Offshore oil driller owes $ 1.1B, files for bankruptcy

Oil driller Paragon Offshore tumbled into Chapter 11 bankruptcy Sunday, becoming the latest victim of rock- bottom oil prices in a year likely to see more energy companies face insolvency.

Paragon said it had won support from a large majority of its unsecured and secured creditors to slash $ 1.1 billion in debt through bankruptcy, giving the rig operator a good shot at re- emerging with a sustainable balance sheet.

Yet the bankruptcy reflects what analysts say is the latest in a string of energy bankruptcies. Drillers are particularly susceptible as oil companies cut back considerably on production amid a global glut of crude.

“Paragon has acted proactively to strengthen the company’s balance sheet in this challenging environment,” Paragon CEO Randall Stilley said in a statement.

“We look forward to moving as quickly as possible through this process while maintaining our focus on delivering safe, reliable, and efficient operations,” the statement said.

The company said 77% of its unsecured bondholders had agreed to support its restructuring plan, in addition to 96% of its secured credit line bondholders.

As part of the deal, shareholders would own 65% of the company after bankruptcy, while bondholders would own 35%.

Paragon said the bankruptcy would have “very little impact” on employees, with no effect on compensation or benefits.

The United Kingdom- based company filed for bankruptcy in Delaware, which is legally allowable because it has U. S.based legal entities.