American court hearing recordings and interviews - CB & I UK LTD chapter 15 hearing 10-10-23, before #Bankruptcy Judge Jones sitting in for Judge Lopez, #McDermott #McDermottInternational

Episode Date: October 21, 2023

For more information, see press release - MCDERMOTT ANNOUNCES TRANSACTION SUPPORT AGREEMENT WITH KEY FINANCIAL STAKEHOLDERS.... Reaches Transaction Support Agreement with More Than 75% of Secured Letter of Credit Facility Providers, Funded Debt Creditors and Equity Holders Receives $250 Million in New Capital The Agreement Extends Company's Loans and Letter of Credit Facilities Three Years, Until Mid-2027 Company to Continue All Operations No Impairment to Vendors, Projects, or Customers To Implement the TSA and to Discharge Legal Claims Related to Prior Projects, Intends to Commence Parallel In-Court Proceedings in the Netherlands and UK for Select Non-U.S. McDermott Entities HOUSTON, Sept. 8, 2023 /PRNewswire/ -- McDermott International, Ltd ("McDermott" or the "Company") today announced that it has entered into a transaction support agreement ("TSA" or the "Agreement") with more than 75%, in aggregate, of its secured letter of credit ("LC") providers, funded debt creditors and equity holders to initiate a financial restructuring process to strengthen its capital structure, enhance its liquidity position, and further position the Company for long-term success. Additionally, the Company has received $250 million in new capital from a group of its existing equity holders, which will support its ability to operate its business, deliver on existing projects and expand backlog with new client projects. Under the terms of the Agreement, McDermott will amend and extend its term loans and LC facilities for three years, through mid-2027 with no change in pricing, increase the company's liquidity, and discharge certain legacy legal liabilities. To implement the Agreement, McDermott International Holdings B.V. and Lealand Finance Company B.V. will initiate procedures in the Netherlands under the Dutch Act on Confirmation of Extrajudicial Plans (Wet Homologatie Onderhands Akkoord or "WHOA"). CB&I UK Limited will initiate a Restructuring Plan under Part 26A of the Companies Act 2006 (UK) in England. McDermott International Holdings B.V., Lealand Finance Company B.V., and CB&I UK Limited are the only McDermott entities named in these proceedings. Following the completion of the Netherlands and UK processes, McDermott will make a voluntary filing in the United States to secure legal recognition of the international court decisions. The Company expects to continue all current customer agreements, projects, and vendor commitments throughout these processes. McDermott currently expects to complete the processes no later than early 2024. "Over the past 24 months, our executive leadership has made transformative progress in resetting and implementing our business strategy by leveraging the strength of our operating business and tailoring our approach to our core clients," said Michael McKelvy, President & CEO of McDermott. "We are pleased to have reached this agreement with our key stakeholders, which demonstrates their confidence in the long-term strength and sustainability of our business. These proactive steps ensure that McDermott is strongly positioned to deliver on our growing number of client projects as we continue our important work of accelerating the energy transition in our industry." The Company has also completed actions to strengthen its world-leading storage business, CB&I Storage Solutions. CB&I Storage Solutions will have dedicated working capital and an independent LC facility separate from the McDermott LC facilities.... For more see: https://finance.yahoo.com/news/mcdermott-announces-transaction-support-agreement-152000100.html

Control today is October the 10th, 2020. This is the docket for Houston, Texas. On the 11 o'clock docket are the jointly administered cases under case number 23-90795, CBNI UK Limited. Folks, this case, as you may or may not know, was assigned to Judge Lopez. Judge Lopez will be the judge on the case. He sends his regrets for not being able to attend this morning. I told him I was reluctant even to relay that, although he made me do it, as many of you may or may not know. Judge Lopez's mother lost a long battle to cancer last week, and today is the funeral. So I know all of our thoughts are with Judge Lopez. We've done our best to make the transition.

I do not know if an electronic link has been set up or not, just to make sure if you do choose to speak. please note your appearance you may want to send case manager just an email that said hey I appeared and we'll figure out a way to note your official appearance today for those of you are on the telephone and I note there are more in the telephone than there are on video we are using judge Lopez's dial-in link we could not get the video link to follow so we are using my video link so as opposed to typing in judge Lopez it would be judged Jones if you want to activate the video link.

Dial in, again, is Judge Lopez. That's working just fine. We are recording this morning using court speak. We'll have the audio of the hearing up on the docket shortly after the conclusion of the hearing. For today and today only, obviously first time that you speak, if you would, please state your name and who you represent. That really does help the court reporters.

And I say for today and today only simply because I've never sat in a at Judge Lopez hearing. I don't know how he handles these things. If you haven't already done so, no, you're going to be speaking five-star on your telephone. I'll get you unmuted. You can, of course, change your mind at any time. I went through very quickly on the Pro Hocq request. I think I got them all. If I missed one and it's on file, consider yourself authorized to speak if you need to this morning. I think I also got, I got the designation of the complex chapter 15 filed, also got the order granting the joint administration. So with that, Mr. Greco, good morning. Good morning, Your Honor. Can you hear me okay? Loud and clear. Thank you for checking.

Thank you, Judge. Chris Greco from Kirkland analysis proposed counsel for the debtors. Your honor, I'm joined today by my colleague, Mr. Luz and Mr. Williams. Your Honor, should we jump right in? Do we need to take any appearances or anything else? I have a couple of slides I'd love to present if we could. Of course, again, I think because I don't want 50 people to have to jump on the line to make an appearance. If you want your appearance noted again, if the link isn't up and I didn't check, Mr. Greco, did you have, is the link up on Judge Lopez's website? I don't know, Your Honor.

Fair enough. If it's not, I would ask those who want their official appearance record. to simply send it is up all right thank you I am told that the link is up and has been verified so for those of you who want to record your electronic appearance quick trip to judge Lopez's website you'll see you'll see the link there on his website mr. Greco who would you like control transfer to? Your Honor my colleague miss Sipriano the C is sitting in the room with me here and she has control of the slide that's okay Of course, and she is logged on. Oh, there she is. Thank you for raising your hand. You should now have control.

Thank you, Your Honor. While the slides are coming up, just the way we'd love to proceed, Your Honor, is I have a couple of slides to walk the court and the parties through just to set the stage, and then my colleague, Mr. Roos, will handle the cross of the agenda. Mr. Williams will handle the witnesses. We have three declarations,

If you can't even lie, that's them obviously in Mr. Williams, we handled that. All right. Thank you. Thank you. Just for the outset, Your Honor, we really do appreciate you're sitting in for Just Lopez, and of course, on behalf of all the parties to send our condolences to Just Lopez.

Your Honor, you're, you are actually very familiar with the greater enterprise here of McDermott International. And so if you'll indulge me just a few minutes for the parties that are maybe not as familiar, or don't have as much history,

I'll go through a little bit of study the stage of this Chapter 15 here. We're here today on the Chapter 15 of three legal entities, and those are the three highlighted in green on the chart. Now, this is a simplified considerably corporate order chart of the structure. Your Honor, we'll recall McThermott International Limited, the ultimate event, the Chapter 11 case, a pre-packaged after 11 case that Your Honor presided over in January of 2020. And that plan was confirmed in March of 2020, which many of us remember very well

because it was confirmed, I think, on the day that the lockdown started on or about March 11th of 2020. Subsequent to that, you may recall that the main condition to effectiveness of the last restructuring was the failed alumnus technology business. which then closed about 50 or so days later in June of 2020, and that plan was consummated. We would all describe that and structure in your honor, notwithstanding us being back before the court today on this Chapter 15,

as having been successful. It achieved its goals. If you levered the company significantly to the tune of billions of dollars, it brought in fresh capital, and effectively at that time, because it was a pre-packaged plan, it had unsecured creditors and customers rise through unimpaired. It also had any pending litigation, of course, rise through unimpaired as well. And that was something that was carefully thought about and considered at the time,

but because of the level of consensus and the urgency, that was a decision at that time. So that restructuring was successful. Unfortunately, though, and you've heard the COVID story many times in the last several years, but COVID immediately had an impact on this business because what this company does, as Your Honor knows, is it builds things around the world. It has about 30,000 employees, right? It's a construction company, an engineering construction company.

And so many of those projects were delayed, shut down, postpone, et cetera. And that really was the first stumbling block in the weight of the last chapter 11 in 2020. Your Honor, I'll just flip to the next slide to show you brief as a capital structure. So it's complicated, not all of this is funded, though, and not nearly all of it. So, Your Honor may also recall that the nature of this business is such that when the company wins new business, so when a base oil and gas company, for example, awards a project to McDermott, then that project comes with a requirement that there be performance letters of credit posted

to support that project, and they're often multi-year project. And so the company's capital structure today is not really because they went up and re-levered. It's really just a function of the need to have multiple facilities available to post letters of credit when the company wins work. And so you may recall the story of the last restructuring as well, but the business is fragile because of the nature of the letters of credit. The company really needs to project confidence to its customers, and it does a great job of doing that.

Otherwise, it has the risk of crystallizing a lot of this complicated capital structure and causing LCs to be drawn. And so one of the main goals here is to keep the company stable throughout this process so that we can maximize value and continue achieving honest business. Go to the next slide, please. So I already mentioned the COVID-19 pandemic, which obviously impacted projects, particularly for this construction company. Other things, including oil price collapsing, which impacted the customers of the business, which impacted the business, caused them in certain instances to postpone project. Company was subject to a cybersecurity incident that cost them money in time and sold them down

for about 8 weeks when they lost access to their systems. And then other just geopolitical events, for example, the Russia and Ukraine crisis has impacted things like the global supply chain, which this company relies on in many of its projects. So all of those things were headwind that the company's faced in the last couple of years since the last restructuring. Notwithstanding that the company has continued to win new work, and management has been largely hitting its projections and executing out of business plan well. Earlier this year in 2023, the company began what we referred to as amend and extend negotiations with its creditors to effectively address a wall of maturity on the letter of credit facilities

because these LC facilities are so important to the business. The company was making good progress on those negotiations. There were two large ad hoc groups that were formed. There was an LC steer-po of lenders, and then there was an ad hoc group of lenders that were both creditors and shareholders of McDermott, which is by the company now. Those negotiations were going well until the company was hit with a billion-dollar arbitration award in favor of any that we refer to as repripar.

Repar, so effectively, Judge, this was a legacy project that CB&I, Chicago, Virgin Iron, did in and around, I think, 2010-2012 time frame. An arbitration was commenced by a company owned by the Colombian government called Echo Patrol. The arbitration was a AAA arbitration commenced in 2015, and that award, we didn't have a sense when the timing would be. We obviously didn't predict the result. But that award came down in June of 2023. So in the midst of its amend and extend negotiations that were,

that were close to being final. That amend and extending absent that may have been executed out of court but it was unclear, but in the midst of that, with this arbitration coming down, the company needed to seek to address a slight with broader restructuring than just the capital structure. And that's what it did. Go to the next slide, please.

I'll talk a little bit about the broader restructuring. Yeah, one more please. The company in early September basically built in amended its transaction that it had been negotiating with its financial creditors

to execute a cross-border restructuring. So the Rappapar arbitration was an award against two of the three debtors in this chapter 15. The main debtor,

the CB&I, UK, obviously a UK entity, and the McDermott entity, not McDermott International Limited is a parent, but the McDermott International Holding TV, which is a Netherlands entity. And then there's a third entity called Leominfinance that's part of this chapter 15, that's also a Dutch, Netherlands entity. And so what the company has command overseas are proceedings in two different jurisdictions. We've commenced a process in the UK that we refer to as the RP, the UK RP or restructuring plan, and we've commenced the process in the Netherlands that we refer to as the Dutch WHAOA, which is a new, relatively new,

insolency regime in place in the Netherlands and those processes are underway. We have, I'll come to it in a second, I'll talk a little bit about what stage they are in that they've been recently met. Talk briefly as part of the TSA, I'll just note that to address the liquidity to go to the Tanks slot of things. The company entered into as part of that TSA what we refer to as the Tanks transaction,

which was effectively a drop-down financing of the Tanks business that the company has, and it was provided by members of the parties to the TSA. And that financing is, is meant to support the business during business restructuring. So effectively, to think of it as a dip, except it was executed pretty fine. Just talk a little bit about the broad stakeholder support. It's not before the court today, but I think it's obviously relevant to things that we're doing

and the stay we're asking for. You know, we're proud to say that the TSA negotiations did result in significant stakeholders support and so if you look across the different facilities the company has well about two-thirds in some in some instances of 100% support across different classes and that will be relevant in those relevant in the in the foreign proceedings in the UK and the Dutch law but it's also just notable for the court to know that if we do enjoy broad consensus now I will say you'll hear likely from council to rep the park today.

And you may hear also from council, there are a few minority creditors that are not yet supportive of the transaction. We look forward to continuing to engage with all those parties. But notwithstanding, whatever reservations of rights or objections may come, courts should know that there is broad general support for this restructuring, this cross-border restructure.

Just touched briefly on the English proceeding. when we have a declaration in support of this from my colleague Ms. Crawford. But the English proceeding in Part 26A as a company's act are referred to as the RP similar to the scheme of arrangement in the UK although the RP can bind dissenting classes provided unique the relevant requirements of the UK RP.

So the relevant alternative, I think, similar to our best interest test or liquidation analysis. And there's an independent advisor that's providing a report to the UK judge on the relevant alternative and why this works and all the sentencing creditors would be no worse off so effectively our best interest step and then you have to have at least one impaired class supposed to accept the plan in the UK. We've met those.

In the UK, we had an initial hearing equivalent to our first day hearing. They call it convening hearing. That convening hearing went as planned and the UK court has scheduled November of the 27 for his sanction hearing, which is the equivalent of a confirmation hearing in the U.S. And the second, I'll just flash some of the other days just to the court's awareness, part is right now. Briefly just touches well on the duct proceeding, the WOLA. The WOLO has also been commenced.

We had an equivalent of a first day hearing yesterday, so early stages in the Dux Wola. has sought a stay there in the Wola that the court will take up in the near term. And then we have similar requirements on the relevant alternative, and then two-thirds requirement in voting in the Dutch proceeding. So each jurisdiction is obviously a little bit different, but there also are some similarities, and we enjoy the requisite support we think to have what officers call confirmable cross-quarter planning each of the relevant jurisdiction. Briefly touch on the timeline, I mentioned

some of this already. A few of the dates marry up to November 3rd for the relevant voting deadline, although obviously with the stakeholder support under the TSA, you know, we anticipate that that vote will come in with a funded support.

As I mentioned, the UK has scheduled November the 27th for the section hearing. That could be, as I understand it, a multi-day hearing. in the UK. So it may take three or four days the week of the 27th. We have asked, and Mr. Luz will pick this up in a moment, but we have asked as part of our scheduling request to set a recognition hearing date in the Chapter 15. We did coordinate with Mr. Alonzo before

court and understand that perhaps December 5th at 1 o'clock might work for Judge Lopez, but I'll let Mr. Luz face that up in a moment. Your Honor, unless you have any questions for me, I would pass the virtual podium to Mr. Luzz who will get into the agenda today. Mr. Greco, I don't have any questions. I compliment your team on putting this together in an easy-to-read, informative fashion, took me no more than a couple hours to get up to speed. I think I have a good sense of what's going on and where we're headed. So I appreciate the hard work for everybody that lost sleep.

Thank you, Your Honor. We appreciate that. Let me get it. Before I go to Mr. Lewis on the motions, is there anyone else that wanted to just make an open comment or raise an issue? Mr. Warren, I notice I think you're the only other party on that's active on the video. Did you wish to be heard? Yes, I would like to be here, Your Honor. Please, go ahead. There, Matt Warren, and King is falling on behalf of refinery Descartagena, which Mr. Greco, and I also refer to as Breco.

car. Your Honor, you probably do not recall us from the prior Chapter 11. I had one, I had one small time before you, and that's because the confirmation order in that your prior bankruptcy preserved our claim in full, confirmed that the arbitration was the appropriate form, which would go to, and so we didn't have much else to say. As Mr. Greco noted, I think they probably regret that equitization, leaving our claim in place. Now that it's subject to us an award in at least $1.3 billion. I know this won't be your honor's case for the full term. I think I'll keep it to a 10-second background,

and then I have one reservation I wanted to make about the joint administration. But as a Rappacar and debtors issues, stem back well over a decade, the arbitration has been going on for a decade. It culminated in a six-week-long trial a little over three months ago, as Mr. Grecoe had an arbitration award that found that the debtors acted with gross negligence in breaching their contracts with Bradcar, and as a result of their gross negligence and mal-in-pents,

were liable for more than $1.3 billion. I won't do on the scale of the award in Columbia, Your Honor, but it can't be overstated. This action and the debtor's context is one of the largest scandals in the history of the country. Individuals have been under house arrest in Colombia for years on account of the action. Careers were ruined, prospects.

people were fired in incarceration remains for many of the people that were involved in that project. So I say that only in the severity of the situation is hard to overstate from a Colombian perspective and how serious they take this. As Mr. Greco, I think very accurately noted, while they had debt maturity coming up eight months from now and we're working on extensions of those, the purpose of these proceedings is to discharge the threat of our claim for all... and perhaps they could have stayed out of court if not for the Rappar claim. And I do understand they want to move as quickly as possible to discharge Rappar's claim

while leaving all the other creditors and equity holders intact. I know not for today, but whether these ultimately work in the U.K. and other ones, I think will be a very contested issue. You know, there is a pure violation of the absolute priority rule. At its core, the equity here is remaining in tax while the debt is not being paid. They are seeking incredibly broad and unconsensual third-party. releases, civil race, real concerns. But look, as Mr. Greco noted, they have fairly full support from everybody who's being paid in full. Everybody who's getting the full payment, except for

Mr. Albarina's clients, so I'm sure we'll hear from, it's generally supportive of these transactions. That's everybody in this case, except for Repar. And so I do think that merit I think as you get into the scheduling, it's important to note that while Mr. Greco put up the October 20th hearing first October 20th launch for the plans in the Netherlands, at the hearing yesterday, Rappakar requested that a restructuring expert be appointed in lieu of an observer. Restructuring expert is, as I understand, it's only been appointed once before in a low case. And it's sort of like a some somewhat expect that a trustee that takes charge.

of the distribution of the plan and has the ability to work with creditors on proposing an alternative plan if the restructing expert decides. Right before this hearing, Your Honor, about 15 minutes before, our request and the restructure answer was granted in the Netherlands process. But I don't think that Mr. Greco has said they have control over when the process will be launched in Netherlands. I believe Freshfield has been appointed to take charge as the restructing expert in Netherlands.

I don't have an issue with the December 4th or 5th date. sort of being reserved on the calendar at this point, but I don't think the debtors are fully in charge of the process, no longer. The last thing I'll say, Your Honor, is I know your Honor already signed the joint admin proceedings. I'd like to reserve on that,

that there is a reference for Kroll as the claims and noticing agent of the debtors, just as where the service goes to in the website. We may have an issue with that. Your Honor, there's a potential conflict problem there. I don't think it's for today. I didn't read your Honor as joint admin order as approving anything with Kroll,

but it is in the order. So I'd just like to say on the record that doesn't anyway the last parole's rolling these proceedings any further. Fair enough. If there's an issue, you'll bring it to Judge Lopez's attention and he will deal with it. If I could ask you a question, this representative person, is he or she required to produce reports,

or is it just they just give opinions to the court when asked? So if I understand, Your Honor, and it's referred to as the restructuring expert. Restructuring X. There's a choice between an observer, which is what the debtors requested in Netherlands, who sort of just looks at the plan and says whether or not it's okay, or an alternative, which is the restructuring expert, which is a much more involved process. My understanding is that the restructuring expert, and again, it's only the second time once been appointed in a lower case of the scale, so I think there's some, some undemabled

some unknowns perhaps even within the process i think it's a pretty unusual and extraordinary remedy but the restructuring expert takes control of the timing for the debtors plan the debtors can still propose their own plan but they know whether control the timing of it simultaneously the restructuring experts mandate is to work with the creditors and potentially formulate his own plan as well and pursue that plan to be voted on so as i understand it from our Netherlands experts it's a bit of a mixture between a trustee being a appointed slash a mediator being appointed somewhere in the middle because they actually do have control rules within the Netherlands, but the debtors are still in charge of their assets, which I'm sure either Mr. Liu's or Greco would have couldn't clarify. They're still in control of their assets, but they're not in control of the timing of the process. And plus we have sort of a pseudo mediator, as I understand it, to be appointed now in the Netherlands. There's a little bit high level. You've probably tapped my knowledge on the Netherlands-Well as scheme for expert rules and appointment, other than I send to the hearing. yesterday where we saw it.

Got it. We're going to go with akin to a subchapter 5 trustee. Sure. Sounds like they have some common things involved. All right. Thank you. And again, all I'm doing today is picking a date off of Judge Lopez's calendar after consultation with his staff.

Obviously, if those dates need to move at some future point in time, you'll reach out and file the appropriate pleadings with. with Tedz Lopez to seek to move that. I mean, anybody can do that, obviously. All right. Mr. Warren, anything else before I go to Mr. Albarino? Well, that's all for me for now, Your Honor. Thank you, sir.

Mr. Alvarino? Good morning, Your Honor. Just Scott Albrino from making it go on behalf of the senior LC at our group. Your Honor, Mr. Warren is a tough act to follow, but I have a few things that I'd like to just put on the record with your honor. Certainly.

First and foremost, number one, We'll go prohops on eventually. We did file a pleading, her honor, which I think probably hit the doc in a few minutes after the period began. I think we sent copies over to Mr. Greco, Mr. Lunes, as well as Mr. Warren. And first and foremost, we're not objecting to entry the provisional relief. But we did think it was appropriate, you know, to put a statement, you know, on the record because, you know, there are, in our view, certain kind of elements of the pleadings

that were filed with the company that did not necessarily highlight, for Your Honor, for Judge Lopez, the contested nature of the proceedings that are currently underway in England as well as in the Netherlands. We've seen kind of the playbook before with commencement of foreign proceedings and, you know, in Chapter 15, kind of proceeding on a relatively perfunctory basis. And, Your Honor, I don't believe that is the case here. I think we're moving into a bit of uncharted territory with these cases, given the relief that it being sought through the English and thus proceedings in this case,

which, you know, we believe is contrary to fundamental underpinnings in U.S. bankruptcy law. They are seeking relief, and our issues in this case, you know, our issues are a little bit different from Mr. Warren's client's issues. We're probably more closely in line with the company than we are with Mr. Warren, you know, with it comes to some of his client issues, but there are, you know, other issues that go to what the company is trying to accomplish through what they call the amended extent portion of the foreign proceedings. In this case, the company is attempting through these proceedings to essentially extend

funding commitments under pre-petition agreements for three years. This is not grant paper. This is not turning funds which have been advanced previously into new notes. This is requiring companies outside of bankruptcy to continue to honor unadvanced funding commitments to a company in bankruptcy through pre-petition documents. Now, our clients, along with RefraCard and others, you know, are appearing in both the English proceedings as well as concussion proceedings. These will be heavily contested in both.

Even though the sanctions hearing is scheduled right now for the end of November, there is a long, tough road to home getting there, and there will be significant discovery, significant expert testimony. And I think as, you know, our colleagues in Kirkland advised you, this is not a simple one-day trial. We'll be in a multi-day, if not longer, trial in the UK portion of this. And the other ones as well, Mr. Warren kind of stole my thunder, but, you know, with a bit of a victory for Mr. Warren's clients as well as ours,

our clients as well filed the request for the restructuring expert in this case, as opposed to the plan observer. We were very happy to hear that if the Dutch court agreed with us and agreed with Reprofar, you know, as a point of that expert so that we can get, you know, independent eyes evaluating whether this is the correct pathway and the right pathway for the company and all constituencies impacted here.

You know, in any event, Your Honor, you know, we wanted the court to be aware, and I'm sure Judge Lopez will review the transcript. You know, this is not, you know, a propatory trip through Chapter 15, even if we get to the point where the Dutch in English courts have approved these regimes and we will certainly be back in front of Judge Lopez on the chapter 15 issues and it's not going to be as simple as

bringing to court for a one-day hearing now on the issue of setting the hearing date I understand your honor it's just a hearing date we can move it and we do think though we do think it would be helpful to just delay you know scheduling that hearing until judge Lopez returns and frankly I mean we'd like to understand whether the restructuring expert will weigh in here on the timing and process as well as the substance of the plan has had a chance to confer with parties. You have to see whether December 4th is actually a date that will stick. I don't really see a reason for any emergency here to put that date on the count on her,

even though I know I've been on the other side of this. I like having dates. I like the momentum. I like pushing people towards results. But I do think in this case, given this morning's appointment as a restructuring expert, would be, I think, beneficial for all sides, you know, perhaps to kind of recede the product Judge Lopez, maybe later this week or later next week, but to talk about that date and to see whether we have feedback for the restructuring expert as to whether

that date will stay. So, again, now they, I understand dates can rule, and we can come back to the court to ask for it, but I do think in this circumstance, in light of this morning's developments, you know, a little pause on scheduling that date might make sense. But, you know, at this point, Your Honor, I'm happy. I know you're not to be dealing with this case. I will note they chose not to come back to Houston, you know, file the capital of Q from McDermott.

You know, there's something that they're seeing that's beneficial in the U.K. and the Netherlands, which is why they are there. And, you know, we will kind of deal with that process in those venues, and we will deal with it if we have to if it returns to the United States through a recognition area. But with that, Your Honor, I will reserve comments and see what Mr. Luce has to say,

and if you have any questions, I'm happy to take them right now. So just, Mr. Elbrino, Just one. I want to make sure I read between the lines appropriately. You're telling me, you're telling the court that in a recognition hearing, there are going to be some U.S. policy concerns that you believe are going to need to be addressed, even if the debtors are successful in other jurisdictions. Did I read that right? You read it perfectly, Your Honor. I'll make sure I convey.

Well, I've now put it on the transcript for Judge Lopez. So he will have it. All right. Thank you. Anyone else before? Thank you. Anyone else before I go to Mr. Lewis? All right.

Mr. Lewis? Can Your Honor hear me okay? Loud and clear. Thanks for checking. All right. Thank you, Your Honor. We have two matters going forward today. One is scheduling, which appears in docket number nine,

and one is a request for provisional relief, which appears in docket number 10. Before we get into the two motions, Your Honor, we also filed three declarations. Mr. Brantley, this is the foreign representative, which is sort of the main evidentiary basis. We also filed declarations from Ms. Crocker, a UK specific declaration,

and from Mr. Stroiken, which is a death-specific declaration, those appear at docket numbers four, six, and five, respectively. We would ask that those be moved into evidence for purposes of today's hearing only on it. All right, thank you. And I have read each of the three declarations. Any objection, again, admitted for purposes of today's hearing only, the declarations which are marked as debtor exhibits,

one, two, and three found at CMECF, 4, 5, and 6. All right, they are admitted. Anyone wish to cross-examine any of the three witnesses? not waiving your right to do so at a future date. All right. Thank you. Then they are admitted, Mr. Lewis. Thank you, Your Honor.

So that I'll jump into the scheduling motion, which is docket number nine. Your Honor saw effectively all we're asking for is a date, and we're seeking a date that is the earliest date that would fall after we're expecting to have sanctions hearings and orders enter. in the Netherlands and the UK. There's additional release in there, Your Honor, related to form of notice. We also have some release in there that's become relatively

standard in this jurisdiction around EU and UK, data privacy laws, nothing out of the ordinary there. I believe it's consistent with what we've agreed with the U.S. trustee in the past, but I don't have specific sign-offs on the opposite of the United States trustee. Your Honor, we're asking for a day, the week of December 4th. We understand from conferring the chambers beforehand with December 5th at 1T.M. Central is a possibility based on Judge Lopez's availability.

Your Honor, if you take respect to Mr. Alvarino's comments, it is useful to have a date on the calendar for parties to work towards collectively. There will be greasing and papers filed ahead of this hearing. There will be potential discovery and other information that happens ahead of this hearing right now. The timeline of both the Dutch and the case of seating are within that date, such that that would be an appropriate date for a recognition hearing. And also, Your Honor, this is the business jurisdiction and days show up, and we want to be sure to have some time on the calendar. But if something changes, and we'll reserve a debate on the exact role of the restructuring expert in the Netherlands.

I don't think it's akin to a trustee, and there's a significant potential with the restructuring expert degree with our plan is to pass forward. All of that is to be sorted through in the coming weeks. It's not like we're asking for a hearing at the beginning of November. There's plenty of time here to allow those proceedings to play out. And if parties wish to come back for FAC developed with respect to the UK adjust proceedings such that November 5th no longer makes sense, as we do and matters all the time, we can look to adjust those states as appropriate. But for now we think it's appropriate and beneficial to the company to have a date on the

calendar or to move these ahead and also allow the company to message to their various stakeholders who are not as familiar as those of us on this on this call are with the process the other methods of these processes are moving to an order of conclusion even if those dates are moved somewhat at a later time so unless your honor has any questions that is our request and we submitted a proposed form of order with openings for the date and the objection that all right thank you Mr. Alvarino, no need to repeat what you said earlier. I heard you.

Any additional comments or arguments you want to make? No, the only point I would make there is, I think we referenced earlier, the heat sanction hearing in the UK begins the week of November 27th. It probably goes that all week. The recognition hearing they're looking at schedule is kind of a week from the start of that sanctions here.

There are a lot of people who are involved here are going to be probably rolling from one to another, it does seem a little bit burdensome to have all the professionals and principles and thought here, roll from one year into another, but all I would say there is, you know, we could probably, if we could consider, like, pushing it out a little bit longer, I think that would be helpful. But I go back to my point of, you know, maybe we get some, maybe if we can get feedback from the restression, I'm sure in the UK, taking into account this full schedule, you know,

we can come up with something that's, I think, more kind of reasonable and orderly for all involved. Because I think both proceedings are going to be heavily contested, you know, a briefing and witnesses. So it's a little difficult to roll from the UK into the U.S. Your Honor, Your Honor, Matt Warren. One point of note there, too, that may help. The hearing was scheduled for four days. That was the subject I contested convening hearing a month ago or so,

maybe a few weeks ago. But the 27th is called the day of pre-reading in the UK. That's not actually, as I understand it, Your Honor, that's allocated for the time the judge will spend reading the papers before the hearing. Not that I'm proposing that to the U.S., but the pre-reading day is the 27th, and then the hearing will start, I believe, on the 28th, and I think, as Mr. Alperina noted, they've set aside four days for it so it could go through the 1st of December

in the UK. Got it. Do we have U.S. trustee on the line? I thought I saw him earlier. Good morning, Your Honor. There you are. U.S. trustee, have any thoughts on this? No, I'll just respond to one of Mr. Liz's comments.

We're not raising any objection to the action of information in the proceeding. We need have neglected to communicate that by now. Got it. All right. Here's anyone else wish to be heard. All right. Here's what I'm going to do, and let me start in reverse order.

With respect to the redaction paragraph, which is paragraph number six, it was framed in the foreign representative is authorized. Again, I don't know. I don't profess to be an expert in UK law or. excuse me, with respect to the Netherlands on the privacy issues. I don't even profess to be an expert on U.S. law when it comes to the current state of privacy. What I am going to do, though, is I'm going to change that from discretionary to mandatory. I'm just going to say the foreign representative is directed to redact from any document. Again, just given what we've seen occur, I'm going to err on the side of caution.

As I always do, I know the U.S. trustee can't agree to it. It actually runs contrary to curtain, to certain printed policy as I understand it. I know that everybody's working really hard to try and find the right landing place on it, and I'm simply going to be overly protective until that is put in place. With respect to the arguments about the hearing date, I got it. I simply don't have, I have but one date on a calendar that I don't control. So what I am going to do is I'm going to schedule it. Excuse me, for December the 5th, 2023 at 1 o'clock.

Objections due no later than November the 28th at 4 p.m. Central time. What I'm also going to do, Mr. Lewis, I'm going, and this will be on the record that Judge Lopez can listen to. I'm going to instruct you to reach out to his chambers, say, next week, and ask for, after talking to all the parties, because, again, I'm sure you'll get some feedback as to what's going on and how this develops over the next couple of weeks. weeks is that you ask for a status conference maybe before the pre-rating day just to give Judge Lopez an update and in terms of talking about scheduling. I think you'll have a much better idea then. And I agree with Mr. Alvarino.

It's difficult to transition from one to another. I'm sure that you would probably want some breathing room as well. So that makes sense to me, but it seems to me that the best way to do that is to make that decision when we have more knowledge, which would, in my mind, be shortly before the start date. And so, again, if I could give you a date, I would. I simply can't. But it's on the record. I'm going to ask you to reach out to Judge Lopez's chamber and get a status conference

sort of shortly before that proceeding is scheduled to start. That makes sense to everybody? Certainly, Your Honor. We will do that. All right. And with that, I've looked at the notice. It's a notice I've seen before. It's a notice I've approved before.

I do think that it achieves the desired goals of being informative and transparent. I don't have any concerns. I will, with the changes that I've made is noted on the record, I will grant the motion. I've signed the order. And it is on its way to document. Chris Fluss? Thank you.

Your Honor. That brings us to the last matter going forward on the agenda which is document number 10 which is our motion for provisional release. We are seeking the most significant relief requested although there's some ancillator release but we are seeking imposition of a stay pending recognition. Your Honor to be clear the scope of the stay is relatively limited. The stay would apply to these debtors. It would apply within the borders of the United States. It would otherwise be the full scope of 362,

but it's not like a Chapter 11 debtor's stay in as much as it doesn't purport to be worldwide. We are seeking corresponding stays in the other processes, Yaman. So in one sense, this fits with a global strategy with respect to sort of act that protection of the debtors. Your Honor, not to hide the ball, there's specific actions that are at issue here

that Mr. Greco passed on briefly. A good, I think, concise description of what's transpired over the past several months between the company and Rapplicar's that's forth in paragraphs 44 to 50 of Mr. Brantley's declaration. There's been an action in the Southern District of New York, following the arbitration award. There was a motion to vacate that was commenced by the debtors.

There was a motion to confirm the award. And then recently there's been a motion to decree judgment attachment as well as discovery of foreign assets of the debtors. The hearing on that motion is best of the Friday. There has, in addition, been an action in the Southern District of Texas. It was nominally commenced against the German International Limited, so the parent company, but it's specifically seeking discovery and information related to Vennity for the purpose of contesting what's going on here abroad,

and I suppose potentially in connection with recognition. Your Honor, just to focus on a few points, I think it's useful to focus on the harm that we're seeking to prevent, as well as sort of the correspondence on and burden. Here, Your Honor, they are seeking pre-judgment attachments if you have the effect of granting a lien. It's the exact type of sort of race to the courthouse type of activity that you say is meant to prevent, even though it's not automatic here, so I were seeking it. And, Your Honor, there are broader ramifications. It's not just a distraction to the ongoing reorganization process.

It's not just potentially a distraction to pursuing a sanction of our destruction in the Netherlands of the UK. There's also not going to affect here to the broader business. It's the same issue that we discussed back in 2020. This company has a relatively sensitive capital structure in light of the nature of their business. They issue LTs for projects all over the world. The nature of these projects counterparties will be with the worst. To date, we've been able to avoid a cascade of LQ draws and customers and suppliers because the company has been able over the past seven years to continue to project stability.

and even though there was a restructuring in 2020 and even though we're pursuing a restructuring in the Netherlands that we play now, the company with the support of their stakeholders that continues to be able to, rightfully, assure their customers and other stakeholders that they continue to be a stable operating platform. If there is doubt, if there's a loss of confidence that can have significant effects and cascading effects

in the phrase we use and Mr. Brantley's definitely, We use it in this court number of times. We can sort of run on the bank scenario. The creation of instability, the creation of doubt, if collection actions were able to continue. It could have a significant impact not just on these centers, although the state applies to these letters and you think would operate to stop the enforcement action

we're focused on. It has effect on the broader and affirmative enterprise. With respect to what the corresponding burden would be, In particular on RASLAR because those are the nearest turn actions that we focused on. It's really just a way, but there continues to be a forum available. There's been a multiple forum available to Rappelcar to continue to pursue their rights in the Netherlands and in the UK and now here and protect their rights. There's not a dissipation of access.

These companies continue to operate in the ordinary courts and they're subject to significant court oversight. from three different courts now. And so we'll conduct their business and conduct their operations in accordance with their fiduciary duties and not try to siphon away assets that otherwise might be available to the produce of nuisance to judgment creditors. We ultimately believe that the analysis will show

that these plans are out of the money. That's not an issue for today. But today we're just trying to maintain the status quo protect the company, protect its assets. And that's what we're speaking today. It requires an affirmative order of the court because it's not automatic, but ultimately we think

in line with what 1519 provides for and relatively limited. It's used that or it's inside of the United States. It's the scope of the state that's otherwise provided for on the 362. I will pause today, your honor, happy answer to the question. All right. Thank you. Anyone else wish to be heard?

Your Honor, Matt Ward on behalf of Ref Guard, like if you heard on this. Of course. Your Honor, as the target of pleading, I appreciate Mr. Luz's clarification that the order is only applicable to non-debtors and there's only applicable to those debtors, not applicable to non-debtors, not applicable outside the United States. I don't think that's clear from the proposed order. that they submitted. The pleading talks a lot about non-debtors and actions against non-debtors.

I think it would be clarified in a proposed order that it does not apply to any entity that's not the debtors in these Chapter 15 cases. In Mr. Leaves's comments, I got a little of loss on that as well as he referenced the 1782 action in the Third District Act that you brought against McGovern International and sort of framed as it's nominally against them.

That's wrong. It's directly against the International. It's not brought against the debtor. Something in two is actually a third-party discovery mechanism for an decent form receiving. So it's properly brought against the non-debtor and it is seeking discovery, much like the thrust of the prejudgment attachment was also in part or in large part

seeking discovery in New York. Now, I will give Mr. Lewis's client some credit. in the past 48 hours or so they've actually started providing some information requested and it may mediate some of that at least being sought. But I certainly don't think on a hearing that at least I only woke up six hours ago had notice of we should be enjoying. They have a problem in the advisory proceeding, which is actually the proper way to file

on a H1519. I don't want to stand on procedure at this point but I think that's an improper procedural mechanism to even seek an injunction at this point. And finally, I'll turn back to the injunction itself. The petition to vacate and the motion to confirm is fully briefed in the side of district in New York. And it's pending ruling in front of Judge Wood. And while we are focused on the value of McDermott's enterprises at Rappacar, indeed, we are the largest creditor, the largest single creditor of McDermott,

and we believe we are the fulcrum and entitled to the recovery all the equity value of McDermann International. So we have no intent of destroying that value. And we are sorry to be a distraction that we want a $1.3 billion for growth negligence in violation of a contract. I don't think our being a distraction to Mitchell Luz's clients or their equity holders, merits stopping that action on a summary basis. Certainly not an injunction all the way through the end of these proceedings. I think Judge Wood should be permitted to rule on that fully brief action, and he shouldn't be enjoined from it now.

Even if we do enjoin it for, certainly any injunctions should only be for a period of a week or two weeks until we can come back to the court on fully brief papers. Rather, he should be able to rule on the petition debate and the confirmation of the arbitration award. From our perspective, that's very significant. There's no burdens of the debtors of that. and the sort of specter in the declaration, which I will admit, Your Honor, I didn't even really have time to read,

but they're admitted to the hearing only for purposes of today, the specter of this cascade of letters of credit being drawn the second anything bad happens to the company. I mean, that's made up. The LCs can't be drawn unless their underlying contracts permits them to be drawn. And I would be very interested in Mr. Luz has underlying contracts that say any of the other than that say,

in the event Repa Car wins confirmation of award from third party gets to draw its LC against McDermott. There's no contract that say that. And so there's not this threat of cascades of LCs. People can't draw LCs whenever they want in the EPC contracting world. That's not how many of this actually works. It's just something that's being held out as a threat

to, frankly, the detriment of my client. And so, Your Honor, I do object to any stay of Judge Wood's ruling on the fully brief, fully brief from a petition. of a motion to confirm the arbitration award, I don't think that these processes should hold that up. And to the extent your honor disagrees with me, which, of course, you might and often do, I would request that we could come back to court on a more fulsome briefing that's not six hours in where we actually have time to submit papers on that front.

Perhaps as part of an adversary proceeding or not, depending what you're on believe is the proper mandate under 15, 19, and I don't necessarily think this is it. But we would request another chance to come back to court on that if you're on just agreed with us. All right. Thank you. Anyone else to be heard? All right. I'm trying to work my way through all of this and recognizing that the majority of the reorganization proceedings will occur outside of the United States and in looking at the intent of section 1519. I do think that provisional relief is appropriate. Mr. Warren, I was very concerned when you said

it wasn't clear that the request of relief applied only to the debtors and only within the United States. I'm looking at it's on page 4 number 2, and it actually requests, says Section 362 of the Bankruptcy Code shall apply with respect to the debtors and the debtor's property that is within the territorial jurisdiction of the United States. and then it goes on, but it doesn't erode that. It seems to me that that's just about as clear as it could be. If I'm missing something, I absolutely want you to point me to it. I was listening and reading both at the same times, and sometimes that's difficult to do. Your Honor, I do think that's clear, and I think the record makes it clear.

I apologize I might have got lost in the pleading references to actions against BASDA, against other parties and actions, and against all sorts of other parties. I don't think the 1782 would be caught into this because it's against the parent. So I don't know exactly what it means to be nominally against another party, but I don't think that would be caught in this. So perhaps Mr. Luz could clarify that that was outside of this,

given it against a non-debtor. So in my mind, what's being asked for, I'm going to let the two of you talk offline. I don't think that parties should get struck trying to put one on the spot. I think that's better for a conversation off the record. I do think that certainty demands here's where we're going to start from. I don't think that the provisional relief exceeds the scope of 1519. I think it just makes sense.

We need a deep breath here. Mr. Warren, certainly nothing in this order. prohibits you from coming back whether it is on normal notice or expedited notice or emergency notice if that's what the situation demands and at that point everybody will have had effectively their pre-reading day for today and we can all be we can all be better educated we can all be better informed we can figure out if the restructuring expert is a party to appear or not because I I just simply don't know at this point, and I'm assuming that you all will educate Judge Lopez, who I hope will educate me. But looking at the request, I don't have any concerns about it.

Everyone's rights to come back and seek specific relief from that order are not impacted by this. I'm going to grant the motion. I've signed the order that was uploaded at docket number 10. That has been signed. It's on its way to docketing. Brooks, what else do we need to talk about today? That is it, Your Honor. As I said, we'll speech out with Judge Lopez's chambers

that status confidence, but otherwise we are concluded for today. I just think that makes sense. And, again, I do see, Mr. Alvarino, I did read the statement that she filed at Docket 32. There are a whole host of other motions to appear pro hoc. We'll get this taken care of very shortly. And with that, everyone have a great day, and we'll be adjourned until 1 o'clock. Thank you, everyone.