite 1500, Wilmington, Delaware 19801-0511; (g) counsel to Loews Corporation, Sullivan & Cromwell LLP, 125 Broad Street, New York, NY 10004-2498; (h) the Office of the United States Attorney for the Southern District of Texas; (i) the state attorneys general for states in which the Debtors conduct business; (j) the Internal Revenue Service; (k) the Securities and Exchange Commission; (l) the Environmental Protection Agency and similar state environmental agencies for states in which the Debtors conduct business; (m) the counterparties to the CSA; and (n) any party that has requested notice pursuant to Bankruptcy Rule 2002. The Debtors submit that, in light of the nature of the relief requested, no other or further notice need be given.
WHEREFORE, the Debtors respectfully request that the Court enter the Proposed Order, granting the relief requested herein and such other relief as the Court deems appropriate under the circumstances.
Dated: January 23, 2021
Respectfully submitted, By: /s/ John F. Higgins
PORTER HEDGES LLP John F. Higgins (TX 09597500) Eric D. Wade (TX 00794802) Heather K. Hatfield (TX 24050730) M. Shane Johnson (TX 24083263) 1000 Main St., 36th Floor Houston, Texas 77002 Telephone: (713) 226-6648 Facsimile: (713) 226-6248 jhiggins@porterhedges.com ewade@porterhedges.com hhatfield@porterhedges.com sjohnson@porterhedges.com
Counsel to the Debtors and the Debtors in Possession
Certificate of Service
I hereby certify that a true and correct copy of the foregoing document was served by the Electronic Case Filing System for the United States Bankruptcy Court for the Southern District of Texas, and will be served as set forth in the Affidavit of Service filed by the Debtors’ claims, noticing and solicitation agent as well as on the parties listed below:
Hydril USA Distribution LLC c/o Holly Hamm
Snow Spence Green LLP
2929 Allen Parkway, Suite 2800 Houston, TX 77019
hollyhamm@snowspencelaw.com Hydril USA Distribution LLC Attn: Eugene C. Chauviere III
Authorized Agent and Vice President Subsea Drilling Services, Baker Hughes 17021 Aldine Westfield Rd.
Houston, TX 77073
chuck.chauviere@bakerhughes.com
EXHIBIT A CSA (Under Seal)
IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION ) ) ) ) ) ) ) ) Chapter 11 Case No. 20-32307 (DRJ) (Jointly Administered) In re:
DIAMOND OFFSHORE DRILLING, INC., et al.,1
Debtors.
ORDER (I) AUTHORIZING, BUT NOT DIRECTING, REJECTION OF THE HYDRIL USA DISTRIBUTION LLC CONTRACTUAL SERVICE AGREEMENT EFFECTIVE
AS OF THE PLAN EFFECTIVE DATE AND (II) GRANTING RELATED RELIEF
[Relates to Docket No. ____]
Upon the motion (the “Motion”)2 for entry of an order (this “Order”) authorizing, but not directing, rejection of the Hydril USA Distribution LLC Contractual Service Agreement (the “CSA”) effective as of the Plan Effective Date and granting related relief, all as more for fully set forth in the Motion; and this Court having jurisdiction over this matter pursuant to 28 U.S.C. § 1334 and the Amended Standing Order; and the Court having found that it may enter a final order consistent with Article III of the United States Constitution; and this Court having found that venue of this proceeding and the Motion in this district is proper pursuant to 28 U.S.C. §§ 1408 and 1409; and this Court having found that the relief requested in the Motion is in the best interests
1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification
number, as applicable, are: Diamond Offshore Drilling, Inc. (1760), Diamond Offshore International Limited (4671), Diamond Offshore Finance Company (0712), Diamond Offshore General Company (0474), Diamond Offshore Company (3301), Diamond Offshore Drilling (UK) Limited (1866), Diamond Offshore Services Company (3352), Diamond Offshore Limited (4648), Diamond Rig Investments Limited (7975), Diamond Offshore Development Company (9626), Diamond Offshore Management Company (0049), Diamond Offshore (Brazil) L.L.C. (9572), Diamond Offshore Holding, L.L.C. (4624), Arethusa Off-Shore Company (5319), Diamond Foreign Asset Company (1496). The Debtors’ primary headquarters and mailing address is 15415 Katy Freeway, Houston, TX 77094.
of the Debtors’ estates, their creditors, and other parties in interest; and this Court having found that the Debtors’ notice of the Motion and opportunity for a hearing on the Motion were appropriate under the circumstances and no other notice need be provided; and this Court having reviewed the Motion and having heard the statements in support of the relief requested therein at a hearing before the Court (the “Hearing”); and this Court having determined that the legal and factual bases set forth in the Motion and at the Hearing establish just cause for the relief granted herein; and upon all of the proceedings had before this Court; and after due deliberation and sufficient cause appearing therefor, it is HEREBY ORDERED THAT:
1. The Debtors are hereby authorized, but not directed, to reject the CSA attached to the Motion under seal as Exhibit A effective as of the Plan Effective Date.
2. The Debtors are authorized to take all actions necessary or appropriate to effectuate the relief granted pursuant to this Order in accordance with the Motion.
3. Notice of the Motion and the relief requested therein satisfies Bankruptcy Rule 6004(a).
4. The relief granted herein shall not be subject to the 14-day stay periods under Bankruptcy Rules 6004(h) and 6006(d).
5. The terms and conditions of this Order shall be immediately effective and enforceable upon entry of the Order.
6. This Court retains jurisdiction with respect to all matters arising from or related to the implementation, interpretation, and enforcement of this Order.
Dated: _____________, 2021 ____________________________________
