EX-99.1 2 a19-12248_1ex99d1.htm EX-99.1

Exhibit 99.1

 

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF TEXAS

 

HOUSTON DIVISION

 

-------------------------------------------------------------

x

 

In re:

:

Chapter 11

 

:

 

WEATHERFORD INTERNATIONAL PLC, et al.,

:

Case No. 19-[    ]

 

:

 

Debtors. (1)

:

(Joint Administration Requested)

 

:

 

-------------------------------------------------------------

x

 

 

DISCLOSURE STATEMENT FOR JOINT PREPACKAGED PLAN OF
REORGANIZATION FOR WEATHERFORD INTERNATIONAL PLC AND ITS
AFFILIATE DEBTORS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE

 

HUNTON ANDREWS KURTH LLP

 

LATHAM & WATKINS LLP

 

 

 

Timothy A. (“Tad”) Davidson II (No. 240112503)

 

George A. Davis (pro hac vice pending)

Ashley L. Harper (No. 24065272)

 

Keith A. Simon (pro hac vice pending)

600 Travis Street, Suite 4200

 

David A. Hammerman (pro hac vice pending)

Houston, Texas 77002

 

Annemarie V. Reilly (pro hac vice pending)

Telephone: (713) 220-4200

 

Lisa K. Lansio (pro hac vice pending)

Facsimile: (713) 220-4285

 

885 Third Avenue

 

 

New York, New York 10022

 

 

Telephone: (212) 906-1200

 

 

Facsimile: (212) 751-4864

 

Proposed Counsel for the Debtors and Debtors-in-Possession

 

Dated: June 28, 2019

Houston, Texas

 


(1)  The Debtors in these cases, along with the last four digits of each Debtor’s federal tax identification number, are:  Weatherford International plc (6750); Weatherford International Ltd. (1344); and Weatherford International, LLC (5019).  The location of the Debtors’ main corporate headquarters and the Debtors’ service address is: 2000 St. James Place, Houston, TX 77056.

 


 

THIS SOLICITATION OF VOTES (THE “SOLICITATION”) IS BEING CONDUCTED TO OBTAIN SUFFICIENT VOTES TO ACCEPT THE PLAN BEFORE THE FILING OF VOLUNTARY REORGANIZATION CASES UNDER CHAPTER 11 OF TITLE 11 OF THE UNITED STATES CODE (THE “BANKRUPTCY CODE”).  BECAUSE THE CHAPTER 11 CASES HAVE NOT YET BEEN COMMENCED, THIS DISCLOSURE STATEMENT HAS NOT BEEN APPROVED BY THE BANKRUPTCY COURT AS CONTAINING ADEQUATE INFORMATION WITHIN THE MEANING OF SECTION 1125(a) OF THE BANKRUPTCY CODE.  FOLLOWING THE COMMENCEMENT OF THE CHAPTER 11 CASE, THE DEBTORS EXPECT TO PROMPTLY SEEK ORDERS OF THE BANKRUPTCY COURT (I) APPROVING THIS DISCLOSURE STATEMENT AS CONTAINING ADEQUATE INFORMATION, (II) APPROVING THE SOLICITATION OF VOTES AS BEING IN COMPLIANCE WITH SECTIONS 1125 AND 1126(b) OF THE BANKRUPTCY CODE, AND (III) CONFIRMING THE PLAN.

 

DISCLOSURE STATEMENT, DATED JUNE 28, 2019

 

Solicitation of Votes

On the Plan of Reorganization of

 

WEATHERFORD INTERNATIONAL PLC, ET AL.

 

from the holders of outstanding

 

PREPETITION NOTES CLAIMS

EXISTING COMMON STOCK

 

THE VOTING DEADLINE FOR HOLDERS OF PREPETITION NOTES CLAIMS IS 5:00 P.M. PREVAILING CENTRAL TIME ON AUGUST 1, 2019 (UNLESS THE DEBTORS EXTEND THE VOTING DEADLINE).

 

THE VOTING RECORD DATE FOR DETERMINING WHICH HOLDERS OF PREPETITION NOTES MAY VOTE ON THE PLAN IS JUNE 24, 2019 (THE “PREPETITION NOTES VOTING RECORD DATE”).

 

A SEPARATE VOTING DEADLINE SHALL BE ESTABLISHED FOR HOLDERS OF EXISTING COMMON STOCK TO VOTE TO ACCEPT OR REJECT THE PLAN AFTER ENTRY OF AN ORDER BY THE BANKRUPTCY COURT CONDITIONALLY APPROVING THE DISCLOSURE STATEMENT AND THE SOLICITATION MATERIALS IN RESPECT OF THE PLAN.

 

THE VOTING RECORD DATE FOR DETERMINING WHICH HOLDERS OF EXISTING COMMON STOCK MAY VOTE ON THE PLAN IS EXPECTED TO BE JULY 2, 2019 (THE “COMMON STOCK VOTING RECORD DATE”).

 

THE VOTING DEADLINE FOR HOLDERS OF EXISTING COMMON STOCK IS EXPECTED TO BE 5:00 P.M. PREVAILING CENTRAL TIME ON AUGUST 13, 2019 (UNLESS THE DEBTORS EXTEND THE VOTING DEADLINE).

 

i


 

TO BE COUNTED AS A VOTE TO ACCEPT OR REJECT THE PLAN, THE VOTING AND CLAIMS AGENT MUST ACTUALLY RECEIVE YOUR BALLOT ON OR BEFORE THE APPLICABLE VOTING DEADLINE.

 

THE DEBTORS ANTICIPATE COMMENCING THE CHAPTER 11 CASES ON JULY 1, 2019 WITH AN EXPECTED FIRST DAY HEARING ON OR AROUND JULY 2, 2019.  A SEPARATE NOTICE OF THE FIRST DAY HEARING WILL BE MAILED TO ALL HOLDERS OF PREPETITION NOTES.  IF YOU DO NOT RECEIVE A NOTICE, PLEASE CONTACT UNDERSIGNED COUNSEL IMMEDIATELY OR CONSULT THE CASE WEBSITE MAINTAINED BY PRIME CLERK LLC AT WWW.PRIMECLERK.COM/WEATHERFORD.

 

RECOMMENDATION BY THE DEBTORS

 

The Board of Directors of Weatherford International plc and the other governing bodies of each of its affiliated Debtors have unanimously approved the transactions contemplated by the Solicitation and the Plan and recommend that all creditors and holders of equity interests whose votes are being solicited submit ballots to accept the Plan.  Holders of over 66.67% in outstanding principal amount of the Prepetition Notes Claims (as defined herein) entitled to vote on the Plan (the “Consenting Noteholders”) have already agreed, subject to the terms and conditions of the Restructuring Support Agreement, to vote in favor of the Plan.

 

THIS DISCLOSURE STATEMENT HAS BEEN PREPARED PURSUANT TO SECTIONS 1125 AND 1126(B) OF THE BANKRUPTCY CODE AND BANKRUPTCY RULE 3016.  THE SECURITIES DESCRIBED HEREIN WILL BE ISSUED TO CREDITORS AND HOLDERS OF EQUITY INTERESTS WITHOUT REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY SIMILAR FEDERAL, STATE OR LOCAL LAW, AND WILL INSTEAD RELY UPON THE EXEMPTIONS SET FORTH IN SECTION 1145 OF THE BANKRUPTCY CODE AND SECTION 4(A)(2) OF THE SECURITIES ACT OR OTHER APPLICABLE EXEMPTIONS.  THE DEBTORS RECOMMEND THAT POTENTIAL RECIPIENTS OF ANY SECURITIES PURSUANT TO THE PLAN CONSULT THEIR OWN LEGAL COUNSEL CONCERNING THE SECURITIES LAWS GOVERNING THE TRANSFERABILITY OF ANY SUCH SECURITIES.

 

THE SOLICITATION OF VOTES ON THE PLAN WITH RESPECT TO PREPETITION NOTES CLAIMS IS BEING MADE PURSUANT TO SECTION 4(A)(2) AND REGULATION D OF THE SECURITIES ACT AND ONLY WITH RESPECT TO HOLDERS OF SUCH CLAIMS THAT ARE ELIGIBLE HOLDERS OF PREPETITION NOTES CLAIMS AS DESCRIBED HEREIN; PROVIDED, HOWEVER, THAT ALL HOLDERS OF ALLOWED PREPETITION NOTES CLAIMS WILL BE ENTITLED TO RECEIVE DISTRIBUTIONS UNDER THE PLAN.

 

THE RIGHTS OFFERING WILL BE CONDUCTED PURSUANT TO SEPARATE RIGHTS OFFERING AND RIGHTS OFFERING PROCEDURES.  ANY DISCLOSURE CONTAINED HEREIN CONCERNING THE RIGHTS OFFERING IS SOLELY FOR INFORMATION PURPOSES.

 

ii


 

THE NEW COMMON STOCK, THE NEW WARRANTS (AND THE NEW COMMON STOCK ISSUABLE UPON EXERCISE THEREOF), THE SUBSCRIPTION RIGHTS, THE NEW TRANCHE A SENIOR UNSECURED NOTES ISSUED PURSUANT TO THE RIGHTS OFFERING, THE NEW TRANCHE B SENIOR UNSECURED NOTES (AND THE NEW COMMON STOCK ISSUABLE PURSUANT TO THE TRANCHE B EQUITY CONVERSION), AND ANY OTHER NEW SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (“SEC”) OR BY ANY STATE SECURITIES COMMISSION OR SIMILAR PUBLIC, GOVERNMENTAL, OR REGULATORY AUTHORITY, AND NEITHER THE SEC NOR ANY AUTHORITY HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT OR UPON THE MERITS OF PLAN. THIS DOCUMENT IS NOT A PROSPECTUS WITHIN THE MEANING OF THE EU PROSPECTUS DIRECTIVE (DIRECTIVE 2003/71/EC), AS AMENDED, THE EU PROSPECTUS REGULATION (REGULATION (EU) 2017/1129) OR ANY IMPLEMENTING LEGISLATION OR RULES RELATING THERETO OF ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA. THIS DOCUMENT HAS NOT BEEN APPROVED OR REVIEWED BY ANY COMPETENT AUTHORITY OR REGULATORY AUTHORITY OF ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA. NO OFFER OF SECURITIES TO THE PUBLIC IS MADE, OR WILL BE MADE IN ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA THAT REQUIRES THE PUBLICATION OF A PROSPECTUS WITHIN THE MEANING OF THE EU PROSPECTUS DIRECTIVE, AS AMENDED, OR THE EU PROSPECTUS REGULATION.

 

CERTAIN STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT, INCLUDING STATEMENTS INCORPORATED BY REFERENCE AND PROJECTED FINANCIAL INFORMATION, ARE FORWARD-LOOKING STATEMENTS AND ARE BASED ON ESTIMATES AND ASSUMPTIONS.  THERE CAN BE NO ASSURANCE THAT SUCH STATEMENTS WILL BE REFLECTIVE OF ACTUAL OUTCOMES.  FORWARD-LOOKING STATEMENTS ARE PROVIDED IN THIS DISCLOSURE STATEMENT PURSUANT TO THE SAFE HARBOR ESTABLISHED UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND SHOULD BE EVALUATED IN THE CONTEXT OF THE ESTIMATES, ASSUMPTIONS, UNCERTAINTIES, AND RISKS DESCRIBED HEREIN.

 

FURTHER, WHILE THE DEBTORS BELIEVE THE ASSUMPTIONS ON WHICH THE FORWARD-LOOKING STATEMENTS HEREIN ARE BASED ARE REASONABLE, READERS ARE CAUTIONED AGAINST RELYING ON ANY FORWARD-LOOKING STATEMENTS AS IT IS VERY DIFFICULT TO PREDICT THE IMPACT OF KNOWN FACTORS, AND IT IS IMPOSSIBLE TO ANTICIPATE ALL FACTORS THAT COULD AFFECT ACTUAL RESULTS. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS HEREIN INCLUDE, BUT ARE NOT LIMITED TO, THE ABILITY TO CONFIRM AND CONSUMMATE A PLAN OF REORGANIZATION IN ACCORDANCE WITH THE TERMS OF THE RESTRUCTURING SUPPORT AGREEMENT; RISKS ATTENDANT TO THE BANKRUPTCY PROCESS, INCLUDING THE DEBTORS’ ABILITY TO OBTAIN THE APPROVAL OF THE BANKRUPTCY

 

iii


 

COURT WITH RESPECT TO MOTIONS FILED IN THE CASES, THE OUTCOMES OF BANKRUPTCY CASES AND THE LENGTH OF TIME THAT THE DEBTORS MAY BE REQUIRED TO OPERATE IN BANKRUPTCY; THE EFFECTIVENESS OF THE OVERALL RESTRUCTURING ACTIVITIES AND ANY ADDITIONAL STRATEGIES THAT THE DEBTORS EMPLOY TO ADDRESS LIQUIDITY AND CAPITAL RESOURCES; THE ACTIONS AND DECISIONS OF CREDITORS, REGULATORS AND OTHER THIRD PARTIES THAT HAVE AN INTEREST IN THE CASES, WHICH MAY INTERFERE WITH THE ABILITY TO CONFIRM AND CONSUMMATE A PLAN OF REORGANIZATION; RESTRICTIONS ON THE DEBTORS DUE TO THE TERMS OF ANY DEBTOR-IN-POSSESSION CREDIT FACILITY ENTERED INTO IN CONNECTION WITH THE BANKRUPTCY CASES AND RESTRICTIONS IMPOSED BY THE BANKRUPTCY COURT; THE DEBTORS’ ABILITY TO REALIZE THE COST SAVINGS AND BUSINESS ENHANCEMENTS FROM THEIR TRANSFORMATION EFFORTS; THE DEBTORS’ ABILITY TO INVEST IN THEIR BUSINESSES IN ACCORDANCE WITH THEIR FORECASTED CAPITAL EXPENDITURE BUDGET; A WEAKENING OF GLOBAL ECONOMIC AND FINANCIAL CONDITIONS, CHANGES IN GOVERNMENTAL REGULATIONS AND RELATED COMPLIANCE AND LITIGATION COSTS AND THE OTHER FACTORS LISTED IN THE DEBTORS’ SEC FILINGS.  THE DEBTORS ARE UNDER NO OBLIGATION TO (AND EXPRESSLY DISCLAIM ANY OBLIGATION TO) UPDATE OR ALTER ANY FORWARD-LOOKING STATEMENTS WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS, OR OTHERWISE, UNLESS INSTRUCTED TO DO SO BY THE BANKRUPTCY COURT.

 

HOLDERS OF ALLOWED GENERAL UNSECURED CLAIMS WILL NOT BE IMPAIRED BY THE PLAN AND, AS A RESULT, THE RIGHT TO RECEIVE PAYMENT IN FULL ON ACCOUNT OF EXISTING OBLIGATIONS IN RESPECT OF SUCH CLAIMS IS NOT ALTERED BY THE PLAN.  DURING THE CHAPTER 11 CASES, THE DEBTORS INTEND TO OPERATE THEIR BUSINESSES IN THE ORDINARY COURSE.

 

THE PLAN PROVIDES THAT HOLDERS OF IMPAIRED CLAIMS AND EXISTING COMMON STOCK ENTITLED TO VOTE WHO DO NOT SUBMIT A BALLOT VOTING TO ACCEPT OR REJECT THE PLAN, WHO VOTE TO ACCEPT THE PLAN, OR WHO VOTE TO REJECT THE PLAN BUT DO NOT OPT OUT OF THE RELEASE PROVISIONS OF THE PLAN ARE DEEMED TO HAVE GRANTED THE RELEASES THEREIN.

 

NO LEGAL OR TAX ADVICE IS PROVIDED TO YOU BY THIS DISCLOSURE STATEMENT.  THE DEBTORS URGE EACH HOLDER OF A CLAIM OR AN EQUITY INTEREST TO CONSULT WITH ITS OWN ADVISORS WITH RESPECT TO ANY LEGAL, FINANCIAL, SECURITIES, TAX OR BUSINESS ADVICE IN REVIEWING THIS DISCLOSURE STATEMENT, THE PLAN AND EACH OF THE PROPOSED TRANSACTIONS CONTEMPLATED THEREBY.  FURTHERMORE, THE BANKRUPTCY COURT’S APPROVAL OF THE ADEQUACY OF DISCLOSURE CONTAINED IN THIS DISCLOSURE STATEMENT DOES NOT CONSTITUTE THE BANKRUPTCY COURT’S APPROVAL OF THE MERITS OF THE PLAN.

 

iv


 

IT IS THE DEBTORS’ POSITION THAT THIS DISCLOSURE STATEMENT DOES NOT CONSTITUTE, AND MAY NOT BE CONSTRUED AS, AN ADMISSION OF FACT, LIABILITY, STIPULATION OR WAIVER.  RATHER, THIS DISCLOSURE STATEMENT SHALL CONSTITUTE A STATEMENT MADE IN SETTLEMENT NEGOTIATIONS RELATED TO CONTESTED MATTERS, ADVERSARY PROCEEDINGS AND OTHER PENDING OR THREATENED LITIGATION OR ACTIONS.

 

NO RELIANCE SHOULD BE PLACED ON THE FACT THAT A PARTICULAR LITIGATION CLAIM OR PROJECTED OBJECTION TO A PARTICULAR CLAIM IS, OR IS NOT, IDENTIFIED IN THE DISCLOSURE STATEMENT.  THE DEBTORS OR THE REORGANIZED DEBTORS MAY SEEK TO INVESTIGATE, FILE AND PROSECUTE CLAIMS AND MAY OBJECT TO CLAIMS AFTER THE CONFIRMATION OR EFFECTIVE DATE OF THE PLAN IRRESPECTIVE OF WHETHER THE DISCLOSURE STATEMENT IDENTIFIES ANY SUCH CLAIMS OR OBJECTIONS TO CLAIMS.

 

IN REVIEWING THIS DISCLOSURE STATEMENT AND THE PLAN, AND IN DETERMINING WHETHER TO VOTE IN FAVOR OF OR AGAINST, OR TO OBJECT TO CONFIRMATION OF, THE PLAN, CREDITORS, EQUITY INTEREST HOLDERS AND STAKEHOLDERS SHOULD BE AWARE THAT THE PLAN PRESERVES ALL CAUSES OF ACTION (INCLUDING AVOIDANCE ACTIONS) AND THAT THE PLAN AUTHORIZES THE REORGANIZED DEBTORS TO PROSECUTE THE SAME.

 

THIS DISCLOSURE STATEMENT CONTAINS, AMONG OTHER THINGS, SUMMARIES OF THE PLAN, CERTAIN STATUTORY PROVISIONS, CERTAIN EXPECTED EVENTS IN THE DEBTORS’ TO-BE-FILED CHAPTER 11 CASES AND CERTAIN DOCUMENTS RELATED TO THE PLAN THAT ARE ATTACHED HERETO AND INCORPORATED HEREIN BY REFERENCE.  ALTHOUGH THE DEBTORS BELIEVE THAT THESE SUMMARIES ARE FAIR AND ACCURATE, THESE SUMMARIES ARE QUALIFIED IN THEIR ENTIRETY TO THE EXTENT THAT THE SUMMARIES DO NOT SET FORTH THE ENTIRE TEXT OF SUCH DOCUMENTS OR STATUTORY PROVISIONS OR EVERY DETAIL OF SUCH EVENTS.  IN THE EVENT OF ANY CONFLICT, INCONSISTENCY OR DISCREPANCY BETWEEN A DESCRIPTION IN THIS DISCLOSURE STATEMENT AND THE TERMS AND PROVISIONS OF THE PLAN OR ANY OTHER DOCUMENTS INCORPORATED HEREIN BY REFERENCE, THE PLAN OR SUCH OTHER DOCUMENTS WILL GOVERN AND CONTROL FOR ALL PURPOSES.  EXCEPT WHERE OTHERWISE SPECIFICALLY NOTED, FACTUAL INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT HAS BEEN PROVIDED BY THE DEBTORS’ MANAGEMENT.  THE DEBTORS DO NOT REPRESENT OR WARRANT THAT THE INFORMATION CONTAINED HEREIN OR ATTACHED HERETO IS WITHOUT ANY MATERIAL INACCURACY OR OMISSION.

 

THE DEBTORS’ MANAGEMENT HAS REVIEWED THE FINANCIAL INFORMATION PROVIDED IN THIS DISCLOSURE STATEMENT.  ALTHOUGH THE DEBTORS HAVE USED THEIR REASONABLE BUSINESS JUDGMENT TO ENSURE THE ACCURACY OF THIS FINANCIAL INFORMATION, THE FINANCIAL

 

v


 

INFORMATION CONTAINED IN, OR INCORPORATED BY REFERENCE INTO, THIS DISCLOSURE STATEMENT HAS NOT BEEN AUDITED (UNLESS EXPRESSLY PROVIDED HEREIN).

 

THE DEBTORS ARE MAKING THE STATEMENTS AND PROVIDING THE FINANCIAL INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT AS OF THE DATE HEREOF WHERE FEASIBLE, UNLESS OTHERWISE SPECIFICALLY NOTED.  ALTHOUGH THE DEBTORS MAY SUBSEQUENTLY UPDATE THE INFORMATION IN THIS DISCLOSURE STATEMENT, THE DEBTORS HAVE NO AFFIRMATIVE DUTY TO DO SO.  HOLDERS OF CLAIMS AND EQUITY INTERESTS REVIEWING THIS DISCLOSURE STATEMENT SHOULD NOT INFER THAT, AT THE TIME OF THEIR REVIEW, THE FACTS SET FORTH HEREIN HAVE NOT CHANGED SINCE THE DISCLOSURE STATEMENT WAS FILED.  THE DEBTORS HAVE NOT AUTHORIZED ANY ENTITY TO GIVE ANY INFORMATION ABOUT OR CONCERNING THE PLAN OTHER THAN THAT WHICH IS CONTAINED IN THIS DISCLOSURE STATEMENT.  THE DEBTORS HAVE NOT AUTHORIZED ANY REPRESENTATIONS CONCERNING THE DEBTORS OR THE VALUE OF THEIR PROPERTY OTHER THAN AS SET FORTH IN THIS DISCLOSURE STATEMENT.

 

HOLDERS OF CLAIMS AND EQUITY INTERESTS ENTITLED TO VOTE TO ACCEPT OR REJECT THE PLAN MUST RELY ON THEIR OWN EVALUATION OF THE DEBTORS AND THEIR OWN ANALYSES OF THE TERMS OF THE PLAN IN DECIDING WHETHER TO VOTE TO ACCEPT OR REJECT THE PLAN.  IMPORTANTLY, PRIOR TO DECIDING WHETHER AND HOW TO VOTE ON THE PLAN, EACH HOLDER OF A CLAIM OR EQUITY INTEREST IN A VOTING CLASS SHOULD REVIEW THE PLAN IN ITS ENTIRETY AND CONSIDER CAREFULLY ALL OF THE INFORMATION IN THIS DISCLOSURE STATEMENT AND ANY EXHIBITS HERETO, INCLUDING THE RISK FACTORS DESCRIBED IN GREATER DETAIL IN SECTION V HEREIN, “PLAN-RELATED RISK FACTORS.”

 

vi


 

TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

 

I. EXECUTIVE SUMMARY

 

1

 

 

 

A.

Purpose and Effect of the Plan

 

3

B.

Classification and Treatment of Claims and Equity Interests Under the Plan

 

5

 

 

 

 

II. BACKGROUND TO THE CHAPTER 11 CASES

 

10

 

 

 

A.

The Debtors’ Corporate History and Structure

 

10

B.

Overview of the Debtors’ Businesses

 

10

C.

Prepetition Indebtedness

 

14

D.

Events Leading to the Chapter 11 Filing

 

16

 

 

 

 

III. ANTICIPATED EVENTS DURING THE CHAPTER 11 CASE, THE IRISH EXAMINERSHIP PROCEEDING, AND THE BERMUDA PROCEEDING

 

23

 

 

 

A.

Chapter 11 First Day Motions and Certain Related Relief

 

23

B.

Exclusive Period for Filing a Chapter 11 Plan and Soliciting Votes

 

26

C.

The Irish Examinership Proceeding

 

27

D.

The Bermuda Proceeding

 

28

 

 

 

 

IV. SUMMARY OF THE PLAN

 

29

 

 

 

A.

General

 

29

B.

Administrative, DIP Facility, and Priority Tax Claims

 

30

C.

Classification and Treatment of Classified Claims and Equity Interests

 

32

D.

Acceptance or Rejection of the Plan

 

40

E.

Means for Implementation of the Plan

 

41

F.

Treatment of Executory Contracts and Unexpired Leases

 

51

G.

Provisions Governing Distributions

 

56

H.

Procedures for Resolving Contingent, Unliquidated and Disputed Claims

 

62

I.

Conditions Precedent to Confirmation and Consummation of the Plan

 

64

J.

Release, Discharge, Injunction And Related Provisions

 

68

K.

Retention of jurisdiction

 

76

L.

Miscellaneous Provisions

 

78

 

 

 

 

V. PLAN-RELATED RISK FACTORS

 

84

 

 

 

A.

Certain Bankruptcy Law Considerations

 

84

B.

Additional Factors Affecting the Value of the Reorganized Debtors

 

87

C.

Risk Factors That May Affect the Value of Securities to be Issued Under the Plan and/or Recoveries Under the Plan

 

90

D.

Risk Factors that Could Negatively Impact the Debtors’ And Reorganized Debtors’ Businesses and Financial Condition

 

92

 

i


 

E.

Certain Risk Factors Relating to the Irish Examinership Proceeding

 

101

F.

Certain Risk Factors Relating to the Bermuda Proceeding

 

103

 

 

 

 

VI. SOLICITATION AND VOTING PROCEDURES

 

104

 

 

 

A.

Solicitation Procedures

 

104

B.

Voting Procedures

 

105

 

 

 

 

VII. CONFIRMATION OF THE PLAN

 

114

 

 

 

A.

The Confirmation Hearing

 

114

B.

Objections to Confirmation

 

114

C.

Effect of Confirmation of the Plan

 

114

D.

Consummation of the Plan

 

114

E.

Confirmation Procedures

 

115

F.

Statutory Requirements for Confirmation of the Plan

 

115

G.

Consummation of the Plan

 

121

 

 

 

 

VIII. VALUATION ANALYSIS

 

121

 

 

 

IX. EXEMPTIONS FROM SECURITIES ACT REGISTRATION

 

121

 

 

 

X. CERTAIN TAX CONSEQUENCES OF THE PLAN

 

122

 

 

 

A.

Certain U.S. Federal Income Tax Consequences of the Plan

 

123

B.

Certain Irish Tax Consequences of the Plan

 

145

C.

Certain Swiss Tax Consequences of the Plan

 

153

D.

Certain Bermudian Tax Consequences of the Plan

 

154

 

 

 

 

XI. ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN

 

154

 

 

 

A.

Liquidation Under Chapter 7 of the Bankruptcy Code

 

154

B.

Filing of an Alternative Plan of Reorganization

 

154

 

ii


 

EXHIBITS

 

EXHIBIT A:

 

Plan of Reorganization

 

 

 

EXHIBIT B:

 

Restructuring Support Agreement

 

 

 

EXHIBIT C:

 

Liquidation Analysis

 

 

 

EXHIBIT D:

 

Financial Projections

 

 

 

EXHIBIT E:

 

Valuation Analysis

 

 

 

EXHIBIT F:

 

Organizational Structure Chart

 

 

 

EXHIBIT G:

 

Prepetition Indebtedness Borrowers, Guarantors, and Obligors

 

 

 

EXHIBIT H:

 

Backstop Commitment Agreement

 

 

 

EXHIBIT I:

 

Reorganization Steps Overview

 

 

 

EXHIBIT J:

 

Description of Reorganization Steps

 

 

 

EXHIBIT K:

 

Warrant Term Sheet

 

THE DEBTORS HEREBY ADOPT AND INCORPORATE EACH EXHIBIT ATTACHED TO THIS DISCLOSURE STATEMENT BY REFERENCE AS THOUGH FULLY SET FORTH HEREIN.

 

iii


 

I.

EXECUTIVE SUMMARY

 

Weatherford International plc (“Weatherford Parent”), an Irish public limited company, and the other debtors and debtors in possession (collectively, the “Debtors” and, together with their non-debtor subsidiaries, the “Company” or “Weatherford”), submit this disclosure statement (“Disclosure Statement”) pursuant to sections 1125 and 1126(b) of title 11 of the United States Code, 11 U.S.C. §§ 101-1532 (as amended from time to time, the “Bankruptcy Code”) and other applicable law, in connection with the solicitation of votes (the “Solicitation”) on the Joint Prepackaged Plan of Reorganization for Weatherford International plc and its Affiliate Debtors Under Chapter 11 of the Bankruptcy Code, dated June 28, 2019 (the “Plan”).(2)  Subject to the approval of the board of directors of Weatherford Parent, the Debtors anticipate filing voluntary petitions for relief under chapter 11 in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the “Bankruptcy Court”) on or around July 1, 2019 (the “Chapter 11 Cases”).  A copy of the Plan is attached hereto as Exhibit A.

 

The Debtors anticipate commencing the Chapter 11 Cases on July 1, 2019 with an expected first day hearing on or around July 2, 2019.

 

The Debtors are commencing this Solicitation to implement a comprehensive financial restructuring to deleverage the Company’s balance sheet to ensure the long-term viability of the Debtors’ enterprise.  As a result of extensive negotiations, the Debtors and the Holders of approximately 74% of the Prepetition Notes (the “Consenting Noteholders”) entered into a restructuring support agreement (the “Restructuring Support Agreement”) dated as of May 10, 2019, a copy of which is attached hereto as Exhibit B.  Under the terms of the Restructuring Support Agreement, the Consenting Noteholders have agreed, subject to the terms and conditions of the Restructuring Support Agreement, to support a restructuring of the Debtors’ existing capital structure in chapter 11 (the “Restructuring”) and vote to accept the Plan.

 

There are two groups whose votes for acceptance of the Plan are being solicited:

 

·                  Holders of Prepetition Notes; and

 

·                  Holders of Existing Common Stock.

 

The Restructuring as contemplated in the Plan results in a significant deleveraging of the Debtors’ capital structure.  The Debtors’ funded debt will be reduced from approximately $8.35 billion to $2.50 billion, which will allow the Debtors to focus on long-term growth prospects and their competitive position in the market, which will in turn allow the Debtors to emerge from these Chapter 11 Cases as a stronger company.

 

Pursuant to section 1126(b) of the Bankruptcy Code, prior to commencement of a prepackaged chapter 11 case, the Solicitation of votes for acceptance or rejection of a plan must (i) comply with any applicable non-bankruptcy law, rule or regulation governing the adequacy of

 


(2)  All capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Plan.  To the extent that a definition of a term in the text of this Disclosure Statement and the definition of such term in the Plan are inconsistent, the definition included in the Plan shall control and govern.

 


 

disclosure in connection with such Solicitation or (ii) if there is no such law, rule or other regulation, must contain adequate information as defined in section 1125(a) of the Bankruptcy Code.  Pursuant to section 1125(a) of the Bankruptcy Code, “adequate information” is information of a kind, and in sufficient detail, to enable a hypothetical reasonable investor to make an informed judgment regarding the plan. To satisfy applicable disclosure requirements, the Debtors are submitting this Disclosure Statement to holders of Claims and Equity Interests who are Impaired and not deemed to have rejected the Plan.

 

Section 1125(g) of the Bankruptcy Code allows for the Solicitation of votes from holders prior to commencement of a chapter 11 case if such solicitation complies with applicable nonbankruptcy law and if such holder was solicited before the commencement of the case in a manner complying with applicable nonbankruptcy law.

 

The Solicitation of Holders of Prepetition Notes is being conducted at this time, prior to the commencement of the Chapter 11 Cases, to obtain sufficient acceptances to enable the Plan to be confirmed by the Bankruptcy Court pursuant to the provisions of the Bankruptcy Code.  The Solicitation of Holders of Existing Common Stock will commence after the commencement of the Chapter 11 Cases.  The Company believes that this Solicitation will minimize the disruption of its business that could result from a traditional bankruptcy case, which could be contested and protracted.  The Company also believes that the Solicitation of Holders of Prepetition Notes prior to the commencement of the Chapter 11 Cases will minimize postpetition disputes, and will significantly simplify, shorten, and reduce the administrative costs of the Chapter 11 Cases.

 

This Executive Summary is being provided as an overview of the material items addressed in the Disclosure Statement and the Plan, which is qualified by reference to the entire Disclosure Statement and by the actual terms of the Plan (and including all exhibits attached hereto and to the Plan), and should not be relied upon for a comprehensive discussion of the Disclosure Statement and/or the Plan.  This Disclosure Statement includes, without limitation, information about:

 

·                  the Debtors’ operating and financial history;

 

·                  background information, including the events leading up to the Restructuring, including the expected commencement of the Chapter 11 Cases;

 

·                  the significant events that are expected to occur during the Chapter 11 Cases;

 

·                  the Confirmation process and the solicitation and voting procedures that Holders of Claims and Equity Interests who are entitled to vote on the Plan must follow for their votes to be counted;

 

·                  the terms and provisions of the Plan, including certain effects of confirmation of the Plan, certain risk factors relating to the Debtors or the Reorganized Debtors, the Plan and the securities to be issued under the Plan and the manner in which distributions will be made under the Plan;

 

·                  the Reorganization Steps Overview, as described more fully in Exhibit I; and

 

2


 

·                  the proposed organization, operations and financing of the Reorganized Debtors if the Plan is confirmed and becomes effective.

 

A.                                    PURPOSE AND EFFECT OF THE PLAN

 

1.                                      Plan of Reorganization Under Chapter 11 of the Bankruptcy Code

 

The Debtors are reorganizing pursuant to chapter 11 of the Bankruptcy Code, which is the principal business reorganization chapter of the Bankruptcy Code.  As a result, the confirmation of the Plan means that the Reorganized Debtors will continue to operate their businesses going forward and does not mean that the Debtors will be liquidated or forced to go out of business.  Additionally, as discussed in greater detail in Section IV.J herein, titled “Binding Nature of the Plan,” a bankruptcy court’s confirmation of a plan binds debtors, any entity acquiring property under the plan, any holder of a claim or equity interest in a debtor and all other entities as may be ordered by the bankruptcy court in accordance with the applicable provisions of the Bankruptcy Code to the terms and conditions of the confirmed plan, whether or not such entity voted on the particular plan or affirmatively voted to reject the plan.

 

2.                                      Financial Restructurings Under the Plan

 

The Plan contemplates certain transactions, including, without limitation, the following transactions (described in greater detail in Section IV herein):

 

·                  each Holder of an Allowed Prepetition Revolving Credit Claim will receive payment in Cash equal to such Allowed Claim from the DIP Facility;

 

·                  each Holder of an Allowed Prepetition Term Loan Claim will receive payment in Cash equal to such Allowed Claim from the DIP Facility;

 

·                  each Holder of an Allowed Prepetition A&R Claim will receive payment in Cash equal to such Allowed Claim from the Exit Facility;

 

·                  each Holder of an Allowed Prepetition Notes Claim will receive its Pro Rata share of (i) 99% of the New Common Stock, subject to dilution on account of equity issued pursuant to the New Management Incentive Plan, the New Tranche B Equity Conversion, and the New Common Stock issuable pursuant to the New Warrants and (ii) the New Tranche B Senior Unsecured Notes; provided, however, that each Holder of Allowed Prepetition Notes Claims will have the option, in its sole discretion, of converting its New Tranche B Senior Unsecured Notes pursuant to the Tranche B Equity Conversion at the mid-point of the equity value range set forth in this Disclosure Statement; provided, further that the aggregate principal amount of New Tranche B Senior Unsecured Notes converted into New Common Stock will not exceed $500,000,000.  To the extent that less than $500,000,000 in principal amount of the New Tranche B Senior Unsecured Notes is converted in New Common Stock pursuant to the Tranche B Equity Conversion, any Holder of Allowed Prepetition Notes Claims that elected to convert its full Pro Rata share of New Tranche B Senior Unsecured Notes into New Common Stock in the Tranche B Equity Conversion shall also be eligible to exercise their Overallotment Rights.  Procedures for the effectuation of the

 

3


 

Tranche B Equity Conversion and the Overallotment Rights are set forth in Article V.V of the Plan.  Each Holder of Prepetition Notes issued by Weatherford International, LLC will receive New Tranche B Senior Unsecured Notes issued by Reorganized Weatherford Delaware and each Holder of Prepetition Notes issued by Weatherford International Ltd. will receive New Tranche B Senior Unsecured Notes issued by Reorganized Weatherford Bermuda;

 

·                  each Holder of an Allowed Prepetition Notes Claim will receive Subscription Rights to purchase its Pro Rata share of New Tranche A Senior Unsecured Notes pursuant to the Rights Offering (as defined below) and in accordance with the applicable Rights Offerings Procedures;

 

·                  Existing Common Stock will be cancelled and each Holder of Existing Common Stock will receive its Pro Rata share of (i) 1.0% of the New Common Stock, subject to dilution on account of the equity issued pursuant to the New Management Incentive Plan, the Tranche B Equity Conversion and the New Common Stock issuable pursuant to the New Warrants and (ii) the New Warrants;

 

·                  the Allowed DIP Facility Claims will be paid in full in Cash upon emergence;

 

·                  the Intercompany Claims will be adjusted, reinstated, compromised, or cancelled to the extent determined appropriate by the Debtors, with the consent of the Required Consenting Noteholders (and to the extent permitted by the laws of the Debtor’s jurisdiction of incorporation if non-bankruptcy law applies);

 

·                  the Intercompany Equity Interests will be reinstated for administrative convenience or cancelled as determined by the Debtors, with the reasonable consent of the Required Consenting Noteholders;

 

·                  the Unexercised Equity Interests will be cancelled, and the Holders of such Unexercised Equity Interests will not receive any distribution or retain any property on account of such Unexercised Equity Interests; and

 

·                  the legal, equitable, and contractual rights of the Holders of Allowed Other Priority Claims, Allowed Other Secured Claims, Allowed General Unsecured Claims, and Allowed Secured Tax Claims will be unaltered by the Plan.

 

4


 

3.                                      Effect of the Plan on Debtors’ Capital Structure

 

The expected effect of the Restructuring on the Debtors’ capital structure is summarized as follows:

 

Pre-Petition Capital Structure

 

Reorganized Capital Structure

 

Prepetition A&R

 

$

305,000,000

 

Exit Facility (undrawn on Effective Date)

 

Up to $1,000,000,000

 

 

 

 

 

 

 

 

 

Prepetition Term Loan

 

$

297,500,000

 

New Tranche A Senior Unsecured Notes

 

Up to $1,250,000,000

 

 

 

 

 

 

 

 

 

Prepetition Revolver

 

$

316,742,581

 

New Tranche B Senior Unsecured Notes

 

Up to $1,250,000,000

 

 

 

 

 

 

 

 

 

Prepetition Notes

 

$

7,427,067,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Funded Debt

 

$

8,346,309,581

 

Total Funded Debt

 

Up to $2,500,000,000

 

 

B.                                    CLASSIFICATION AND TREATMENT OF CLAIMS AND EQUITY INTERESTS UNDER THE PLAN

 

The following table provides a summary of the classification and treatment of Claims and Equity Interests and the potential distributions to Holders of Allowed Claims and Equity Interests under the Plan.

 

THE PROJECTED RECOVERIES SET FORTH IN THE TABLE BELOW ARE ESTIMATES ONLY AND THEREFORE ARE SUBJECT TO CHANGE.  FOR A COMPLETE DESCRIPTION OF THE DEBTORS’ CLASSIFICATION AND TREATMENT OF CLAIMS AND EQUITY INTERESTS, REFERENCE SHOULD BE MADE TO THE ENTIRE PLAN AND THE RISK FACTORS DESCRIBED IN ARTICLE V BELOW.  THE TABLE IS INTENDED FOR ILLUSTRATIVE PURPOSES ONLY AND IS NOT A SUBSTITUTE FOR A REVIEW OF THE PLAN AND DISCLOSURE STATEMENT IN THEIR ENTIRETY.  FOR CERTAIN CLASSES OF CLAIMS, THE ACTUAL AMOUNT OF ALLOWED CLAIMS COULD BE MATERIALLY DIFFERENT THAN THE ESTIMATED AMOUNTS SHOWN IN THE TABLE BELOW.

 

5


 

 

SUMMARY OF EXPECTED RECOVERIES

 

Class

 

Claim/Equity
Interest

 

Treatment of Claim/Equity Interest

 

Projected
Recovery
Under the
Plan

 

1

 

Other Priority Claims

 

Expected Amount:

$0

 

Each Holder of an Allowed Class 1 Claim will receive in full satisfaction, settlement, discharge and release of, and in exchange for, such Allowed Class 1 Claim, at the election of the Debtors or Reorganized Debtors, as applicable (with the consent of the Required Consenting Noteholders in the manner set forth in the Restructuring Support Agreement):

 

·                  Cash equal to the amount of such Allowed Class 1 Claim;

 

·                  Such other less favorable treatment as to which the Debtors or Reorganized Debtors, as applicable, and the Holder of such Allowed Class 1 Claim will have agreed upon in writing; or

 

·                  Such other treatment such that it will not be impaired pursuant to section 1124 of the Bankruptcy Code.

 

100%

 

 

 

 

 

 

 

 

 

2

 

Other Secured Claims

 

Expected Amount:

$0

 

Each Holder of an Allowed Class 2 Claim will receive in full satisfaction, settlement, discharge and release of, and in exchange for, such Allowed Class 2 Claim, at the election of the Debtors or Reorganized Debtors, as applicable (with the consent of the Required Consenting Noteholders in the manner set forth in the Restructuring Support Agreement):

 

·                  Cash equal to the amount of such Allowed Class 2 Claim;

 

·                  Such other less favorable treatment as to which the Debtors or Reorganized Debtors, as applicable, and the Holder of such Allowed Class 2 Claim will have agreed upon in writing;

 

·                  The Collateral securing such Allowed Class 2 Claim; or

 

·                  Such other treatment such that it will not be impaired pursuant to section 1124 of the Bankruptcy Code.

 

100%

 

 

 

 

 

 

 

 

 

3

 

Secured Tax Claims

 

Expected Amount:

$0

 

Each Holder of an Allowed Class 3 Claim will receive in full satisfaction, settlement, discharge and release of, and in exchange for, such Allowed Class 3 Claim, at the election of the Debtors or Reorganized Debtors, as applicable (with the consent of the Required Consenting Noteholders in the manner set forth in the Restructuring Support Agreement):

 

·                  Cash equal to the amount of such Allowed Class 3 Claim;

 

·                  Such other less favorable treatment as to which the Debtors or Reorganized Debtors, as applicable, and the Holder of such Allowed Class 3 Claim shall have agreed upon in writing;

 

·                  The Collateral securing such Allowed Class 3 Claim;

 

100%

 

 

6


 

Class

 

Claim/Equity
Interest

 

Treatment of Claim/Equity Interest

 

Projected
Recovery
Under the
Plan

 

 

 

 

 

·                  Such other treatment such that it will not be impaired pursuant to section 1124 of the Bankruptcy Code; or

 

·                  Pursuant to and in accordance with sections 1129(a)(9)(C) and 1129(a)(9)(D) of the Bankruptcy Code, Cash in an aggregate amount of such Allowed Class 3 Claim payable in regular installment payments over a period ending not more than five (5) years after the Petition Date, plus simple interest at the rate required by applicable non-bankruptcy law on any outstanding balance from the Effective Date, or such lesser rate as is agreed to in writing by a particular taxing authority and the Debtors or Reorganized Debtors, as applicable, pursuant to section 1129(a)(9)(C) of the Bankruptcy Code.

 

 

 

 

 

 

 

 

 

 

 

4

 

Prepetition Revolving Credit Claims

 

Expected Amount:

$316,742,581

 

The Prepetition Revolving Credit Claims are deemed Allowed Secured Claims in the aggregate principal amount of $316,742,581, plus accrued and unpaid interest on such amount as of the Petition Date.  To the extent not paid in full in Cash prior to the Effective Date, on the Effective Date, the Allowed Prepetition Revolving Credit Claims shall, in full satisfaction, settlement, discharge and release of, and in exchange for, such Claims, be indefeasibly paid in full in Cash and the Prepetition Revolving Credit Agreement Liens shall be deemed discharged, released, and terminated for all purposes without further action of or by any Person or Entity.

 

100%

 

 

 

 

 

 

 

 

 

5

 

Prepetition Term Loan Claims

 

Expected Amount:

$297,500,000

 

The Prepetition Term Loan Claims are deemed Allowed Secured Claims in the aggregate principal amount of $297,500,000, plus accrued and unpaid interest on such amount as of the Petition Date.  To the extent not paid in full in Cash prior to the Effective Date, on the Effective Date, the Allowed Prepetition Term Loan Claims shall, in full satisfaction, settlement, discharge and release of, and in exchange for, such Claims, be indefeasibly paid in full in Cash and the Prepetition Term Loan Agreement Liens shall be deemed discharged, released, and terminated for all purposes without further action of or by any Person or Entity.

 

100%

 

 

 

 

 

 

 

 

 

6

 

Prepetition A&R Claims

 

Expected Amount:

$305,000,000

plus outstanding letters of credit in an amount of $166,000,000

 

The Prepetition A&R Claims are deemed Allowed in the aggregate principal amount of $305,000,000 plus accrued and unpaid interest thereon.  On the Effective Date, the Allowed Prepetition A&R Claims shall, in full satisfaction, settlement, discharge and release of, and in exchange for, such Claims, be indefeasibly paid in full in Cash.  Any letters of credit issued and outstanding as of the Effective Date under the Prepetition A&R Credit Agreement shall either be cash collateralized or receive such other treatment as may be acceptable to the Debtors, the Prepetition A&R Credit Agreement Agent, and the Required Consenting Noteholders.

 

100%

 

 

7


 

Class

 

Claim/Equity
Interest

 

Treatment of Claim/Equity Interest

 

Projected
Recovery
Under the
Plan

 

7

 

Prepetition Notes Claims

 

Expected Amount:

$7,427,067,000

 

The Prepetition Notes Claims are deemed Allowed in the aggregate principal amount of $7,427,067,000, plus accrued and unpaid interest thereon.  On the Initial Distribution Date, each Holder of an Allowed Prepetition Notes Claim shall receive, in full satisfaction, settlement, discharge and release of, and in exchange for, such Claim, its Pro Rata share of:

 

·                  (i) 99% of the New Common Stock, subject to dilution on account of equity issued pursuant to the New Management Incentive Plan, the Tranche B Equity Conversion (as defined below), and the New Common Stock issuable pursuant to the New Warrants;

 

·                  (ii) the New Tranche B Senior Unsecured Notes in an aggregate amount of up to $1.25 billion; provided, however, that each Holder of Allowed Prepetition Notes Claims shall have the option, in its sole discretion, to convert its Pro Rata share of the New Tranche B Senior Unsecured Notes into New Common Stock (the “Tranche B Equity Conversion”) at a conversion price of $36.20 per unit or share of New Common Stock; provided, further that the aggregate principal amount of Tranche B Senior Unsecured Notes converted into New Common Stock shall not exceed $500,000,000; and

 

·                  (iii) Subscription Rights to purchase its Pro Rata share of New Tranche A Senior Unsecured Notes in an aggregate amount of up to $1.25 billion pursuant to the Rights Offering and in accordance with the applicable Rights Offerings Procedures.

 

To the extent that less than $500,000,000 in principal amount of the New Tranche B Senior Unsecured Notes is converted into New Common Stock pursuant to the Tranche B Equity Conversion, any Holder of Allowed Prepetition Notes Claims that elected to convert its full Pro Rata share of Tranche B Senior Unsecured Notes into New Common Stock in the Tranche B Equity Conversion shall also be eligible to exercise their Overallotment Rights.  Procedures for the effectuation of the Tranche B Equity Conversion and the Overallotment Rights are set forth in Article V.V of the Plan.  

 

63%

 

 

 

 

 

 

 

 

 

8

 

General Unsecured Claims

 

Expected Amount:

$0

 

The legal, equitable, and contractual rights of the holders of General Unsecured Claims are unaltered by the Plan.  Except to the extent that a holder of a General Unsecured Claim agrees to a different treatment, on and after the Effective Date, the Debtors shall continue to pay (if Allowed) or dispute each General Unsecured Claim in the ordinary course of business in accordance with applicable law. 

 

100%

 

 

8


 

Class

 

Claim/Equity
Interest

 

Treatment of Claim/Equity Interest

 

Projected
Recovery
Under the
Plan

 

9

 

Intercompany Claims

 

Subject to the Restructuring Transactions, the Intercompany Claims shall be adjusted, reinstated, compromised, or cancelled to the extent determined appropriate by the Debtors, with the consent of the Required Consenting Noteholders.

 

N/A

 

 

 

 

 

 

 

 

 

10

 

Existing Common Stock

 

On the Effective Date, the Existing Common Stock will be cancelled without further notice to, approval of or action by any Entity.  Each Holder of Existing Common Stock shall receive its Pro Rata share of

 

·                  (i) 1.0% of the New Common Stock, subject to dilution on account of the equity issued pursuant to the New Management Incentive Plan, the Tranche B Equity Conversion, and the New Common Stock issuable pursuant to the New Warrants; and

 

·                  (ii) the New Warrants.

 

Greater than 0%

 

 

 

 

 

 

 

 

 

11

 

Intercompany Interests

 

Subject to the Restructuring Transactions, the Intercompany Equity Interests shall be reinstated for administrative convenience or cancelled as determined by the Debtors, with the reasonable consent of the Required Consenting Noteholders.

 

N/A

 

 

 

 

 

 

 

 

 

12

 

Unexercised Equity Interests

 

On the Effective Date, the Unexercised Equity Interests will be cancelled, and the Holders of such Unexercised Equity Interests shall not receive any distribution or retain any property on account of such Unexercised Equity Interests.

 

0%

 

 

9


 

 

II.
BACKGROUND TO THE CHAPTER 11 CASES

 

A.                                    THE DEBTORS’ CORPORATE HISTORY AND STRUCTURE

 

Debtor Weatherford International Ltd. was originally incorporated in Delaware in 1972.  In 2002, the Company restructured its corporate structure and inserted Weatherford International Ltd., a Bermuda exempted company as the group holding company.  In 2009, the Company completed a share exchange transaction in which Weatherford International Ltd., which was then the parent company, became a wholly-owned subsidiary of Weatherford Switzerland for purposes of changing the Company’s place of incorporation from Bermuda to Switzerland.  In June of 2014, the Company completed the change in its place of incorporation from Switzerland to Ireland, whereby Weatherford Parent became the new public holding company and parent of the Weatherford group of companies.  The ordinary shares of Weatherford Parent are listed on the New York Stock Exchange (the “NYSE”).  The NYSE, however, has suspended trading in the ordinary shares and has commenced proceedings to delist the ordinary shares, subject to an appeal of the NYSE’s decision by Weatherford Parent.

 

Weatherford Parent has approximately 255 direct and indirect subsidiaries as of the date hereof.  Of those entities, however, only the three Debtor entities are liable on the Prepetition Notes (as described in further detail below).  The Company’s entire organizational structure as of the date of this Disclosure Statement is attached hereto as Exhibit F.

 

B.                                    OVERVIEW OF THE DEBTORS’ BUSINESSES

 

Weatherford is a global leading provider of equipment and services used in the drilling, evaluation, completion, production, and intervention of oil and natural gas wells.  Weatherford operates in over 80 countries worldwide and has service and sales locations in nearly all of the oil and natural gas producing regions in the world.

 

Weatherford offers managed-pressure drilling services, including closed-loop, air, managed pressure, and underbalanced drilling; drilling services, such as directional drilling, logging while drilling, measurement while drilling, and rotary steerable systems; and tubular running services, which consist of tubular connection and installation services for the drilling, completion, and work over of oil or natural gas wells.

 

Weatherford also provides drilling tools comprising of drilling jars, under reamers, rotating control devices, down hole tools, drill pipe and related tools, tubular handling equipment, and other pressure-control equipment; drilling and project management services; wire line services; testing and production services; re-entry, fishing, and thru-tubing services; equipment for cementing operations; liner systems, such as liner hangers; integrated laboratory services; and surface logging systems.

 

In addition, Weatherford offers artificial lift systems that include reciprocating rod lift systems, progressing cavity pumps, gas lift systems, hydraulic lift systems, plunger lift systems, hybrid lift systems, and wellhead systems to produce oil or natural gas from the wells; stimulation, including pressure pumping services, coiled tubing services equipment, and reservoir stimulation hydraulic fracturing services; and completion tools, such as cased hole and flow control systems,

 

10


 

and well, industrial, and sand screens, as well as completion services, including upper and lower completions, and reservoir monitoring.

 

Weatherford has an extensive focus on research and development (“R&D”) activities which are aimed at providing efficient services to its customers.  Weatherford’s R&D focuses on improving existing products and services and developing new technologies to meet customer demands for improved drilling performance and enhanced reservoir productivity.  In 2018, Weatherford invested $139 million on its R&D activities.

 

1.                                      The Company’s Products and Services

 

The Company’s business focuses on the following four sectors:

 

(a)                                 Production

 

Weatherford’s production sector offers various production optimization services through its production ecosystem which includes the Company’s artificial-lift portfolio, testing and flow measurement solutions, and optimization software.  The Company’s artificial lift systems provide a mechanical method to produce oil or gas from wells lacking sufficient reservoir pressure for natural oil and gas flow.  Through its pressure pumping systems, the Company offers its customers advanced hydraulic fracturing services. Weatherford’s drilling fluids product line provides engineered fluid and chemical technology products and services used for drilling oil and gas wells.

 

(b)                                 Completions

 

Weatherford’s completion sector offers a variety of completion products, reservoir stimulation designs, and engineering capabilities that isolate zones and unlock reserves in deepwater, unconventional, and aging reservoirs.  The Company’s completion systems offer customers a range of completion tools including safety systems, production packers, flow control and sand-control technologies, which aid in maximum oil and gas production while ensuring minimal cost per barrel.  In addition, through its cementation products and liner hanger product lines, the Company provides products used to install oil and gas well steel casing systems.

 

(c)                                  Drilling and Evaluation

 

Weatherford’s drilling and evaluation sector comprises of a suite of services ranging from early well planning to reservoir management. The managed pressure drilling services delivers engineered balanced and underbalanced drilling services to enable and enhance drilling efficiency. The drilling services offer innovative tools and expert engineering to deliver accurate well placement, increase efficiency and maximize reservoir exposure. The evaluation services merge wellsite capabilities including wireline, logging while drilling, and surface logging with laboratory-fluid and core analyses to reduce reservoir uncertainty.

 

(d)                                 Well Construction

 

Weatherford also offers well construction services where Weatherford builds or rebuilds well integrity for the full life cycle of the well.  The Company’s land drilling rig business is included in its well construction sector.  The services offered include tubular running services,

 

11


 

conventional rig services and intervention services.  The Company also offers its patented drilling tools and equipment for rent.

 

2.                                      Weatherford’s Customers

 

The vast majority of Weatherford’s customers are in the energy sector.  Most of the Company’s international sales are to large international or national oil companies.  As of December 31, 2018, the Eastern Hemisphere accounted for 55% of the Company’s net outstanding accounts receivables and the Western Hemisphere accounted for 45% of the Company’s net outstanding accounts receivables.  As of December 31, 2018, the Company’s net outstanding accounts receivable in the U.S. accounted for 18% of the balance and Mexico accounted for approximately 10% of the balance.  No other country accounted for more than 10% of the Company’s net outstanding accounts receivables balance.  During 2018, 2017 and 2016, no individual customer accounted for more than 10% of the Company’s consolidated revenues.

 

3.                                      Incentive and Retention Bonus Programs

 

All of the employees of the Weatherford enterprise are employed by certain of the Debtors’ non-Debtor affiliates.  In addition, Weatherford International, LLC, is a party to service contracts with a staffing agency that provides workers to the Company.  The Debtors do not employ any personnel directly.  The non-Debtor affiliates have historically maintained incentive-based bonus programs that have primarily consisted of an annual cash bonus program and a long-term equity incentive program (collectively, the “Incentive and Retention Bonus Programs”).  In early 2019, the non-Debtor affiliates, with the assistance of their compensation advisors, reviewed their Incentive and Retention Bonus Programs to determine whether they fulfilled the purposes of retaining and incentivizing key employees given the decline in price of Weatherford Parent stock.  The Company determined that these programs did not adequately fulfill these purposes and made the decision to suspend the annual cash bonus program and the long-term equity incentive program and replace them with new programs that would more efficiently achieve the Company’s goals.  The current Incentive and Retention Bonus Programs consist of the Executive Bonus Plan, the Management Bonus Plan for Non-Officers, the Technical Bonus Program, the Sales Incentive Program, the Executive Retention Program, and the Non-Officer Retention Program.

 

The Executive Bonus Plan (the “EBP”) provides a means of rewarding key employees based on the overall performance of Weatherford and the achievement of certain quarterly and cumulative performance goals in 2019 to be established by the compensation committee of the board.  The EBP covers seventeen senior-level employees.  The participants under the EBP are employed by non-Debtor affiliates.  In May of 2019, the non-Debtor affiliates made the first quarterly payment under the EBP to eligible participants under the program.  The second quarterly payment, if any, under the EBP will be made within 30 days after second quarter results are finalized.

 

The Management Bonus Plan for Non-Officers (the “MBP”) and the Technical Bonus Program for technical employees (the “TBP”) are designed to align the interests of the Company and eligible key non-officer employees of the non-Debtor affiliates.  Both the MBP and the TBP reward eligible employees based on the overall performance of Weatherford and the achievement of certain quarterly goals including productivity, safety, financial metrics, and cost savings goals.  Bonus payments pursuant to the MBP and the TBP are guaranteed for 2019 contingent on

 

12


 

continued employment through each applicable payment date and certain other requirements.  Approximately 2,250 employees participate in the MBP and approximately 450 employees participate in the TBP.  The TBP covers eligible engineering employees in research and development, while the MBP covers employees in management roles.  Officers are not eligible to participate in either program.  In April of 2019, the non-Debtor affiliates made the first quarterly payment under the MBP and the TBP to the eligible participants under the program.  The second quarterly payments will be made within 30 days after second quarter results are finalized.

 

Approximately 600 eligible employees are entitled to earn incentive payments for the successful closing of sales to customers that result in realized revenue and profitability for the Company (the “Sales Incentive Plan”).  Payments under the Sales Incentive Plan are only available for employees who remain active at the time of payment.  Awards under the Sales Incentive Plan are paid on a quarterly basis.  Awards under the Sales Incentive Plan are based on invoiced revenue and gross margin performance.  The awards have been guaranteed at a specified threshold level for the 2019 calendar year.  In May of 2019, the non-Debtor affiliates made the first quarterly payment under the Sales Incentive Plan to eligible participants under the program.  The second quarterly payment will be made within 30 days after second quarter results are finalized.

 

The employees eligible to participate in the EBP are also eligible to receive a cash retention award which is based on the participant’s annual compensation (the “Executive Retention Program”).  The retention awards are payable in advance within 30 days of a participant accepting the terms.  In the event a recipient of a retention award voluntarily terminates his or her employment, or the recipient is terminated for cause, in either case, before the first anniversary of the date on which the recipient received the retention award, then such recipient will be required to promptly repay the amount of the retention award.  The retention award letters issued pursuant to the Executive Retention Program also include certain restrictive covenants including non-solicitation and non-compete provisions.  All payments under the Executive Retention Program were made in April of 2019.

 

Approximately 1,700 employees are eligible to participate in a cash retention award program for non-officers (the “Non-Officer Retention Program”).  Pursuant to the program, employees are eligible to receive a quarterly cash award contingent on such employee’s continued employment.  Officers are not eligible to participate in the program.  The retention award letters issued pursuant to the Non-Officer Retention Program also include certain restrictive covenants including non-solicitation and non-compete provisions.  In April of 2019, the non-Debtor affiliates made the first quarterly payment under the Non-Officer Retention Program to the eligible participants under the program.  The second quarterly payment will be made in July of 2019.

 

In addition to the Incentive and Retention Bonus Programs, the non-Debtor affiliates maintain ordinary course incentive plans for non-insider employees including, but not limited to, a field bonus program and a bonus program relating to the Transformation Plan (as defined below).

 

4.                                      Directors and Officers

 

The senior management team of Weatherford Parent consists of the following individuals:

 

13


 

Name

 

Position

Mark A. McCollum

 

President, Chief Executive Officer and Director

 

 

 

Christoph Bausch

 

Executive Vice President and Chief Financial Officer

 

 

 

Christina M. Ibrahim

 

Executive Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary

 

 

 

Karl Blanchard

 

Executive Vice President and Chief Operating Officer

 

 

 

Stuart Fraser

 

Vice President and Chief Accounting Officer

 

C.                                    PREPETITION INDEBTEDNESS

 

As set forth below, as of the date of this Disclosure Statement, the Debtors have outstanding funded debt obligations consisting of approximately $8.35 billion.

 

1.                                      Prepetition Term Loan Agreement

 

On May 4, 2016, each of the Debtors entered into or guaranteed that certain Term Loan Agreement, by and among Weatherford International Ltd., Weatherford Parent, JPMorgan Chase Bank, N.A. (the “Prepetition Term Loan Agent”) and the lenders party thereto from time to time (the “Prepetition Term Loan Lenders”), as amended from time to time (the “Prepetition Term Loan Agreement”).

 

As amended, the Prepetition Term Loan Agreement has a maturity date of July 13, 2020. The outstanding principal amount under the Prepetition Term Loan Agreement is $297.50 million plus accrued and unpaid interest.

 

The Prepetition Term Loan Agreement is secured by substantially all of Weatherford Parent’s assets and certain assets of its subsidiaries.

 

2.                                      Prepetition Revolving Credit Agreement

 

On August 16, 2018, each of the Debtors entered into or guaranteed that certain 364-Day Revolving Credit Agreement, by and among Weatherford International Ltd., Weatherford Parent, JPMorgan Chase Bank, N.A. (the “Prepetition Revolving Credit Agreement Agent”), Morgan Stanley Senior Funding, Inc. as collateral agent, and the lenders party thereto from time to time (“Prepetition Revolving Credit Agreement Lenders”) as amended from time to time (the “Prepetition Revolving Credit Agreement”).

 

The Prepetition Revolving Credit Agreement has a maturity date of August 15, 2019.  The outstanding principal amount under the Prepetition Revolving Credit Agreement is $316.74 million plus accrued and unpaid interest.

 

The Prepetition Revolving Credit Agreement is secured by a junior lien on the current assets of Weatherford Parent and certain subsidiaries of Weatherford Parent.

 

14


 

3.                                      Prepetition Unsecured Revolving Credit Agreement

 

On May 9, 2016, each of the Debtors entered into or guaranteed that certain Amended and Restated Credit Agreement, by and among Weatherford International Ltd., WOFS Assurance Limited, Weatherford Parent, by and among the other borrowers party thereto, JPMorgan Chase Bank, N.A. (the “Prepetition A&R Credit Agreement Agent”) and the lenders party thereto from time to time (the “Prepetition A&R Credit Agreement Lenders”), as amended from time to time (the “Prepetition A&R Credit Agreement” and together with the Prepetition Term Loan Agreement and the Prepetition Revolving Credit Agreement, the “Prepetition Credit Agreements”).

 

As amended, the Prepetition A&R Credit Agreement has a maturity date of July 12, 2019, which may be extended pursuant to certain conditions.  The outstanding principal amount under the Prepetition A&R Credit Agreement is $305.00 million (plus accrued and unpaid interest), plus outstanding letters of credit in an amount of $166,000,000.  The obligations arising under the Prepetition A&R Credit Agreement are unsecured.

 

Each of the Prepetition Credit Agreements is guaranteed by certain subsidiaries of Weatherford Parent as listed on Exhibit G.

 

4.                                      Prepetition Letters of Credit

 

As of the date hereof, the Debtors and certain of their non-Debtor subsidiaries have entered into or guaranteed certain letter of credit facilities with a total exposure of $415.0 million.  The letters of credit are held by Standard Chartered Bank, Deutsche Bank, and Citibank, among others.

 

5.                                      Prepetition Notes

 

The Debtors have a series of unsecured Prepetition Notes that have been issued by either Debtor Weatherford International Ltd. (“Weatherford Bermuda”) or Debtor Weatherford International LLC (“Weatherford Delaware”), with each such issuance being guaranteed by Weatherford Parent.  The Prepetition  Notes are pari passu with one another.  The total aggregate outstanding amount of the Prepetition Notes is $7.4 billion plus accrued and unpaid interest.  As noted above, the three Debtor entities are the only Weatherford entities that are liable on the Prepetition Notes.

 

The series of Prepetition Notes are as follows:

 

Notes

 

Issuer

 

Current Principal Amount

 

Maturity

 

5.125% Notes

 

Weatherford Bermuda

 

$

365,107,000

 

2020

 

5.875% Notes

 

Weatherford Bermuda

 

$

1,265,000,000

 

2021

 

7.750% Notes

 

Weatherford Bermuda

 

$

750,000,000

 

2021

 

4.500% Notes

 

Weatherford Bermuda

 

$

646,286,000

 

2022

 

 

15


 

Notes

 

Issuer

 

Current Principal Amount

 

Maturity

 

8.250% Notes

 

Weatherford Bermuda

 

$

750,000,000

 

2023

 

9.875% 2024 Notes

 

Weatherford Bermuda

 

$

790,000,000

 

2024

 

9.875% 2025 Notes

 

Weatherford Delaware

 

$

600,000,000

 

2025

 

6.500% Notes

 

Weatherford Bermuda

 

$

453,045,000

 

2036

 

6.800% Notes

 

Weatherford Delaware

 

$

258,767,000

 

2037

 

7.000% Notes

 

Weatherford Bermuda

 

$

461,300,000

 

2038

 

9.875% 2039 Notes

 

Weatherford Bermuda

 

$

250,000,000

 

2039

 

6.750% Notes

 

Weatherford Bermuda

 

$

462,601,000

 

2040

 

5.950% Notes

 

Weatherford Bermuda

 

$

374,961,000

 

2042

 

 

6.                                      General Unsecured Claims

 

General Unsecured Claims consist of any prepetition claims against the Debtors (other than the Prepetition Notes Claims, 510(b) Claims, or any Intercompany Claims) as of the Petition Date that are neither secured by collateral nor entitled to priority under the Bankruptcy Code or any order of the Bankruptcy Court.  The Debtors expect that there will be no General Unsecured Claims.

 

7.                                      Intercompany Claims

 

Certain Debtors hold Claims against other Debtors resulting primarily from the normal functioning of the Company’s centralized cash management system as well as, in some cases, the provision of intercompany services by one Debtor to another Debtor, such as, for example, administrative support services.  Historically, such intercompany claims were recorded in the Company’s books and records.  Pursuant to the Plan, for administrative convenience only, these Intercompany Claims will be adjusted, reinstated, compromised, or cancelled to the extent determined appropriate by the Debtors, with the consent of the Required Consenting Noteholders.

 

D.                                    EVENTS LEADING TO THE CHAPTER 11 FILING

 

1.                                      Current State of the Oil & Gas Industry and Impact on Debtors.

 

Weatherford’s operations have been and likely will continue to be affected by the volatility of oil and natural gas prices.  The oil and gas industry has been in one of the longest, steepest, and most sustained declines in oil and gas prices in recent history.  Oil and natural gas prices are

 

16


 

dependent on factors beyond the Company’s control, including the supply of and demand for oil, weather conditions, and political conditions, among others.  As a result of the sustained market downturn, oil and gas companies around the world have dramatically curtailed capital and operating expenditures dedicated to oil and gas exploration, development and production, which in turn has contributed to the financial distress of numerous oilfield services companies.  In fact, dozens of oilfield services companies, whose business is dependent on spending by oil and gas companies, have filed for bankruptcy in the last several years.

 

The sustained drop in oil and gas prices has impacted companies throughout the oil and gas industry including Weatherford and the majority of its customers.  As spending on exploration, development, and production of oil and natural gas has decreased so has demand for Weatherford’s services and products.  The decline in spending by oil and gas companies has had a significant effect on the Debtors’ financial health.  To illustrate, on a consolidated basis, the Company’s cash flows from operating activities have been negative $304 million, negative $388 million, and negative $242 million in fiscal years 2016, 2017, and 2018, respectively.

 

In addition to the issues facing the oil and gas industry generally, Weatherford operates in a highly competitive market. The oilfield services and equipment industry is saturated with competition from various companies that operate in the same sector and the same regions of the world as Weatherford.  The primary competitive factors include safety, performance, price, quality, and breadth of products and services.  Weatherford also faces competition from regional suppliers in some of the sectors in which it operates as these suppliers offer limited equipment and services that are specifically tailored to the relevant local market.  Some of the Company’s competitors have better financial and technical resources, which allows them to pursue more vigorous marketing and expansion activities.  This heavily competitive market has impacted the Company’s ability to maintain its market share and defend or maintain the pricing for its products and services.  Heavy competition has also impacted the Company’s ability to negotiate contract terms with its customers and suppliers, which has resulted in the Company accepting suboptimal terms.

 

The Company’s operations are also subject to extensive federal, international, state and local laws and regulations relating to environmental production, waste management and cleanup of hazardous materials, and other matters.  Compliance with the various requirements imposed by these laws and regulations has also resulted in increased capital expenditures as companies in these sectors have had to make significant investments to ensure compliance.

 

2.                                      Prepetition Efforts to Combat Market Downturn

 

The decline in the price of oil and gas and the resulting adverse market conditions have severely impacted Weatherford affecting, among other things, the Company’s cash flow, borrowing capacity, and ability to service its outstanding indebtedness.  As with many of their peers, this drastic and prolonged drop in oil and gas prices has strained the Company’s liquidity for an extended period of time.

 

The Company took several steps to try to address its capital structure and liquidity needs without a comprehensive in-court restructuring before commencing these Chapter 11 Cases.  The Company and its management team focused on cutting costs, reducing capital expenditure, and managing liquidity.

 

17


 

(a)                                 The Debtors’ Cost-Reduction Initiatives and Operational Adjustments

 

In the second quarter of 2017 management, led by the new chief executive officer, focused on analyzing and assessing the structure and operations of the Company in order to determine where key cost-reduction initiatives could be implemented.  Management and the board of directors engaged in an extensive review of all existing protocols and processes to determine which initiatives should be implemented.  The ensuing cost-reduction efforts were strategic and focused on the reduction of overhead and elimination of inefficiencies across the enterprise.  Specifically, the Company implemented new initiatives focused on training leaders as well as field-level supervisors and other personnel in order to improve efficiency and accountability.  The initiatives also focused on flattening the organizational structure of the Company in order to improve cost efficiency and reduce organizational redundancies.  In the fourth quarter of 2017, the Company eliminated the regional structure and consolidated countries into a geo-zone structure, to eliminate overhead costs and redundancies. This fundamental change in operation of the business resulted in a headcount reduction of approximately 900 and created annualized savings of approximately $114 million.

 

In 2018, the Company continued its cost-reduction initiatives and operational adjustments.  In the first quarter of 2018, the Company, with the assistance of McKinsey Restructuring & Transformation Services, implemented its transformation plan (the “Transformation Plan”), which was aimed at reducing the Company’s overall cost structure and workforce to better align the business with current activity levels.  The Transformation Plan continued into 2019 and includes a workforce reduction, organization restructure, facility consolidations, and other cost reduction and efficiency initiatives across the Company globally.

 

Despite implementing these efficient and strategic initiatives, the Company continued to face declining revenue and cash flow, as well as market challenges.  Due to the Company’s increasingly tight liquidity, its key vendors began requiring shortened payment terms, including pay on delivery or prepayment for all supplies purchased by the Company.  This contributed to additional pressure on liquidity that the Company could not sustain.  Additionally, as discussed above, the highly competitive market that the Company operates in posed challenges for the Company in winning new bids, resulting in decreased revenue.

 

(b)                                 The Debtors’ Strategic Divestitures

 

As part of the Company’s overall operations adjustments, management conducted a detailed review of all of the Company’s product lines focusing on the current state of the product line, the ability to invest in its growth, and the overall role of the product in the Company’s long-term strategy.  Management and the board determined that there were product lines and sectors that could be sold in order to increase liquidity and focus on the Company’s key product lines and services.

 

In December of 2017, Weatherford completed the sale of its U.S. pressure pumping and pump-down perforating assets for gross cash proceeds of $430 million, the proceeds of which were used to reduce the Company’s outstanding indebtedness.  In the fourth quarter of 2018, the Company completed the sales of a portion of its land drilling rigs operations for gross cash proceeds of $216 million.  The sale represents two of a series of four closings pursuant to the purchase and sale agreements entered into with ADES International Holding Ltd. in July of 2018

 

18


 

to sell the Company’s land drilling rig operations in Algeria, Kuwait and Saudi Arabia, as well as two idle land rigs in Iraq.  The sale is for an aggregate purchase price of $287.5 million.  In April of 2019, the Company sold its laboratory services business to an affiliate of CSL Capital Management, L.P., and its surface data logging business to Excellence Logging, for an aggregate net purchase price of approximately $225 million in cash.

 

Despite several successful strategic divestitures, the Company remained overleveraged, with debt service payments hampering its ability to use the proceeds of these divestitures to invest in the business and the new initiatives.

 

3.                                The Debtors’ Financing Initiatives

 

Despite management’s best efforts, performance and liquidity continued to further deteriorate and it became apparent that the Company’s revenue and cash flow generating capacity would not be sufficient to service its outstanding debt on a long-term basis and to maintain the liquidity necessary to operate its businesses and maximize long-term enterprise value.  The Company retained Lazard Frères & Co. LLC (“Lazard”) on May 30, 2018, to assist the Company in refinancing its revolving credit facility.  The revolving credit facility was successfully extended in August of 2018.

 

In the third quarter of 2018, the Company reported that it had missed its cash flow projections for the quarter.  In addition, Weatherford continued to face industry headwinds and was levered at over 10.0x EBITDA, a figure significantly higher those of its competitors, who have traditionally been levered at close to 2.0x EBITDA.  Weatherford generated negative cash flow driven in part by approximately $600 million in annual interest payments.  Its negative cash flow position began to impact the Company’s ability to win business, invest in new technologies, and compete more broadly with its better-capitalized peers.  It became critical that the Company extend its liquidity runway in order to realize the benefits of the Transformation Plan, necessitating that it address approximately $2.4 billion of upcoming maturities through 2021.  To that end, the Company retained Lazard on December 31, 2018 and Latham & Watkins LLP as restructuring counsel on April 1, 2019, to advise on further refinancing efforts and a possible balance sheet restructuring.

 

4.                                The Debtors’ Prepetition Restructuring Efforts

 

In early 2019, the Company, with the assistance of its advisors, determined that it would need to pursue a restructuring option that significantly de-leveraged the Company while giving it enough runway to implement the cost-reduction and operational adjustments it had begun in 2017 and 2018.

 

Management and the board of directors first considered a variety of out-of-court alternatives to achieve the necessary runway.  The alternatives included a variety of potential transactions including maturity extensions of the revolving credit facilities and first lien term loan, debt-for-uptiered-debt and/or debt-for-cash exchanges, the issuance of convertible debt instruments, and debt equitization transactions to provide short- and medium-term runway so the Company could execute on its turnaround plan.

 

19


 

During this time, revenues continued to decline, delaying execution on the Transformation Plan and further constraining liquidity.  In April, the Company met with its bank group to provide a revised forecast for fiscal year 2019 and continue to explore a refinancing of the credit facility, but was unable to reach agreement on the terms of a refinancing that would meet the Company’s holistic goals.

 

Beginning in mid-April of 2019, the Company and their advisors began to engage in parallel arms-length negotiations with an ad hoc group holding a substantial portion of their unsecured notes to first explore out-of-court alternatives that would be workable in conjunction with a credit facility maturity extension on terms proposed by the Company’s existing bank group and, alternatively, to develop a comprehensive financing and restructuring plan to be implemented through the Chapter 11 Cases to the extent a solution could not be reached.  Despite the parties’ best efforts to achieve an out-of-court solution, it became clear that an in-court process would be required to accomplish the comprehensive balance sheet restructuring the Company needed.

 

Over the next several weeks, the Company, with the aid of its advisors, was able to execute a consensual Restructuring Support Agreement with the Consenting Noteholders in support of the Restructuring.  The Company intends to file the Chapter 11 Cases to implement the prepackaged Plan that is contemplated by the Restructuring Support Agreement.

 

5.                                      The Debtors’ Entry into the Restructuring Support Agreement(3)

 

On May 10, 2019, the Debtors and the Consenting Noteholders entered into the Restructuring Support Agreement whereby the Consenting Noteholders have committed, subject to the terms and conditions of the Restructuring Support Agreement, to support the Debtors in their efforts to confirm the Plan, as well as to provide additional liquidity to the Debtors both during the Chapter 11 Cases and upon emergence (as described herein in more detail). The terms of the Restructuring are reflected in the Plan.

 

The Restructuring Support Agreement contemplates a comprehensive deleveraging of the Company’s balance sheet and an approximately $5.85 billion reduction of its prepetition funded debt.  The key provisions of the Restructuring Support Agreement are as follows:

 

·                  The Prepetition Notes will be cancelled and exchanged for (a) 99% of the New Common Stock, subject to dilution on account of equity issued pursuant to the New Management Incentive Plan, the Tranche B Equity Conversion, and the New Common Stock issuable pursuant to the New Warrants, and (b) an aggregate amount of up to $1.25 billion of New Tranche B Senior Unsecured Notes to be issued by Weatherford Delaware and Weatherford Bermuda, as applicable;

 

·                  Holders of the Prepetition Notes will have the option to convert up to $500 million of the New Tranche B Unsecured Notes to New Common Stock at the mid-point of plan equity value;

 


(3)  This summary is qualified in its entirety by the Restructuring Support Agreement.  To the extent that any provision of this summary is inconsistent with the Restructuring Support Agreement, the Restructuring Support Agreement will control.

 

20


 

·                  Holders of Prepetition Notes also will receive subscription rights in a Rights Offering (as defined below) for the New Tranche A Senior Unsecured Notes to be issued by Weatherford Delaware and Weatherford Bermuda and backstopped by certain Prepetition Noteholders;

 

·                  The Prepetition Revolving Credit Claims, the Prepetition A&R Claims, and the Prepetition Term Loan Claims will be repaid in full in cash;

 

·                  All trade claims will be paid in full in the ordinary course of business;

 

·                  The Existing Common Stock will be cancelled and exchanged for (a) 1% of the New Common Stock, and (b) three-year warrants to purchase 10% of the New Common Stock (the “New Warrants”) pursuant to the terms of the Warrant Term Sheet attached hereto as Exhibit K;

 

·                  There will be a DIP Facility which will consist of a $1.0 billion term loan facility (the “DIP Term Loan Facility”) and a $750 million revolving credit facility (the “DIP Revolving Credit Facility” and together with the DIP Term Loan Facility, the “DIP Facility”);

 

·                  The DIP Facility will be repaid or refinanced in full upon the Effective Date of the Plan through the Company’s (a) Exit Facility (as defined and described below) and (b) issuance of up to $1.25 billion of New Tranche A Senior Unsecured Notes, which notes issuance will be fully backstopped by the Consenting Noteholders.

 

The Restructuring Support Agreement includes certain milestones for the progress of the Chapter 11 Cases, which include the dates by which the Debtors are required to, among other things, obtain certain court orders and complete the Restructuring.(4)

 

Milestone

 

Deadline

Commencement of Chapter 11 Cases

 

No later than July 15, 2019

Commencement of Bermuda Proceedings

 

One calendar day after the Petition Date

Filing of Chapter 11 Plan, Disclosure Statement, and Solicitation Procedures Motion

 

One calendar day after the Petition Date

Entry of interim order approving DIP Motion (as defined below)

 

No later than July 18, 2019

Entry of final order approving DIP Motion

 

Within 30 days after entry of Interim DIP Order

Commencement of Irish Examinership Proceeding

 

October 1, 2019

Entry of order confirming the Chapter 11 Plan

 

No later than September 15, 2019, subject to availability of the Bankruptcy Court

 


(4)  The Restructuring Support Agreement was amended by the Debtors and the Consenting Noteholders in June of 2019 to, among other things, amend certain of the milestones, incorporate the Bermuda proceedings, and address certain diligence issues.

 

21


 

Milestone

 

Deadline

Entry of order of the Irish Court approving the Scheme of Arrangement

 

No later than 70 calendar days after the Examinership Commencement Date

Chapter 11 Plan Effective Date

 

No later than fifteen calendar days after entry of the Confirmation Order by the Bankruptcy Court and entry of the order of the Irish Court approving the Scheme of Arrangement and the Bermuda Scheme

 

Of key importance, the Restructuring Support Agreement provides that the Consenting Noteholders will support the Plan.  The Plan provides for a comprehensive restructuring of the Debtors’ prepetition obligations, preserves the going-concern value of the Debtors’ business, maximizes creditor recoveries, provides for an equitable distribution to the Debtors’ stakeholders, and protects the jobs of thousands of employees.

 

6.                                      Amortization Payment and Interest Payments Due Under Prepetition Debt

 

The Prepetition Credit Agreements provide for interest payments (and in the case of the Prepetition Term Loan Agreement, payments of principal) to be made on each of June 30, September 30, December 31, and March 31 (or in the case of a Eurodollar rate loan, at the end of each interest period) until maturity.  Failure to make the interest and/or principal payments, as applicable, on one of the Prepetition Credit Agreements when due will result in an event of default under such Prepetition Credit Agreement and the other Prepetition Credit Agreements.  The occurrence of an event of default under the Prepetition Credit Agreements allows the respective administrative agents and lenders to declare each Debtor’s obligations under the Prepetition Credit Agreements immediately due and payable and to exercise such administrative agents’ and lenders’ rights under the Prepetition Credit Agreements.

 

7.                                      A&R Forbearance Agreement

 

In June of 2019, the Company and Prepetition A&R Credit Agreement Lenders entered into a forbearance agreement (the “A&R Forbearance Agreement”) with respect to certain defaults under the Prepetition A&R Credit Agreement.  Specifically, under the Forbearance Agreement, the Prepetition A&R Credit Agreement Lenders agreed to forbear from exercising their rights and remedies, including the right to accelerate any indebtedness for a specified period of time. Under the terms of the A&R Forbearance Agreement, the Company will pay a fee for the ratable account of the Prepetition A&R Credit Agreement Lenders in an amount equal to 0.25% on the outstanding principal amount of the loans and total letter of credit exposure under the A&R Credit Agreement, with such fee due and payable on the effective date of the A&R Forbearance Agreement. Additionally, (i) to the extent such entities are not currently guarantors under the Prepetition A&R Credit Agreement, all subsidiaries of the Company who will be guarantors under the DIP Facility will join as guarantors under the Prepetition A&R Credit Agreement; provided that the aggregate amount of all guaranteed obligations  and (ii) all U.S. and Canadian subsidiaries of the Company will grant a second lien security interest in favor of the Prepetition A&R Credit Agreement Lenders in the same assets that such U.S. and Canadian subsidiaries are pledging a first lien security interest in under the DIP Facility; provided that the aggregate amount of the guaranteed obligations to be secured under the Prepetition A&R Credit Agreement shall not exceed

 

22


 

$100,000,000; provided, further, that if the obligations under the Prepetition A&R Credit Agreement are not paid in full by November 30, 2019, such security interest of the Prepetition A&R Credit Agreement Lenders shall automatically transition from second liens to pari passu liens with the liens under the DIP Facility.

 

8.                                      Formation of Equity Holder Group

 

In May of 2019, certain counsel contacted the Company’s legal advisors claiming to represent a group of Holders of Existing Common Stock (the “Equity Holder Group”).  According to counsel for the Equity Holder Group, the Equity Holder Group holds approximately 25% of the issued and outstanding common stock of Weatherford Parent.  Subsequently, Proskauer Rose LLP was retained as counsel to the Equity Holder Group.

 

III.
ANTICIPATED EVENTS DURING THE CHAPTER 11 CASE, THE IRISH
EXAMINERSHIP PROCEEDING, AND THE BERMUDA PROCEEDING

 

A.                                    CHAPTER 11 FIRST DAY MOTIONS AND CERTAIN RELATED RELIEF

 

In accordance with the Restructuring Support Agreement, the Debtors anticipate filing voluntary petitions for relief under chapter 11 of the Bankruptcy Code on or around July 1, 2019.  The filing of the petitions will commence the Chapter 11 Cases at which time the Debtors will be afforded the benefits and become subject to the limitations of the Bankruptcy Code.

 

The Debtors intend to continue operating their businesses in the ordinary course during the pendency of the Chapter 11 Cases as they have been doing prior to the intended Petition Date.  To facilitate the efficient and expeditious implementation of the Plan through the Chapter 11 Cases, and to minimize disruptions to the Debtors’ operations on the Petition Date, the Debtors intend to seek to have the Chapter 11 Cases assigned to the same bankruptcy judge and administered jointly and to file various motions seeking important and urgent relief from the Bankruptcy Court.  Such relief, if granted, will assist in the administration of the Chapter 11 Cases; however, there can be no assurance that the requested relief will be granted by the Bankruptcy Court.

 

1.                                      First Day Motions and Other Related Relief

 

On the Petition Date, the Debtors intend to file multiple motions seeking various relief from the Bankruptcy Court and authorizing the Debtors to maintain their operations in the ordinary course.  Such relief is designed to ensure a seamless transition between the Debtors’ prepetition and postpetition business operations, facilitate a smooth reorganization through the Chapter 11 Cases, and minimize any disruptions to the Debtors’ operations.  The following is a brief overview of the relief the Debtors intend to seek on the Petition Date to maintain their operations in the ordinary course.

 

(a)                                 First Day Motions

 

Recognizing that any interruption of the Debtors’ business, even for a brief period of time, would negatively impact their operations, customer relationships, revenue and profits, the Debtors intend to file a number of motions to help stabilize their operations and effectuate, as much as

 

23


 

possible, a smooth transition into operations as debtors in possession.  Specifically, the Debtors will request that the Bankruptcy Court enter orders authorizing the Debtors to:

 

·                  maintain and administer customer programs and honor their obligations arising under or relating to those customer programs;

 

·                  continue insurance coverage, including performance under its insurance financing agreements, and enter into new insurance policies, if necessary;

 

·                  establish procedures to protect certain tax attributes, including stock trading restrictions, and establish record date and sell-down procedures for trading claims; and

 

·                  maintain their existing cash management system, maintain existing bank accounts and continue entering into certain intercompany transactions among the Debtors and with their non-debtor affiliates.

 

(b)                                 Motion to Approve Debtor in Possession Financing

 

The Debtors intend to file a motion (the “DIP Motion”) to approve the DIP Facility and the use of cash collateral.  The Debtors will be entering chapter 11 with minimal cash on hand.  Access to the DIP Facility and the use of Cash Collateral (as such term is defined in section 363(a) of the Bankruptcy Code) is critical to ensure that the Debtors have sufficient liquidity to operate their business and administer their estates during these Chapter 11 Cases.

 

To address their working capital needs and fund their reorganization efforts, in the months leading up to the Petition Date, the Debtors and their advisors solicited interest in providing the DIP Facility from various parties including major banks that were current holders of the Debtors’ prepetition credit facilities.  Each of the lenders submitted initial non-binding term sheets.  The Debtors, with the help of their advisors, evaluated each of the proposals and considered each potential lender’s indicative proposed economics, perceived ability to fully commit and underwrite the entire facility if needed, financing structure, perceived deal risk, market flex, and proposed covenants, among other factors.  The Debtors submitted counterproposals to each of the term sheets and received updated proposals from four potential lenders.  The Debtors, with assistance from their advisors, then undertook similar quantitative and qualitative analyses to compare the updated proposals.  Based on these analyses, the Debtors and their advisors determined that the current proposed DIP Facility was the best option reasonably available under the totality of the circumstances.  The Debtors and their advisors negotiated the terms of the proposed DIP Facility with the DIP Lenders in good faith and at arm’s-length.

 

(c)                                  Motion to Authorize Hedging Program

 

In the ordinary course of business, the Debtors have historically entered into financial derivative contracts primarily to hedge the Debtors’ exposure to foreign exchange rate risks to their cash flows.  To that end, shortly after commencement of the Chapter 11 Cases, the Debtors intend to file a motion requesting that the Bankruptcy Court enter an order authorizing the Debtors to, among other things, perform under existing financial derivative contracts, enter into and perform under new postpetition financial derivative contracts, and in each case grant counterparties to such contracts superpriority administrative expense claims pari passu with the superpriority administrative expense claims provided under the DIP Order.

 

24


 

2.                                      Other Procedural Motions

 

To facilitate a smooth and efficient administration of the Chapter 11 Cases, the Debtors intend to file several other motions that are common to chapter 11 cases of similar size and complexity as the Chapter 11 Cases, including applications to retain various professionals to assist the Debtors in the Chapter 11 Cases.

 

3.                                      Solicitation Procedures Motion

 

Contemporaneously with the filing of their chapter 11 petitions, the Debtors will seek an order of the Bankruptcy Court scheduling a hearing to conditionally approve the Disclosure Statement for purposes of soliciting the Holders of Existing Common Stock and the Solicitation in connection therewith, and scheduling the Confirmation Hearing to consider the adequacy of the Disclosure Statement and confirmation of the Plan (the “Solicitation Procedures Motion”).  Notice of these hearings will be published and mailed to all known holders of Claims and Equity Interests in accordance with orders of the Bankruptcy Court to be requested by the Debtors.

 

4.                                      Timetable for Chapter 11 Cases

 

In accordance with the Restructuring Support Agreement, the Debtors have agreed to proceed with the implementation of the Plan through the Chapter 11 Cases.  The milestones contained in the Restructuring Support Agreement are described in section II.D.5.  Achieving the various milestones under the Restructuring Support Agreement is crucial to successfully reorganizing the Debtors.

 

5.                                      Rights Offering and Backstop Commitment Agreement

 

On the Initial Distribution Date, either Weatherford Delaware or Weatherford Bermuda will issue the New Tranche A Senior Unsecured Notes up to an aggregate principal amount of up to $1.25 billion, which will be offered Pro Rata to all holders of Allowed Prepetition Notes Claims through a rights offering (the “Rights Offering”), which will be fully backstopped by the Backstop Parties pursuant to the Backstop Commitment Agreement which is attached hereto as Exhibit H.  The Debtors expect to commence the Rights Offering following confirmation of the Plan.  The procedures for soliciting participation from the holders of the Prepetition Notes in the Rights Offering (the “Rights Offering Procedures”) will be attached to the Confirmation Order.

 

The Backstop Commitment Agreement generally provides as follows:

 

·                  Each Backstop Party agrees to purchase its Commitment Percentage (as defined in the Backstop Commitment Agreement) of the New Tranche A Senior Unsecured Notes that have not been subscribed for in the Rights Offering.

 

·                  In consideration for the foregoing, the Backstop Parties have received the Backstop Commitment Premium (as defined in the Backstop Commitment Agreement).

 

·                  The Backstop Parties will be entitled to have all of the reasonable and documented out-of-pocket fees and expenses of their advisors paid by the Debtors.

 

25


 

·                  The Backstop Parties will be entitled to a termination fee payment in an amount equal to the Backstop Commitment Premium, payable in cash, under certain circumstances if the Backstop Commitment Agreement is terminated.

 

Because the Backstop Commitment Agreement facilitates the success of the Rights Offering and thereby significantly reduces the financing risks associated with consummation of the Plan, the Debtors submit, in their business judgment, that the payments are fair and reasonable.

 

6.                                      New Warrants

 

Holders of Existing Common Stock will receive three-year warrants for 10.0% of the New Common Stock to be issued by Reorganized Parent, which will be subject to dilution on account of the equity issued pursuant to the New Management Incentive Plan and the Tranche B Equity Conversion, with a strike price to be set at an equity value at which the Prepetition Noteholders would receive a recovery equal to par plus accrued and unpaid interest as of the Petition Date in respect of the Prepetition Notes.

 

7.                                      Exit Facility

 

The Debtors intend to begin marketing for secured commitments for an exit facility (the “Exit Facility”) which will be provided to the Reorganized Debtors on the Effective Date consisting of a first lien revolving credit facility in the principal amount of up to $1.00 billion.  The proceeds of the Exit Facility will be used to fund general working capital needs and for general corporate purposes of Reorganized Weatherford, subject to the terms of the Exit Facility Credit Agreement.

 

8.                                      Internal Reorganizations

 

As part of the Plan, Weatherford intends to carry out certain internal reorganizations (“Internal Reorganizations”).  The Internal Reorganizations are intended to be effected substantially in accordance with those transaction steps outlined in Exhibit I (the “Reorganization Steps Overview”).  Exhibit J (the “Description of Reorganization Steps”) is intended as an illustrative example of specific reorganization steps by which Weatherford Parent may effect the Internal Reorganizations.  There can be no assurance that all or any of the reorganization steps outlined in the Reorganization Steps Overview or described in the Description of Reorganization Steps will actually occur or, if they do occur, will occur in the order set forth in Exhibit I or Exhibit J, as applicable.  In addition, the Internal Reorganizations may be effected by means of steps not outlined in the Reorganization Steps Overview or the Description of Reorganization Steps.  The Internal Reorganizations are intended to take place during the period following the confirmation of the Plan and ending on and including the Effective Date, but the actual timing of the steps comprising the Internal Reorganizations is uncertain and certain steps may occur, if at all, prior to confirmation of the Plan or after the Effective Date.

 

B.                                    EXCLUSIVE PERIOD FOR FILING A CHAPTER 11 PLAN AND SOLICITING VOTES

 

Under the Bankruptcy Code, a debtor has the exclusive right to file and solicit acceptances of a plan or plans of reorganization for an initial period of 120 days from the date on which the

 

26


 

debtor filed for voluntary relief.  If a debtor files a plan within this exclusive period, then the debtor has the exclusive right for 180 days from the petition date to solicit acceptances to the plan.  During these exclusive periods, no other party in interest may file a competing plan of reorganization; however, a court may extend these periods upon request of a party in interest and “for cause.”

 

C.                                    THE IRISH EXAMINERSHIP PROCEEDING

 

In accordance with the Restructuring Support Agreement, Weatherford Parent anticipates filing a petition for the appointment of an examiner to itself under part 10 of the Companies Act 2014 (Ireland) following confirmation of the Plan (the “Irish Examinership Proceeding”).  The filing of the petition will commence the protection period during which Weatherford Parent will, under Irish law, have the benefit of protection against enforcement and other actions by its creditors for a period of up to 100 calendar days.  Weatherford Parent intends to apply on the same date as the filing of the petition to the High Court of Ireland for the appointment of an examiner to itself on an interim basis pending the hearing of the petition which is likely to take place between one and two weeks after filing.

 

Weatherford Parent intends to continue operating its business in the ordinary course during the protection period, save that an examiner will be in place whose primary function will be to seek approval for its proposals for a scheme of arrangement in relation to Weatherford Parent (the “Scheme of Arrangement”).

 

Weatherford Parent believes that the terms of the proposals for a scheme of arrangement which will accompany the petition to have an examiner appointed to Weatherford Parent will, inter alia, deal with the: (i) cancellation of all Existing Common Stock; (ii) issue of New Common Stock and New Warrants to the Holders of Existing Common Stock; and (iii) issue of New Common Stock and New Tranche B Senior Unsecured Notes to the holders of Allowed Prepetition Notes Claims each on terms consistent with the Plan.  Weatherford Parent is a guarantor of the Prepetition Revolving Credit Claims, the Prepetition Term Loan Claims, the Prepetition A&R Claims and the Prepetition Note Claims, all of which are expected to be treated in the same way in the Scheme of Arrangement as in the Plan.

 

1.                                      Petition Hearing

 

On the petition hearing date, Weatherford Parent will apply to have the examiner’s appointment confirmed.  Weatherford Parent will be required to establish that it is insolvent and that there is a reasonable prospect of the survival of both the company and its undertaking.  It is intended that the petition will be accompanied by the Scheme of Arrangement.

 

2.                                      Approval of Proposals for the Scheme of Arrangement

 

The examiner will convene meetings of classes of creditors and the shareholders of Weatherford Parent.  The Scheme of Arrangement is required to be approved by in excess of 50% plus one in value and in number of at least one class of impaired creditors.  The Prepetition Notes Claims class will be the only impaired class of creditors in the Scheme of Arrangement.

 

27


 

3.                                      Approval by the High Court of Ireland

 

Once the requisite creditor class has voted in favor of the Scheme of Arrangement, the examiner will file a report containing details of the outcome of the votes of the class meetings with the High Court of Ireland and apply to the High Court of Ireland for a hearing date to confirm the Scheme of Arrangement.  At such hearing the examiner will be required to establish that the proposals are fair and equitable to any class of creditors which has not accepted the proposals and whose interests would be impaired by the proposals and that the proposals are not unfairly prejudicial to the interests of any interested party.

 

4.                                      Timetable for Irish Examinership Proceeding

 

The Irish Examinership Proceeding is a milestone under the Restructuring Support Agreement as described in section II.D.5 above.

 

Alternatively, Weatherford Parent may commence an alternative proceeding or implement an alternative structure that is reasonably acceptable to the Required Consenting Noteholders.

 

D.                                    THE BERMUDA PROCEEDING

 

To implement the foregoing restructuring, in parallel with these Chapter 11 Cases, and contemporaneously with the Debtors’ commencing these Chapter 11 Cases, Weatherford Bermuda (the “Bermuda Debtor”) expects to commence “provisional liquidation” proceedings (the Bermuda Proceedings”) pursuant to sections 161 and 170 of the Companies Act 1981 of Bermuda by presenting a “winding up” petition to the Supreme Court of Bermuda (the “Bermuda Court”).  Upon the application of the Bermuda Debtor, the Bermuda Court will be requested to appoint one or more “provisional liquidators” over the Bermuda Debtor to facilitate the restructuring of the Bermuda Debtor in its chapter 11 case.  The provisional liquidator(s) act as officers of the Bermuda Court, and will be required under the Bermuda Court’s order to report to the Bermuda Court from time to time on the progress of the Bermuda Debtor’s chapter 11 proceedings.  The Bermuda Debtor’s application will also seek to limit the provisional liquidator(s)’ powers such that the Bermuda Debtor’s management team and boards of directors will remain in control of the Bermuda Debtor’s day-to-day operations and its chapter 11 case and the provisional liquidators will have the power to oversee the process, including the review of documents.  Upon the appointment of provisional liquidators in respect of the Bermuda Debtor, a statutory stay of proceedings in Bermuda against the Bermuda Debtor or its assets will automatically arise.  On the “return date” for the Bermuda petition—similar to a “second day” hearing in a chapter 11 proceeding—the Bermuda Debtor will seek to postpone its petition for a specified period, while the Bermuda Debtor administers its Chapter 11 Cases.

 

Prior to the Effective Date the Bermuda Debtor may, along with the provisional liquidator and subject to the direction of the Supreme Court of Bermuda, convene meetings of the impaired creditors in order to consider and if thought fit approve a scheme of arrangement pursuant to the Companies Act 1981 of Bermuda (the “Bermuda Scheme”).

 

It is anticipated that a terms of the Bermuda Scheme will mirror the terms of the Plan.  A Bermuda Scheme is  a mechanism for ensuring that all of  the impaired creditors of the Bermuda Debtor are bound by the terms of the Plan and will be binding on impaired creditors after (i) a

 

28


 

majority in number of those impaired creditors voting, representing three-quarters in value of those voting, vote in person or by proxy in favor of the scheme at a meeting convened at the direction of the court for the purpose of considering the Bermuda Scheme; and (ii) the Bermuda Court subsequently makes an order approving the Bermuda Scheme; and (iii) a copy of that order is delivered to the Registrar of Companies in Bermuda for registration.

 

Although impaired creditors who have claims in Class 7 in both the Plan and a Bermuda Scheme will be asked to vote on both the Plan and the Bermuda Scheme, they will only receive a single distribution in respect of such a claim if allowed. Impaired creditors who have claimed only in a Bermuda Scheme will not be prejudiced as a result and will receive a single distribution in the same way as all other claims which are allowed under a Bermuda Scheme and the Plan.

 

The Bermuda Scheme and the Plan are expected to be inter-conditional; one is expected not to become effective without the other.  Impaired creditors should expect to receive a separate circular explaining the Bermuda Scheme.  It is anticipated that the meeting to consider the Bermuda  Scheme will be held after the meetings convened to vote on the Plan.

 

Alternatively, instead of a Bermuda Scheme, after the Confirmation of the Plan by the Bankruptcy Court, applications may be made by the Bermuda Debtor and the provisional liquidator(s) to the Bermuda Court seeking orders that, conditional upon the Confirmation Order, (i) the Bermuda Court recognize the Confirmation Order as a matter of Bermuda law; (ii) the Bermuda Court permanently restrain creditors and shareholders of the Bermuda Debtor from pursing claims against the Bermuda Debtor in breach of their obligations under the chapter 11 plan; and (iii) the Bermuda Court dismiss the winding up petition, thereby removing the provisional liquidators from office and terminating the Bermuda Proceedings.

 

IV.
SUMMARY OF THE PLAN

 

A.                                    GENERAL

 

This section of the Disclosure Statement summarized the Plan, a copy of which is annexed hereto as Exhibit A.  This summary is qualified in its entirety by reference to the Plan.  YOU SHOULD READ THE PLAN IN ITS ENTIRETY BEFORE VOTING TO ACCEPT OR REJECT THE PLAN.

 

In general, a chapter 11 plan (1) divided claims and equity interests into separate classes, (2) specifies the consideration that each class is to receive under the plan and (3) contains other provisions necessary to implement the plan.  Under the Bankruptcy Code, “claims” and “equity interests,” rather than “creditors” and “shareholders,” are classified because creditors and shareholders may hold claims and equity interests in more than one class.  Under section 1124 of the Bankruptcy Code, a class of claims is “impaired” under a plan unless the plan (1) leaves unaltered the legal, equitable, and contractual rights of each holder of a claim in such class or (2) provides, among other things, for the cure of certain existing defaults and reinstatement of the maturity of claims in such class.  Under the Plan, Classes 7, 10, and 12 are impaired, and holders of Claims or Interests in such Classes are entitled to vote to accept or reject the Plan unless such Classes of Claims or Interests are deemed to reject the Plan (e.g., Class 12) or subject to an objection filed by the Debtors.  Ballots are being furnished herewith to all holders of Claims in

 

29


 

Classes 7 and 10 that are entitled to vote to facilitate their voting to accept or reject the Plan. Class 12 is deemed to reject the Plan, and, therefore, holders of Claims or Interests in such Class will not vote on the Plan.

 

B.                                    ADMINISTRATIVE, DIP FACILITY, AND PRIORITY TAX CLAIMS

 

1.                                      Administrative Claims

 

Subject to sub-paragraph (a) below, on the later of the Effective Date or the date on which an Administrative Claim becomes an Allowed Administrative Claim, or, in each such case, as soon as practicable thereafter, each Holder of an Allowed Administrative Claim (other than an Allowed Professional Fee Claim) will receive, in full satisfaction, settlement, discharge and release of, and in exchange for, such Claim either (i) Cash equal to the amount of such Allowed Administrative Claim; or (ii) such other less favorable treatment as to which the Debtors (with the consent of the Required Consenting Noteholders in the manner set forth in the Restructuring Support Agreement) or Reorganized Debtors, as applicable, and the Holder of such Allowed Administrative Claim will have agreed upon in writing; provided, however, Administrative Claims incurred by any Debtor in the ordinary course of business may be paid in the ordinary course of business following the occurrence of the Effective Date by the applicable Reorganized Debtor in accordance with such applicable terms and conditions relating thereto without further notice to or order of the Bankruptcy Court.

 

(a)                                 Professional Fee Claims

 

Professionals or other Entities asserting a Professional Fee Claim for services rendered before the Effective Date must File and serve on the Reorganized Debtors and such other Entities who are designated in the Confirmation Order an application for final allowance of such Professional Fee Claim no later than the Professional Fees Bar Date; provided that the Reorganized Debtors will pay Professionals in the ordinary course of business for any work performed after the Effective Date, including those reasonable and documented fees and expenses incurred by Professionals in connection with the implementation and consummation of the Plan, in each case without further application or notice to or order of the Bankruptcy Court.

 

Objections to any Professional Fee Claim must be Filed and served on the Reorganized Debtors and the requesting party by no later than thirty (30) days after the Filing of the applicable final request for payment of the Professional Fee Claim.  Each Holder of an Allowed Professional Fee Claim will be paid in full in Cash by the Reorganized Debtors, including from the Professional Fee Claim Reserve, within five (5) Business Days after entry of the order approving such Allowed Professional Fee Claim.  The Reorganized Debtors will not commingle any funds contained in the Professional Fee Claim Reserve and will use such funds to pay only the Professional Fee Claims, as and when allowed by order of the Bankruptcy Court.  Notwithstanding anything to the contrary contained in the Plan, the failure of the Professional Fee Claim Reserve to satisfy in full the Professional Fee Claims will not, in any way, operate or be construed as a cap or limitation on the amount of Professional Fee Claims due and payable by the Reorganized Debtors.  The Professional Fee Claim Reserve will be maintained in trust for the Professionals and will not be considered property of the Debtors’ Estates; provided that the Reorganized Debtors will have a reversionary interest in the Unused Cash Reserve Amount. To the extent that funds held in the Professional Fee Claim Reserve do not or are unable to satisfy the full amount of the Allowed Professional Fee

 

30


 

Claims, such Professionals will have an Allowed Administrative Claim for any such deficiency, which will be satisfied in full in Cash accordance with Article II.A of the Plan.

 

2.                                      DIP Facility Claims

 

The DIP Facility Claims will be Allowed in the full amount due and owing under the DIP Financing Documents, including all principal, accrued and accruing postpetition interest, costs, fees and expenses. On the Effective Date, the Allowed DIP Facility Claims will, in full satisfaction, settlement, discharge and release of, and in exchange for such DIP Facility Claims, be indefeasibly paid in full in Cash from the proceeds of the Exit Facility (or, in the case of “Swap Obligations” and “Banking Services Obligations” be treated as the applicable Holder thereof shall otherwise agree), any unused commitments under the Revolving Credit Facility (as defined in the CIP Credit Agreement) shall be deemed terminated, and the DIP Facility Liens will be deemed discharged, released, and terminated for all purposes without further action of or by any Person or Entity; provided that the DIP Contingent Obligations shall survive the Effective Date on an unsecured basis and shall be paid by the Reorganized Debtors as and when due.

 

3.                                      Priority Tax Claims

 

Subject to Article VIII of the Plan, on, or as soon as reasonably practicable after, the later of (i) the Initial Distribution Date if such Priority Tax Claim is an Allowed Priority Tax Claim as of the Effective Date or (ii) the next Subsequent Distribution Date after the date on which such Priority Tax Claim becomes an Allowed Priority Tax Claim, each Holder of an Allowed Priority Tax Claim will receive in full satisfaction, settlement, discharge and release of, and in exchange for, such Allowed Priority Tax Claim, at the election of the Debtors or Reorganized Debtors, as applicable:  (A) Cash equal to the amount of such Allowed Priority Tax Claim; (B) such other less favorable treatment as to which the Debtors (with the consent of the Required Consenting Noteholders in the manner set forth in the Restructuring Support Agreement) or Reorganized Debtors, as applicable, and the Holder of such Allowed Priority Tax Claim have agreed upon in writing; (C) such other treatment such that it will not be Impaired pursuant to section 1124 of the Bankruptcy Code; or (D) pursuant to and in accordance with sections 1129(a)(9)(C) and 1129(a)(9)(D) of the Bankruptcy Code, Cash in an aggregate amount of such Allowed Priority Tax Claim payable in regular installment payments over a period ending not more than five (5) years after the Petition Date, plus simple interest at the rate required by applicable non-bankruptcy law on any outstanding balance from the Effective Date, or such lesser rate as is agreed to in writing by a particular taxing authority and the Debtors or Reorganized Debtors, as applicable, pursuant to section 1129(a)(9)(C) of the Bankruptcy Code; provided, however, Priority Tax Claims incurred by any Debtor in the ordinary course of business may be paid in the ordinary course of business following the occurrence of the Effective Date by the applicable Reorganized Debtor in accordance with such applicable terms and conditions relating thereto without further notice to or order of the Bankruptcy Court. Any installment payments to be made under clause (C) or (D) above will be made in equal quarterly Cash payments beginning on the first applicable Subsequent Distribution Date, and continuing on each Subsequent Distribution Date thereafter until payment in full of the applicable Allowed Priority Tax Claim.

 

31


 

C.                                    CLASSIFICATION AND TREATMENT OF CLASSIFIED CLAIMS AND EQUITY INTERESTS

 

1.                                      Summary

 

The Plan constitutes a separate plan of reorganization for each Debtor.  All Claims and Equity Interests, except Administrative Claims, DIP Facility Claims, and Priority Tax Claims, are placed in the Classes set forth below. For all purposes under the Plan, each Class will contain sub-Classes for each of the Debtors (i.e., there will be twelve (12) Classes for each Debtor); provided, that any Class that is vacant as to a particular Debtor will be treated in accordance with Article III.D of the Plan.

 

The categories of Claims and Equity Interests listed below classify Claims and Equity Interests for all purposes, including, without limitation, for voting, confirmation and distribution pursuant hereto and pursuant to sections 1122 and 1123(a)(1) of the Bankruptcy Code.  The Plan deems a Claim or Equity Interest to be classified in a particular Class only to the extent that the Claim or Equity Interest qualifies within the description of that Class and will be deemed classified in a different Class to the extent that any remaining portion of such Claim or Equity Interest qualifies within the description of such different Class.  A Claim or Equity Interest is in a particular Class only to the extent that any such Claim or Equity Interest is Allowed in that Class and has not been paid, released, disallowed or otherwise settled prior to the Effective Date.

 

Summary of Classification and Treatment of Classified Claims and Equity Interests

 

Class

 

Claim/Equity Interest

 

Status

 

Voting Rights

 

1.

 

Other Priority Claims

 

Unimpaired

 

Deemed to Accept

 

2.

 

Other Secured Claims

 

Unimpaired

 

Deemed to Accept

 

3.

 

Secured Tax Claims

 

Unimpaired

 

Deemed to Accept

 

4.

 

Prepetition Revolving Credit Claims

 

Unimpaired

 

Deemed to Accept

 

5.

 

Prepetition Term Loan Claims

 

Unimpaired

 

Deemed to Accept

 

6.

 

Prepetition A&R Claims

 

Unimpaired

 

Deemed to Accept

 

7.

 

Prepetition Notes Claims

 

Impaired

 

Entitled to Vote

 

8.

 

General Unsecured Claims

 

Unimpaired

 

Deemed to Accept

 

9.

 

Intercompany Claims

 

Unimpaired

 

Deemed to Accept

 

10.

 

Existing Common Stock(5)

 

Impaired

 

Entitled to Vote

 

11.

 

Intercompany Equity Interests

 

Unimpaired

 

Deemed to Accept

 

12.

 

Unexercised Equity Interests

 

Impaired

 

Deemed to Reject

 

 


(5)  This class excludes the Unexercised Equity Interests that are classified in Class 12.

 

32


 

2.                                      Classification and Treatment of Claims and Equity Interests

 

(a)                                 Class 1 — Other Priority Claims

 

·                  Classification: Class 1 consists of the Other Priority Claims.

 

·                  Treatment:  Subject to Article VIII of the Plan, on, or as soon as reasonably practicable after, the later of (i) the Initial Distribution Date if such Class 1 Claim is an Allowed Class 1 Claim as of the Effective Date or (ii) the next Subsequent Distribution Date after the date on which such Class 1 Claim becomes an Allowed Class 1 Claim, each Holder of an Allowed Class 1 Claim will receive in full satisfaction, settlement, discharge and release of, and in exchange for, such Allowed Class 1 Claim, at the election of the Debtors or Reorganized Debtors, as applicable (with the consent of the Required Consenting Noteholders in the manner set forth in the Restructuring Support Agreement): (A) Cash equal to the amount of such Allowed Class 1 Claim; (B) such other less favorable treatment as to which the Debtors or Reorganized Debtors, as applicable, and the Holder of such Allowed Class 1 Claim will have agreed upon in writing; or (C) such other treatment such that it will not be impaired pursuant to section 1124 of the Bankruptcy Code; provided, however, Class 1 Claims incurred by any Debtor in the ordinary course of business may be paid in the ordinary course of business following the occurrence of the Effective Date by the applicable Reorganized Debtor in accordance with the terms and conditions of any agreements relating thereto without further notice to or order of the Bankruptcy Court.

 

·                  Voting:  Class 1 is an Unimpaired Class, and the Holders of Claims in Class 1 are conclusively deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code.  Therefore, the Holders of Claims in Class 1 are not entitled to vote to accept or reject the Plan.

 

(b)                                 Class 2 — Other Secured Claims

 

·                  Classification:  Class 2 consists of the Other Secured Claims.  Class 2 consists of separate subclasses for each Other Secured Claim.

 

·                  Treatment:  Subject to Article VIII of the Plan, on, or as soon as reasonably practicable after, the later of (i) the Initial Distribution Date if such Class 2 Claim is an Allowed Class 2 Claim as of the Effective Date or (ii) the next Subsequent Distribution Date after the date on which such Class 2 Claim becomes an

 

33


 

Allowed Class 2 Claim, each Holder of an Allowed Class 2 Claim will receive in full satisfaction, settlement, discharge and release of, and in exchange for, such Allowed Class 2 Claim, at the election of the Debtors or Reorganized Debtors, as applicable (with the consent of the Required Consenting Noteholders in the manner set forth in the Restructuring Support Agreement): (A) Cash equal to the amount of such Allowed Class 2 Claim; (B) such other less favorable treatment as to which the Debtors or Reorganized Debtors, as applicable, and the Holder of such Allowed Class 2 Claim will have agreed upon in writing; (C) the Collateral securing such Allowed Class 2 Claim; or (D) such other treatment such that it will not be impaired pursuant to section 1124 of the Bankruptcy Code; provided, however, Class 2 Claims incurred by any Debtor in the ordinary course of business may be paid in the ordinary course of business following the occurrence of the Effective Date by the applicable Reorganized Debtor in accordance with the terms and conditions of any agreements relating thereto without further notice to or order of the Bankruptcy Court.

 

·                  Voting: Class 2 is an Unimpaired Class, and the Holders of Claims in Class 2 are conclusively deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code.  Therefore, the Holders of Claims in Class 2 are not entitled to vote to accept or reject the Plan.

 

(c)                                  Class 3 - Secured Tax Claims

 

·                  Classification:  Class 3 consists of the Secured Tax Claims.

 

·                  Treatment:  Subject to Article VIII of the Plan, on, or as soon as reasonably practicable after, the later of (i) the Initial Distribution Date if such Class 3 Claim is an Allowed Class 3 Claim as of the Effective Date or (ii) the next Subsequent Distribution Date after the date on which such Class 3 Claim becomes an Allowed Class 3 Claim, each Holder of an Allowed Class 3 Claim will receive in full satisfaction, settlement, discharge and release of, and in exchange for, such Allowed Class 3 Claim, at the election of the Debtors or Reorganized Debtors, as applicable (with the consent of the Required Consenting Noteholders in the manner set forth in the Restructuring Support Agreement):  (A) Cash equal to the amount of such Allowed Class 3 Claim; (B) such other less favorable treatment as to which the Debtors or Reorganized Debtors, as applicable, and the Holder of such Allowed Class 3 Claim will have agreed upon in writing; (C) the Collateral securing such Allowed Class 3 Claim; (D) such other treatment such that it will not be impaired pursuant to section 1124 of the Bankruptcy Code; or (E) pursuant to and in accordance with sections 1129(a)(9)(C) and 1129(a)(9)(D) of the Bankruptcy Code, Cash in an aggregate amount of such Allowed Class 3 Claim payable in regular installment payments over a period ending not more than five (5) years after the Petition Date, plus simple interest at the rate required by applicable non-bankruptcy law on any outstanding balance from the Effective Date, or such lesser rate as is agreed to in writing by a particular taxing authority and the Debtors or Reorganized

 

34


 

Debtors, as applicable, pursuant to section 1129(a)(9)(C) of the Bankruptcy Code; provided, however, Class 3 Claims incurred by any Debtor in the ordinary course of business may be paid in the ordinary course of business following the occurrence of the Effective Date by the applicable Reorganized Debtor in accordance with such applicable terms and conditions relating thereto without further notice to or order of the Bankruptcy Court.  Any installment payments to be made under clause (D) or (E) above will be made in equal quarterly Cash payments beginning on the first applicable Subsequent Distribution Date, and continuing on each Subsequent Distribution Date thereafter until payment in full of the applicable Allowed Class 3 Claim.

 

·                  Voting: Class 3 is an Unimpaired Class, and the Holders of Claims in Class 3 are conclusively deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code.  Therefore, the Holders of Claims in Class 3 are not entitled to vote to accept or reject the Plan.

 

(d)                                 Class 4 — Prepetition Revolving Credit Claims

 

·                  Classification: Class 4 consists of the Prepetition Revolving Credit Claims.

 

·                  Allowance: The Prepetition Revolving Credit Claims are deemed Allowed in the aggregate principal amount of $316,742,581 plus accrued and unpaid interest thereon.

 

·                  Treatment:  To the extent not paid in full in Cash prior to the Effective Date, on the Effective Date, the Allowed Prepetition Revolving Credit Claims will, in full satisfaction, settlement, discharge and release of, and in exchange for, such Claims, be indefeasibly paid in full in Cash and the Prepetition Revolving Credit Agreement Liens will be deemed discharged, released, and terminated for all purposes without further action of or by any Person or Entity.

 

·                  Voting: Class 4 is an Unimpaired Class, and the Holders of Claims in Class 4 will be conclusively deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code.  Therefore, Holders of Claims in Class 4 are not entitled to vote to accept or reject the Plan.

 

(e)                                  Class 5 — Prepetition Term Loan Claims

 

·                  Classification: Class 5 consists of the Prepetition Term Loan Claims.

 

·                  Allowance: The Prepetition Term Loans Claims are deemed Allowed in the aggregate principal amount of $297,500,000 plus accrued and unpaid interest thereon.

 

·                  Treatment:  To the extent not paid in full in Cash prior to the Effective Date, on the Effective Date, the Allowed Prepetition Term Loan Claims will, in full

 

35


 

satisfaction, settlement, discharge and release of, and in exchange for, such Claims, be indefeasibly paid in full in Cash and the Prepetition Term Loan Agreement Liens will be deemed discharged, released, and terminated for all purposes without further action of or by any Person or Entity.

 

·                  Voting: Class 5 is an Unimpaired Class, and the Holders of Claims in Class 5 will be conclusively deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code.  Therefore, Holders of Claims in Class 5 are not entitled to vote to accept or reject the Plan.

 

(f)                                   Class 6 — Prepetition A&R Claims

 

·                  Classification: Class 6 consists of the Prepetition A&R Claims.

 

·                  Allowance: The Prepetition A&R Claims are deemed Allowed in the aggregate principal amount of $305,000,000 plus accrued and unpaid interest thereon plus outstanding letters of credit in an amount of $166,000,000.

 

·                  Treatment:  On the Effective Date, the Allowed Prepetition A&R Claims will, in full satisfaction, settlement, discharge and release of, and in exchange for, such Claims, be indefeasibly paid in full in Cash.  Any letters of credit issued and outstanding as of the Effective Date under the Prepetition A&R Credit Agreement will either be cash collateralized or receive such other treatment as may be acceptable to the Debtors, the Prepetition A&R Credit Agreement Agent, and the Required Consenting Noteholders.

 

·                  Voting: Class 6 is an Unimpaired Class, and the Holders of Claims in Class 6 will be conclusively deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code.  Therefore, Holders of Claims in Class 6 are not entitled to vote to accept or reject the Plan.

 

(g)                                  Class 7 — Prepetition Notes Claims

 

·                  Classification: Class 7 consists of the Prepetition Notes Claims.

 

·                  Allowance: The Prepetition Notes Claims are deemed Allowed in the aggregate principal amount of $7,427,067,000, plus accrued and unpaid interest thereon, consisting of:

 

·                  $365,107,000 in aggregate principal amount, plus accrued and unpaid interest on account of the 5.125% Notes;

 

·                  $750,000,000 in aggregate principal amount, plus accrued and unpaid interest on account of the 7.750% Notes;

 

·                  $1,265,000,000 in aggregate principal amount, plus accrued and unpaid interest on account of the 5.875% Notes;

 

36


 

·                  $646,286,000 in aggregate principal amount, plus accrued and unpaid interest on account of the 4.500% Notes;

 

·                  $750,000,000 in aggregate principal amount, plus accrued and unpaid interest on account of the 8.250% Notes;

 

·                  $790,000,000 in aggregate principal amount, plus accrued and unpaid interest on account of the 9.875% 2024 Notes;

 

·                  $453,045,000 in aggregate principal amount, plus accrued and unpaid interest on account of the 6.500% Notes;

 

·                  $461,300,000 in aggregate principal amount, plus accrued and unpaid interest on account of the 7.000% Notes;

 

·                  $250,000,000 in aggregate principal amount, plus accrued and unpaid interest on account of the 9.875% 2039 Notes;

 

·                  $462,601,000 in aggregate principal amount, plus accrued and unpaid interest on account of the 6.750% Notes;

 

·                  $374,961,000 in aggregate principal amount, plus accrued and unpaid interest on account of the 5.950% Notes;

 

·                  $600,000,000 in aggregate principal amount, plus accrued and unpaid interest on account of the 9.875% 2025 Notes; and

 

·                  $258,767,000 in aggregate principal amount, plus accrued and unpaid interest on account of the 6.8000% Notes.

 

·                  Treatment:  On the Initial Distribution Date, each Holder of an Allowed Prepetition Notes Claim will receive, in full satisfaction, settlement, discharge and release of, and in exchange for, such Claim, its Pro Rata share of (i) 99% of the New Common Stock, subject to dilution on account of equity issued pursuant to the New Management Incentive Plan, the Tranche B Equity Conversion (as defined below), and the New Common Stock issuable pursuant to the New Warrants and (ii) the New Tranche B Senior Unsecured Notes; provided, however, that each of such Holders will have the option, in its sole discretion, to convert its Pro Rata share of $500,000,000 in principal amount of the New Tranche B Senior Unsecured Notes into New Common Stock (the “Tranche B Equity Conversion”) at a conversion price of $36.20 per share of New Common Stock; provided, further that the aggregate principal amount of New Tranche B Senior Unsecured Notes converted into New Common Stock will not exceed $500,000,000.  To the extent that less than $500,000,000 in principal amount of the New Tranche B Senior Unsecured Notes is converted in New Common Stock pursuant to the Tranche B Equity Conversion, any such Holder that elected to convert its full Pro Rata share of New Tranche B Senior Unsecured Notes into New Common Stock in the Tranche B Equity Conversion will also be eligible to exercise its Overallotment Rights.  Procedures for the

 

37


 

effectuation of the Tranche B Equity Conversion and the Overallotment Rights are set forth in Article V.V of the Plan.  In addition, each of such Holders will receive Subscription Rights to purchase its Pro Rata share of New Tranche A Senior Unsecured Notes pursuant to the Rights Offering and in accordance with the applicable Rights Offerings Procedures.

 

·                  Voting: Class 7 is Impaired, and Holders of Claims in Class 7 are entitled to vote to accept or reject the Plan.

 

(h)                                 Class 8 —  General Unsecured Claims

 

·                  Classification: Class 8 consists of the General Unsecured Claims.

 

·                  Treatment: The legal, equitable, and contractual rights of the holders of General Unsecured Claims are unaltered by the Plan.  Except to the extent that a holder of a General Unsecured Claim agrees to a different treatment, on and after the Effective Date, the Debtors will continue to pay (if Allowed) or dispute each General Unsecured Claim in the ordinary course of business in accordance with applicable law.

 

·                  Voting: Class 8 is an Unimpaired Class, and the Holders of Claims in Class 8 are conclusively deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code.  Therefore, the Holders of Claims in Class 8 are not entitled to vote to accept or reject the Plan.

 

(i)                                     Class 9 — Intercompany Claims

 

·                  Classification: Class 9 consists of the Intercompany Claims.

 

·                  Treatment:  Subject to the Restructuring Transactions, the Intercompany Claims will be adjusted, reinstated, compromised, or cancelled to the extent determined appropriate by the Debtors, with the consent of the Required Consenting Noteholders.

 

·                  Voting: Class 9 is an Unimpaired Class and the Holders of Claims in Class 9 are conclusively deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code.  Therefore, the Holders of Claims in Class 9 are not entitled to vote to accept or reject the Plan.

 

(j)                                    Class 10 — Existing Common Stock

 

·                  Classification: Class 10 consists of the Existing Common Stock.(6)

 

·                  Treatment: On the Effective Date, the Existing Common Stock will be cancelled without further notice to, approval of or action by any Entity.  On the

 


(6)  This class excludes the Unexercised Equity Interests that are classified in Class 12.

 

38


 

Initial Distribution Date, each Holder of Existing Common Stock will receive its Pro Rata share of (i) 1.0% of the New Common Stock, subject to dilution on account of the equity issued pursuant to the New Management Incentive Plan, the Tranche B Equity Conversion and the New Common Stock issuable pursuant to the New Warrants and (ii) the New Warrants.

 

The foregoing is offered solely for settlement purposes under Rule 408 of the Federal Rules of Evidence and analogous state law, and such settlement is conditioned on the Bankruptcy Court confirming the Plan and the occurrence of the Effective Date.

 

·                  Voting: Class 10 is Impaired, and the Holders of Existing Common Stock in Class 10 are entitled to vote to accept or reject the Plan.

 

(k)                                 Class 11 — Intercompany Equity Interests

 

·                  Classification: Class 11 consists of Intercompany Equity Interests.

 

·                  Treatment:   Subject to the Restructuring Transactions and the applicable law of the Debtors’ jurisdiction of incorporation, the Intercompany Equity Interests will be reinstated for administrative convenience or cancelled as determined by the Debtors, with the reasonable consent of the Required Consenting Noteholders.

 

·                  Voting: Class 11 is an Unimpaired Class and the Holders of Claims in Class 11 are conclusively deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code.  Therefore, the Holders of Claims in Class 11 are not entitled to vote to accept or reject the Plan.

 

(l)                                     Class 12 — Unexercised Equity Interests

 

·                  Classification: Class 12 consists of Unexercised Equity Interests.

 

·                  Treatment:   On the Effective Date, the Unexercised Equity Interests will be cancelled, and the Holders of such Unexercised Equity Interests will not receive any distribution or retain any property on account of such Unexercised Equity Interests.

 

·                  Voting: Class 12 is Impaired, and the Holders of Unexercised Equity Interests in Class 12 will be conclusively deemed to have rejected the Plan pursuant to section 1126(g) of the Bankruptcy Code.  Therefore, Holders of Unexercised Equity Interests in Class 12 will not be entitled to vote to accept or reject the Plan.

 

3.                                      Special Provision Governing Unimpaired Claims

 

Except as otherwise provided herein, nothing under the Plan will affect or limit the Debtors’ or the Reorganized Debtors’ rights and defenses (whether legal or equitable) in respect

 

39


 

of any Unimpaired Claims, including, without limitation, all rights in respect of legal and equitable defenses to or setoffs or recoupments against any such Unimpaired Claims.

 

4.                                      Elimination of Vacant Classes

 

Any Class of Claims that is not occupied as of the commencement of the Confirmation Hearing by an Allowed Claim or a claim temporarily allowed under Bankruptcy Rule 3018, or as to which no vote is cast, will be deemed eliminated from the Plan for purposes of voting to accept or reject the Plan and for purposes of determining acceptance or rejection of the Plan by such Class pursuant to section 1129(a)(8) of the Bankruptcy Code.

 

D.                                    ACCEPTANCE OR REJECTION OF THE PLAN

 

1.                                      Presumed Acceptance of Plan

 

Classes 1-6 and 8, 9, and 11 are Unimpaired under the Plan.  Therefore, the Holders of Claims or Equity Interests in such Classes are deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code and are not entitled to vote to accept or reject the Plan.

 

2.                                      Presumed Rejection of Plan

 

Class 12 is Impaired and Holders of Unexercised Equity Interests in Class 12 are not entitled to receive or retain any property under the Plan.  Accordingly, under section 1126(g) of the Bankruptcy Code, the votes of Holders of Unexercised Equity Interests in Class 12 will not be solicited and such Holders are deemed to reject the Plan.

 

3.                                      Voting Classes

 

Classes 7 and 10 are Impaired and entitled to vote under the Plan.  The Holders of Claims in Class 7 and Existing Common Stock in Class 10 as of the Voting Record Date are entitled to vote to accept or reject the Plan.

 

4.                                      Acceptance by Impaired Class of Claims

 

Pursuant to section 1126(c) of the Bankruptcy Code and except as otherwise provided in section 1126(e) of the Bankruptcy Code, an Impaired Class of Claims has accepted the Plan if the Holders of at least two-thirds (2/3) in dollar amount and more than one-half (1/2) in number of the Allowed Claims in such Class actually voting have voted to accept the Plan.

 

Pursuant to section 1126(d) of the Bankruptcy Code and except as otherwise provided in section 1126(e) of the Bankruptcy Code, an Impaired Class of Equity Interests has accepted the Plan if the Holders of at least two-thirds (2/3) in amount of the Allowed Equity Interests in such Class actually have voted to accept the Plan.

 

5.                                      Confirmation Pursuant to Sections 1129(a)(10) and 1129(b) of the Bankruptcy Code; Cram Down

 

Section 1129(a)(10) of the Bankruptcy Code will be satisfied for purposes of Confirmation by acceptance of the Plan by Class 7.  The Debtors request confirmation of the Plan under section 1129(b) of the Bankruptcy Code with respect to any Impaired Class that does not accept the Plan pursuant to section 1126 of the Bankruptcy Code.  The Debtors reserve the right, in accordance

 

40


 

with the terms of the Restructuring Support Agreement, to modify the Plan or any Exhibit or Plan Schedule in order to satisfy the requirements of section 1129(b) of the Bankruptcy Code, if necessary.

 

6.                                      Votes Solicited in Good Faith

 

The Debtors have, and upon the Confirmation Date will be deemed to have, solicited votes on the Plan from the Voting Classes in good faith and in compliance with the applicable provisions of the Bankruptcy Code, including, without limitation, sections 1125 and 1126 of the Bankruptcy Code, and any applicable non-bankruptcy law, rule, or regulation governing the adequacy of disclosure in connection with the solicitation.  Accordingly, the Debtors, the Reorganized Debtors, and each of their respective Related Parties will be entitled to, and upon the Confirmation Date are hereby granted, the protections of section 1125(e) of the Bankruptcy Code.

 

E.                                    MEANS FOR IMPLEMENTATION OF THE PLAN

 

1.                                      Restructuring Transactions

 

Without limiting any rights and remedies of the Debtors or Reorganized Debtors under the Plan or applicable law, but in all cases subject to the terms and conditions of the Restructuring Support Agreement (if applicable), the DIP Financing Documents (if applicable), and the Restructuring Documents and any consents or approvals required thereunder, the entry of the Confirmation Order will constitute authorization for the Reorganized Debtors to take, or to cause to be taken, all actions necessary or appropriate to consummate and implement the provisions of the Plan, including but not limited to the actions set forth in the Reorganization Steps Overview, prior to, on and after the Effective Date, including such actions as may be necessary or appropriate to effectuate a corporate restructuring of their respective businesses, to otherwise simplify the overall corporate structure of the Reorganized Debtors, or to reincorporate certain of the Debtors under the laws of jurisdictions other than the laws of which the applicable Debtors are presently formed or incorporated.  Such restructuring may include one or more mergers, amalgamations, consolidations, restructures, dispositions, liquidations, dissolutions, or creations of one or more new Entities, as may be determined by the Debtors or Reorganized Debtors to be necessary or appropriate (with the consent of the Required Consenting Noteholders), including the steps described in the Reorganization Steps Overview, but in all cases subject to the terms and conditions of the Plan, the DIP Financing Documents (if applicable), and the Restructuring Documents and any consents or approvals required hereunder or thereunder (collectively, the “Restructuring Transactions”).

 

All such Restructuring Transactions taken, or caused to be taken, will be deemed to have been authorized and approved by the Bankruptcy Court.  The actions to effectuate the Restructuring Transactions may include: (i) the execution and delivery of appropriate agreements or other documents of merger, amalgamation, consolidation, restructuring, disposition, liquidation, or dissolution containing terms that are consistent with the terms of the Plan and that satisfy the applicable requirements of applicable state law and such other terms to which the applicable Entities may agree; (ii) the execution and delivery of appropriate instruments of transfer, assignment, assumption, or delegation of any asset, property, right, liability, duty, or obligation on terms consistent with the terms of the Plan and having such other terms to which the applicable Entities may agree; (iii) the filing of appropriate certificates or articles of merger, amalgamation,

 

41


 

consolidation, or dissolution pursuant to applicable state law; (iv) the creation of one or more new Entities; and (v) all other actions that the applicable Entities determine to be necessary or appropriate, including making filings or recordings that may be required by applicable state law in connection with such transactions, in each case in form and substance reasonably acceptable to the Required Consenting Noteholders, and in all cases subject to the terms and conditions of the Plan, the DIP Financing Documents (if applicable), and the Restructuring Documents and any consents or approvals required thereunder.

 

2.                                      Continued Corporate Existence

 

Subject to the Restructuring Transactions permitted by Article V.A of the Plan, after the Effective Date, the Reorganized Debtors will continue to exist as separate legal Entities in accordance with the applicable law in the respective jurisdiction in which they are incorporated or formed and pursuant to their respective certificates or articles of incorporation and by-laws, or other applicable corporate governance documents, in effect immediately prior to the Effective Date, except to the extent such certificates or articles of incorporation and by-laws, or other applicable corporate governance documents, are amended, restated or otherwise modified under the Plan (subject to such amendment, restatement, or replacement being in accordance with the law of the Debtor’s jurisdiction of incorporation to the extent such non-bankruptcy law is applicable), including pursuant to the Amended/New Corporate Governance Documents.  Notwithstanding anything to the contrary herein, the Claims against a particular Debtor or Reorganized Debtor will remain the obligations solely of such Debtor or Reorganized Debtor and will not become obligations of any other Debtor or Reorganized Debtor solely by virtue of the Plan or the Chapter 11 Cases.

 

3.                                      Vesting of Assets in the Reorganized Debtors Free and Clear of Liens and Claims

 

Except as otherwise expressly provided in the Plan, the Confirmation Order, or any Restructuring Document, pursuant to sections 1123(a)(5), 1123(b)(3), 1141(b) and (c) and other applicable provisions of the Bankruptcy Code, on and after the Effective Date, all property and assets of the Estates of the Debtors, including all claims, rights, and Litigation Claims of the Debtors, and any other assets or property acquired by the Debtors or the Reorganized Debtors during the Chapter 11 Cases or under or in connection with the Plan (other than the Professional Fee Claim Reserve and any rejected Executory Contracts and/or Unexpired Leases), will vest in the Reorganized Debtors free and clear of all Claims, Liens, charges, and other encumbrances, subject to the applicable law of the Debtor’s jurisdiction of incorporation, where such non-bankruptcy law is applicable, Liens which survive the occurrence of the Effective Date as described in Article III of the Plan (including, without limitation, the Liens that secure the Exit Facility).  On and after the Effective Date, the Reorganized Debtors may (i) operate their respective businesses, (ii) use, acquire, and dispose of their respective property and (iii) compromise or settle any Claims, in each case without notice to, supervision of or approval by the Bankruptcy Court and free of any restrictions of the Bankruptcy Code or the Bankruptcy Rules, other than restrictions expressly imposed by the Plan or the Confirmation Order.

 

4.                                      Exit Facility Loan Documents

 

On the Effective Date, the Debtors and the Reorganized Debtors, as applicable, will be authorized to execute and deliver, and to consummate the transactions contemplated by, the Exit

 

42


 

Facility Loan Documents, in each case in form and substance acceptable to the Required Consenting Noteholders in the manner set forth in the Restructuring Support Agreement and to the Exit Facility Lenders and without further notice to or order of the Bankruptcy Court, act or action under applicable law, regulation, order, or rule or the vote, consent, authorization or approval of any Person or Entity (other than as expressly required by the Exit Facility Loan Documents).  On the Effective Date, the Exit Facility Loan Documents will constitute legal, valid, binding and authorized indebtedness and obligations of the Reorganized Debtors, enforceable in accordance with their respective terms and such indebtedness and obligations will not be, and will not be deemed to be, enjoined or subject to discharge, impairment, release or avoidance under the Plan, the Confirmation Order or on account of the Confirmation or Consummation of the Plan.

 

5.                                      New Senior Unsecured Notes Indentures

 

On the Effective Date, the Debtors and the Reorganized Debtors, as applicable, will be authorized to execute and deliver, and to consummate the transactions contemplated by, the New Senior Unsecured Notes Indentures and other New Senior Unsecured Notes Documents in each case in form and substance acceptable to the Required Consenting Noteholders in the manner set forth in the Restructuring Support Agreement, and with respect to the New Tranche A Senior Unsecured Notes Indentures, in form and substance acceptable to the Backstop Parties, and without further notice to or order of the Bankruptcy Court, act or action under applicable law, regulation, order, or rule or the vote, consent, authorization or approval of any Person or Entity (other than as expressly required by the New Senior Unsecured Notes Indentures).  On the Effective Date, the New Senior Unsecured Notes Indentures will constitute legal, valid, binding and authorized indebtedness and obligations of the Reorganized Debtors, enforceable in accordance with their respective terms and such indebtedness and obligations will not be, and will not be deemed to be, enjoined or subject to discharge, impairment, release or avoidance under the Plan, the Confirmation Order or on account of the Confirmation or Consummation of the Plan.

 

6.                                      New Common Stock; Book Entry

 

On the Effective Date, subject to the terms and conditions of the Plan and the Restructuring Transactions and as described more fully in the Reorganization Steps Overview, Reorganized Parent will issue the New Common Stock pursuant to the Plan and the Amended/New Corporate Governance Documents.

 

Distributions of the New Common Stock and the New Warrants may be made by delivery or book-entry transfer thereof by the applicable Distribution Agent in accordance with the Plan and the Amended/New Corporate Governance Documents.  Upon the Effective Date, after giving effect to the transactions contemplated hereby, the authorized share capital or other equity securities of Reorganized Parent will be that number of shares of New Common Stock as may be designated in the Amended/New Corporate Governance Documents.

 

7.                                      Listing of New Securities and Transfer Restrictions

 

Reorganized Parent will use its commercially reasonable efforts to list the New Common Stock for trading on a national securities exchange reasonably acceptable to the Debtors and the Required Consenting Noteholders, with such listing to be effective as soon as practical after the Effective Date. On the Effective Date, Reorganized Parent will be a registrant under the Securities Exchange Act of 1934, as amended. Each share of New Common Stock will have the same rights,

 

43


 

including with respect to voting, dividend, capital, redemption, and information rights.  The New Common Stock will constitute a single class of equity securities in Reorganized Parent on the Effective Date and, other than the New Common Stock issued under the New Management Incentive Plan and the New Warrants, there will exist no other equity securities, warrants, options, or other agreements to acquire any equity interest in Reorganized Parent as of the Effective Date.

 

8.                                      New Registration Rights Agreement

 

Subject to the Restructuring Transactions permitted by Article V.A of the Plan, on the Effective Date, Reorganized Parent will enter into the New Registration Rights Agreement, which will become effective and binding in accordance with its terms and conditions upon the parties thereto, in each case without further notice to or order of the Bankruptcy Court, act or action under applicable law, regulation, order, or rule or the vote, consent, authorization or approval of any Entity (other than as expressly required by the New Registration Rights Agreement).

 

9.                                      New Management Incentive Plan

 

As soon as reasonably practicable after the Effective Date, Reorganized Parent will adopt the New Management Incentive Plan, which will be on the terms and conditions (including any and all awards granted thereunder) determined by the New Board (including with respect to participants, allocation, timing, and the form and structure of the options, warrants, and/or equity compensation thereunder).  The New Common Stock issued under the New Management Incentive Plan will dilute all of the New Common Stock equally.

 

10.                               New Warrants

 

On the Effective Date, Reorganized Parent will enter into and consummate the transactions contemplated by the New Warrant Agreement (including issuing the New Warrants), which will become effective and binding in accordance with their respective terms and conditions upon the parties thereto, in each case without further notice to or order of the Bankruptcy Court, act or action under applicable law, regulation, order, or rule or the vote, consent, authorization or approval of any Person or Entity (other than as expressly required by the New Warrant Agreement and the New Warrants, as applicable).

 

11.                               Plan Securities and Related Documentation; Exemption from Securities Laws

 

On and after the Effective Date, the Debtors and the Reorganized Debtors, as applicable, are authorized to and will provide or issue, as applicable, the New Common Stock, the New Warrants, and the New Senior Unsecured Notes to be distributed and issued under the Plan (collectively, the “Plan Securities”) and any and all other notes, stock, instruments, certificates, and other documents or agreements required to be distributed, issued, executed or delivered pursuant to or in connection with the Plan (collectively, the “Plan Securities and Documents”), in each case in form and substance acceptable to the Required Consenting Noteholders in the manner set forth in the Restructuring Support Agreement, and without further notice to or order of the Bankruptcy Court, act or action under applicable law, regulation, order, or rule or the vote, consent, authorization or approval of any Entity.

 

44


 

The offer, distribution, and issuance, as applicable, of the Plan Securities and Documents under the Plan (including New Common Stock issued pursuant to the Tranche B Equity Conversion) will be exempt, or will be effected in a manner that is exempt, from registration and prospectus delivery requirements under applicable securities laws (including, as applicable, Section 5 of the Securities Act, Article 3(1) of Directive 2003/71/EC of the European Parliament and of the Council (as amended), Article 3(1) of Regulation (EU) 2017/1129 of the European Parliament and of the Council, or any similar state or local law requiring the registration and/or delivery of a prospectus for offer or sale of a security or registration or licensing of an issuer of a security) pursuant to section 1145(a) of the Bankruptcy Code and/or other applicable exemptions; provided, however, that New Tranche A Senior Unsecured Notes issued to the Backstop Parties pursuant to the Backstop Commitment Agreement (but not the New Tranche A Senior Unsecured Notes issued to Holders of Allowed Prepetition Notes Claims in the Rights Offering pursuant to Article III.B.7(c) of the Plan) will be issued and distributed pursuant to Section 4(a)(2) of the Securities Act and other applicable exemptions.  An offering of Plan Securities provided in reliance on the exemption from registration under the Securities Act pursuant to section 1145(a) of the Bankruptcy Code may be sold without registration to the extent permitted under section 1145 of the Bankruptcy Code and is deemed to be a public offering, and such Plan Securities may be resold without registration to the extent permitted under section 1145 of the Bankruptcy Code and other applicable law.

 

Persons who purchase securities pursuant to the exemption from registration set forth in Section 4(a)(2) of the Securities Act or Regulation D promulgated thereunder will hold “restricted securities.” Resales of such restricted securities would not be exempted by section 1145 of the Bankruptcy Code from registration under the Securities Act or other applicable law.  Holders of restricted securities would, however, be permitted to resell Plan Securities without registration if they are able to comply with the applicable provisions of Rule 144 under the Securities Act or Rule 144A under the Securities Act or any other applicable registration exemption under the Securities Act, or if such securities are registered with the SEC.

 

12.                               Release of Liens and Claims

 

To the fullest extent provided under section 1141(c) and other applicable provisions of the Bankruptcy Code, except as otherwise provided herein (including, without limitation, Article V.D, V.E, V.F, and V.G of the Plan) or in any contract, instrument, release or other agreement or document entered into or delivered in connection with the Plan, on the Effective Date and concurrently with the applicable distributions made pursuant to Article VII of the Plan, all Liens, Claims, mortgages, deeds of trust, or other security interests against the assets or property of the Debtors or the Estates will (subject to the laws of the Debtor’s jurisdiction of incorporation where such non-bankruptcy law is applicable) be fully released, canceled, terminated, extinguished and discharged, in each case without further notice to or order of the Bankruptcy Court, act or action under applicable law, regulation, order, or rule or the vote, consent, authorization or approval of any Person or Entity.  The filing of the Confirmation Order with any federal, state, or local agency or department will constitute good and sufficient evidence of, but will not be required to effect, the termination of such Liens, Claims and other interests to the extent provided in the immediately preceding sentence.  Any Person or Entity holding such Liens, Claims or interests will, pursuant to section 1142 of the Bankruptcy Code and in the case of any DIP Liens at the sole cost and expense of the Reorganized Debtors, promptly execute and deliver to the Reorganized Debtors

 

45


 

such instruments of termination, release, satisfaction and/or assignment (in recordable form) as may be reasonably requested by the Reorganized Debtors.

 

13.                               Corporate Governance Documents of the Reorganized Debtors

 

The respective corporate governance documents of each of the Debtors will be amended and restated or replaced (as applicable) by the New/Amended Corporate Governance Documents (subject to such amendment, restatement, or replacement being in accordance with the law of the Debtor’s jurisdiction of incorporation to the extent such non-bankruptcy law is applicable).  Such corporate governance documents will (if permissible under the law of the Debtor’s jurisdiction of incorporation if such non-bankruptcy law is applicable): (i) to the extent required by section 1123(a)(6) of the Bankruptcy Code, include a provision prohibiting the issuance of non-voting equity securities; (ii) authorize the issuance of New Common Stock in an amount not less than the amount necessary to permit the distributions thereof required or contemplated by the Plan (including as a result of the exercise of New Warrants); and (iii) to the extent necessary or appropriate, include such provisions as may be needed to effectuate and consummate the Plan and the transactions contemplated herein.  After the Effective Date, the Reorganized Debtors may, subject to the terms and conditions of the New/Amended Corporate Governance Documents, amend and restate their respective corporate governance documents as permitted thereby and by applicable law.

 

14.                               Directors and Officers of the Reorganized Debtors

 

The New Board will be composed of seven (7) directors, one of whom will be Mark A. McCollum, the chief executive officer of the Debtors, and six (6) of whom will be designated by the Ad Hoc Noteholder Committee (in consultation with Mark A. McCollum, the chief executive officer of the Debtors and subject to the obligation of the Ad Hoc Noteholder Committee to meet and interview upon reasonable notice any existing members of the Debtors’ boards of directors who express interest in serving on the New Board).

 

Pursuant to and to the extent required by section 1129(a)(5) of the Bankruptcy Code, the Debtors will disclose in the Plan Supplement the identity and affiliations of any Person proposed to serve on the New Board or as an officer of each of the Reorganized Debtors, and, to the extent such Person is an insider other than by virtue of being a director or an officer, the nature of any compensation for such Person.  Each such director and officer will serve from and after the Effective Date pursuant to applicable law and the terms of the Amended/New Corporate Governance Documents and the other constituent and corporate governance documents of the applicable Reorganized Debtors.  The existing boards of directors and other governing bodies of the Debtors will be deemed to have resigned on and as of the Effective Date, in each case without further notice to or order of the Bankruptcy Court, act or action under applicable law, regulation, order, or rule or the vote, consent, authorization or approval of any Person or Entity.

 

15.                               Corporate Action

 

Each of the Debtors and the Reorganized Debtors may take any and all actions to execute, deliver, File or record such contracts, instruments, releases and other agreements or documents and take such actions as may be necessary or appropriate to effectuate and implement the

 

46


 

provisions of the Plan, including, without limitation, the issuance and the distribution of the securities to be issued pursuant hereto, in each case in form and substance acceptable to the Required Consenting Noteholders in the manner set forth in the Restructuring Support Agreement and to the extent permitted by the DIP Financing Documents, and without further notice to or order of the Bankruptcy Court, act or action under applicable law, regulation, order, or rule or any requirement of further action, vote or other approval or authorization by the security holders, officers or directors of the Debtors or the Reorganized Debtors or by any other Person (subject to such actions being in accordance with the law of the Debtor’s jurisdiction of incorporation to the extent such non-bankruptcy law is applicable).

 

Prior to, on or after the Effective Date (as appropriate), to the extent permitted by the law of the Debtor’s jurisdiction of incorporation to the extent such non-bankruptcy law is applicable, all matters provided for pursuant to the Plan that would otherwise require approval of the stockholders, directors, officers, managers, members or partners of the Debtors (as of prior to the Effective Date) will be deemed to have been so approved and will be in effect prior to, on or after the Effective Date (as appropriate) pursuant to applicable law and without any requirement of further action by such Person or Entity or the need for any approvals, authorizations, actions or consents of or from any such Person or Entity.

 

As of the Effective Date, all matters provided for in the Plan involving the legal or corporate structure of the Debtors or the Reorganized Debtors (including, without limitation, the adoption of the Amended/New Corporate Governance Documents and similar constituent and corporate governance documents, and the selection of directors and officers for, each of the Reorganized Debtors), and any legal or corporate action required by the Debtors or the Reorganized Debtors in connection with the Plan, to the extent permitted by the law of the Debtor’s jurisdiction of incorporation to the extent such non-bankruptcy law is applicable, will be deemed to have occurred and will be in full force and effect in all respects, in each case without further notice to or order of the Bankruptcy Court, act or action under applicable law, regulation, order, or rule or any requirement of further action, vote or other approval or authorization by any Person or Entity.

 

On and after the Effective Date, the appropriate officers of the Debtors and the Reorganized Debtors are authorized to issue, execute, and deliver, and consummate the transactions contemplated by, the contracts, agreements, documents, guarantees, pledges, consents, securities, certificates, resolutions and instruments contemplated by or described in the Plan in the name of and on behalf of the Debtors and the Reorganized Debtors, in each case in form and substance acceptable to the Required Consenting Noteholders in the manner set forth in the Restructuring Support Agreement, and without further notice to or order of the Bankruptcy Court, act or action under applicable law, regulation, order, or rule or any requirement of further action, vote or other approval or authorization by any Person or Entity.  The secretary and any assistant secretary of the Debtors and the Reorganized Debtors will be authorized to certify or attest to any of the foregoing actions.

 

16.                               Cancellation of Notes, Certificates and Instruments

 

On the Effective Date, except to the extent otherwise provided in the Plan (including, without limitation, Article II.B, Article V.B, Article V.E, and Article V.K of the Plan), all notes, indentures, instruments, certificates, agreements and other documents evidencing or relating to any Impaired

 

47


 

Claim (including, for the avoidance of doubt and without limitation, the Prepetition Notes Indentures and the Prepetition Notes, or any Claim being paid in full in Cash under the Plan, will be fully released, terminated, extinguished and discharged (including, in respect of DIP Facility Documents, any duties or obligations of the DIP Agent thereunder), in each case without further notice to or order of the Bankruptcy Court, act or action under applicable law, regulation, order, or rule or any requirement of further action, vote or other approval or authorization by any Person or Entity and in the case of any Claim being paid in full in Cash upon the indefeasible payment of such Claim in full in Cash as contemplated by the Plan; provided that the Prepetition Debt Documents and the DIP Facility Documents will continue in effect for the limited purpose of (i) allowing Holders of Claims thereunder to receive, and allowing and preserving the rights of the Prepetition Agents, the Prepetition Notes Indenture Trustee or other applicable Distribution Agents thereunder to make, distributions under the Plan; (ii) permitting the Prepetition Notes Indenture Trustee to exercise its Prepetition Notes Indenture Trustee Charging Lien against such distributions for payment of any unpaid portion of the Prepetition Notes Indenture Trustee Fees and Expenses; (iii) preserving any rights of the DIP Agent to payment of fees, expenses, and indemnification obligations and otherwise allowing the DIP Agent to take any actions contemplated by the Plan, and (iv) preserving the DIP Contingent Claims as contemplated by Article II.B of the Plan; provided further that, upon completion of the distribution with respect to a specific Prepetition Debt Claim, the Prepetition Debt Documents in connection thereto and any and all notes, securities and instruments issued in connection with such Prepetition Debt Claim shall terminate completely without further notice or action and be deemed surrendered.  For the avoidance of doubt, nothing in this paragraph will affect or impair the Prepetition Notes Indenture Trustee Charging Lien, which will remain in full force and effect as of and after the Effective Date.  For the avoidance of doubt, nothing contained in the Plan or the Confirmation Order shall in any way limit or affect the standing of the Prepetition Notes Indenture Trustee or the DIP Agent to appear and be heard in the Chapter 11 Cases or any other proceeding in which they are or may become party on and after the Effective Date, to enforce any provisions of the Plan or otherwise.

 

17.                               Existing Equity Interests

 

On the Effective Date, the Equity Interests in Weatherford Parent will be terminated and cancelled without further notice to or order of the Bankruptcy Court, act or action under applicable law, regulation, order, or rule or any requirement of further action, vote or other approval or authorization by any Person or Entity.

 

On the Effective Date, the Intercompany Equity Interests will remain effective and outstanding, except to the extent modified pursuant to the terms of the Reorganization Steps Overview (provided such steps are taken in accordance with applicable law to the extent such non-bankruptcy law is applicable), and will be owned and held by the same applicable Person(s) that held and/or owned such Intercompany Equity Interests immediately prior to the Effective Date.  Each Parent Subsidiary will continue to be governed by the terms and conditions of its applicable corporate governance documents as in effect immediately prior to the Effective Date, except as amended or modified by the Plan, where such amendment or modification is permitted under the law of the Parent Subsidiary’s jurisdiction of incorporation to the extent such non-bankruptcy law is applicable.

 

48


 

18.                               Sources of Cash for Plan Distributions

 

All Cash necessary for the Debtors or the Reorganized Debtors, as applicable, to make payments required pursuant to the Plan will be obtained from their respective Cash balances, including Cash from operations, the Rights Offering, and the Exit Facility Credit Agreement.  The Debtors and the Reorganized Debtors, as applicable, may also make such payments using Cash received from their subsidiaries through their respective consolidated cash management systems and the incurrence of intercompany transactions, in all cases subject to the terms and conditions of the Restructuring Documents.  For the avoidance of doubt, Weatherford Bermuda and Weatherford Delaware may make payments on behalf of Weatherford Parent that would otherwise be considered prepetition claims of Weatherford Parent in the Irish Scheme of Arrangement so long as such payments are in the ordinary course of business and otherwise in accordance with the terms of the Plan and the DIP Orders.

 

19.                               Funding and Use of Professional Fee Claim Reserve

 

On or before the Effective Date, the Debtors will fund the Professional Fee Claim Reserve in such amount as determined by the Debtors, with the consent of the Required Consenting Noteholders or as determined by order of the Bankruptcy Court, as necessary in order to be able to pay in full in Cash the obligations and liabilities for which such reserve was established.

 

The Cash contained in the Professional Fee Claim Reserve will be used solely to pay the obligations and liabilities for which such reserve was established, with the Unused Cash Reserve Amount (if any) being returned to the Reorganized Debtors within three (3) Business Days after determining the Unused Cash Reserve Amount.  The Debtors and the Reorganized Debtors, as applicable, will maintain detailed records of all payments made from the Professional Fee Claim Reserve, such that all payments and transactions will be adequately and promptly documented in, and readily ascertainable from, their respective books and records.

 

The Professional Fee Claim Reserve will be maintained in trust for the Professionals and will not be considered property of the Debtors’ Estates; provided that the Reorganized Debtors will have a reversionary interest in the Unused Cash Reserve Amount. To the extent that funds held in the Professional Fee Claim Reserve do not or are unable to satisfy the full amount of the Allowed Professional Fee Claims, such Professionals will have an Allowed Administrative Claim for any such deficiency, which will be satisfied in full in Cash accordance with Article II.A of the Plan.

 

After the Effective Date, neither the Debtors nor the Reorganized Debtors will deposit any other funds or property into the Professional Fee Claim Reserve without further order of the Bankruptcy Court or otherwise commingle funds in the Professional Fee Claim Reserve.  To the extent the Professional Fee Claim Reserve is insufficient to pay in full in Cash the obligations and liabilities for which such reserve was established, then the Reorganized Debtors will, within five (5) Business Days, pay such obligations and liabilities from either Cash on hand or by drawing under the Exit Facility Credit Agreement to the extent of any availability thereunder.

 

20.                               Payment of Fees and Expenses of Certain Creditors

 

The Debtors will, on and after the Effective Date and to the extent invoiced in accordance with the terms of the applicable engagement letter, pay the Ad Hoc Noteholder Committee Fees and Expenses (whether accrued prepetition or postpetition and to the extent not otherwise paid

 

49


 

during the Chapter 11 Cases), without the need for application by any such parties to the Bankruptcy Court, and without notice and a hearing pursuant to section 1129(a)(4) of the Bankruptcy Code or otherwise.

 

21.                               Payment of Fees and Expenses of the Prepetition Notes Indenture Trustee

 

The Debtors will, on and after the Effective Date, and upon the presentment of invoices in customary form (which may be redacted to preserve any confidential or privileged information), pay the Prepetition Notes Indenture Trustee Fees and Expenses (in each case whether accrued prepetition or postpetition and to the extent not otherwise paid during the Chapter 11 Cases), without the need for application by any party to the Bankruptcy Court, and without notice and a hearing pursuant to section 1129(a)(4) of the Bankruptcy Code or otherwise.  Nothing herein will be deemed to impair, waive, or discharge the Prepetition Notes Indenture Trustee Charging Lien for any amounts not paid pursuant to the Plan and otherwise claimed by the Prepetition Notes Indenture Trustee pursuant to and in accordance with the Prepetition Notes Indentures.  From and after the Effective Date, the Reorganized Debtors will pay any Prepetition Notes Indenture Trustee Fees and Expenses in full in Cash without further court approval.

 

22.                               Tranche B Equity Conversion and Overallotment Rights

 

Holders of Allowed Prepetition Notes Claims may elect to receive shares of New Common Stock in lieu of the New Tranche B Senior Unsecured Notes in partial satisfaction of the applicable Allowed Prepetition Notes Claims; provided, however, that such Holders shall not be allowed to exchange, in aggregate principal amount, more than $500,000,000 of New Tranche B Senior Unsecured Notes (the “Tranche B Conversion Notes”) for shares of New Common Stock.  Each Holder of New Tranche B Senior Unsecured Notes shall be entitled to exchange its pro rata share of the Tranche B Conversion Notes, in accordance with its percentage ownership of the Prepetition Notes (the “Conversion Pro Rata Share”).  The number of shares of New Common Stock available to be received in lieu of New Tranche B Senior Unsecured Notes shall be determined by dividing such Holder’s Conversion Pro Rata share of the Tranche B Conversion Notes by the value of a share of New Common Stock as provided in the Disclosure Statement.  If any of such Holders do not elect to exchange their full amount of Tranche B Conversion Notes, each of the Holders of the Prepetition Notes that has elected to exchange its full Conversion Pro Rata Share of Tranche B Conversion Notes for shares of New Common Stock (a “Participating Holder”) will be eligible to receive additional shares of New Common Stock in lieu of New Tranche B Senior Unsecured Notes that were not subscribed for by Holders of the Prepetition Notes (the “Overallotment Right”).

 

Holders of the Prepetition Notes will be able to elect to receive New Common Stock in lieu of New Tranche B Senior Unsecured Notes by using the subscription form that will be delivered during the Chapter 11 Cases.  The subscription form must be returned to the Voting and Claims Agent on or before the Business Day that is not less than ten (10) Business Days prior to the Effective Date.  When such Holders return their subscription forms, they will indicate the maximum principal amount of New Tranche B Senior Unsecured Notes they elect to exchange for shares of New Common Stock, which amount may include their Overallotment Right (such Holder’s, “Election Amount”).

 

50


 

If such Holders do not elect to receive shares of New Common Stock in exchange for all of the Tranche B Conversion Notes, then Participating Holders shall be allocated any unsubscribed for Tranche B Conversion Notes on a pro rata basis in accordance with the Participating Holder’s Election Amount.  Shares of New Common Stock elected to be received in lieu of New Tranche B Senior Unsecured Notes will be issued on the Effective Date together with the other Plan Securities to be issued to the Holders of the Prepetition Notes under Article III of the Plan.

 

23.                               Rights Offering

 

The Debtors will distribute the Subscription Rights for the $1,250,000,000.00 Rights Offering to the Holders of Prepetition Notes as set forth in the Plan and the Rights Offering Procedures.  Pursuant to the Rights Offering Procedures and the Plan, the Rights Offering will be open to all Holders of Prepetition Notes.  The Rights Offering will commence within three (3) Business Days following entry of the Confirmation Order by the Bankruptcy Court and will conclude on the first Business Day that is not less than 10 days thereafter and prior to the Effective Date.  Upon exercise of the Subscription Rights by the Holders of Prepetition Notes pursuant to the terms of the Rights Offering Procedures and the Plan, the Reorganized Debtors will be authorized to issue the New Tranche A Senior Unsecured Notes on the Effective Date in accordance with the Plan and the Rights Offering Procedures.  Pursuant to the Backstop Commitment Agreement, the Backstop Commitment Parties will purchase any New Tranche A Senior Unsecured Notes not subscribed for by Holders of Prepetition Notes in the Rights Offering at the per note purchase price set forth in the Rights Offering Procedures and the Backstop Commitment Agreement.  On the Effective Date, the rights and obligations of the Debtors under the Backstop Commitment Agreement will vest in the Reorganized Debtors.

 

F.                                     TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES

 

1.                                      Assumption of Executory Contracts and Unexpired Leases

 

On the Effective Date, all Executory Contracts and Unexpired Leases of the Debtors will be assumed by the Debtors in accordance with, and subject to, the provisions and requirements of sections 365 and 1123 of the Bankruptcy Code, except for those Executory Contracts and Unexpired Leases that:

 

(a)                                 have been assumed or rejected by the Debtors by prior order of the Bankruptcy Court;

 

(b)                                 are the subject of a motion to reject filed by the Debtors pending on the Effective Date;

 

(c)                                  (are identified by the Debtors (with the consent of the Required Consenting Noteholders) and Filed in the Plan Supplement, which Plan Schedule may be amended by the Debtors (with the consent of the Required Consenting Noteholders) to add or remove Executory Contracts and Unexpired Leases by filing with the Bankruptcy Court an amended Plan Schedule and serving it on the affected non-Debtor contract parties at least seven (7) days prior to the Plan Objection Deadline; or

 

(d)                                 are rejected or terminated by the Debtors pursuant to the terms of the Plan.

 

51


 

Without amending or altering any prior order of the Bankruptcy Court approving the assumption or rejection of any Executory Contract or Unexpired Lease, entry of the Confirmation Order by the Bankruptcy Court will constitute approval of such assumptions pursuant to sections 365(a) and 1123 of the Bankruptcy Code.

 

To the extent any provision in any Executory Contract or Unexpired Lease assumed or assumed and assigned (as applicable) pursuant to the Plan or any prior order of the Bankruptcy Court (including, without limitation, any “change of control” provision) (a) prohibits, restricts or conditions (or purports to prohibit, restrict or condition), (b) is modified, breached or terminated (or deemed modified, breached or terminated), (c) increases, accelerates or otherwise alters any obligations or liabilities of the Debtors or Reorganized Debtors (or purports to increase, accelerate or otherwise alter any obligations or liabilities of the Debtors or Reorganized Debtors), or (d) results in the creation or imposition of any Lien upon any property or asset of any of the Debtors or Reorganized Debtors (or purports to result in the creation or imposition of any Lien upon any property or asset or any of the Debtors or Reorganized Debtors), in each case as a result of (i) the commencement of these Chapter 11 Cases or the insolvency or financial condition of any Debtor at any time before the closing of its respective Chapter 11 Case, (ii) any Debtor’s or any Reorganized Debtor’s assumption or assumption and assignment (as applicable) of such Executory Contract or Unexpired Lease or (iii) the Confirmation or Consummation of the Plan, then such provision will, to the extent provided by Section 365 of the Bankruptcy Code, not entitle the non-debtor party thereto to modify, declare a breach, terminate, increase, accelerate or alter any of the obligations or liabilities of the Debtors or the Reorganized Debtors under, or create or impose any Lien upon any property or asset of any of the Debtors or Reorganized Debtors under any such Executory Contract or Unexpired Lease or to exercise any other default-related rights or remedies solely with respect thereto, and any required consent under any such contract or lease will be deemed satisfied by the Confirmation of the Plan, in each case subject to the remaining terms and conditions of Article VI of the Plan.

 

Each Executory Contract and Unexpired Lease assumed and/or assigned pursuant to the Plan will revest in and be fully enforceable by the applicable Reorganized Debtor or the applicable assignee in accordance with its terms and conditions, except as modified by the provisions of the Plan, any order of the Bankruptcy Court approving its assumption and/or assignment, or applicable law.

 

The inclusion or exclusion of a contract or lease on any schedule or exhibit will not constitute an admission by any Debtor that such contract or lease is an Executory Contract or Unexpired Lease or that any Debtor has any liability thereunder.

 

2.                                      Cure of Defaults; Assignment of Executory Contracts and Unexpired Leases

 

Any defaults under each Executory Contract and Unexpired Lease to be assumed, or assumed and assigned, pursuant to the Plan will be satisfied, pursuant to and to the extent required by section 365(b)(1) of the Bankruptcy Code, by payment of the applicable default amount in Cash on the Effective Date or on such other terms as the Bankruptcy Court may order or the parties to such Executory Contracts or Unexpired Leases may otherwise agree in writing (with the consent of the Required Consenting Noteholders) (the “Cure Claim Amount”).

 

In the event of an assumption, or an assumption and assignment, of an Executory Contract or Unexpired Lease under the Plan, at least twenty-one (21) days prior to the Plan Objection

 

52


 

Deadline (or, in the case of an Executory Contract or Unexpired Lease removed from the Plan Schedule after such date, no later than one (1) Business Day after such removal), the Debtors will File and serve upon counterparties to such Executory Contracts and Unexpired Leases, a notice of the proposed assumption, or proposed assumption and assignment, which will: (a) list the applicable Cure Claim Amount, if any; (b) if applicable, identify the party to which the Executory Contract or Unexpired Lease will be assigned; (c) describe the procedures for filing objections thereto; and (d) explain the process by which related disputes will be resolved by the Bankruptcy Court.

 

Any objection by a counterparty to an Executory Contract or Unexpired Lease to a proposed assumption, or proposed assumption and assignment under the Plan, or any related cure amount, must be Filed, served and actually received by the Debtors prior to the Plan Objection Deadline (notwithstanding anything in the Schedules or a proof of Claim to the contrary).  Any counterparty to an Executory Contract or Unexpired Lease that fails to object timely to the proposed assumption, or proposed assumption and assignment, or cure amount will be deemed to have consented to such matters and will be deemed to have forever released and waived any objection to such proposed assumption, proposed assumption and assignment, and cure amount.  The Confirmation Order will constitute an order of the Bankruptcy Court approving each proposed assumption, or proposed assumption and assignment, of Executory Contracts and Unexpired Leases pursuant to sections 365 and 1123 of the Bankruptcy Code as of the Effective Date.

 

In the event of a dispute regarding (a) the amount of any cure payment, (b) the ability of any Debtor or assignee to provide “adequate assurance of future performance” (within the meaning of section 365 of the Bankruptcy Code) under the Executory Contract or Unexpired Lease to be assumed, or assumed and assigned or (c) any other matter pertaining to assumption or assignment, the applicable cure payments required by section 365(b)(1) of the Bankruptcy Code will be made following the entry of a Final Order resolving the dispute and approving such assumption or assumption and assignment; provided, however, that following the resolution of any such dispute, the Debtors or the Reorganized Debtors, as applicable, may elect to reject such Executory Contract or Unexpired Lease in lieu of assuming or assigning it.  The Debtors or the Reorganized Debtors, as applicable, will be authorized to effect such rejection by filing a written notice of rejection with the Bankruptcy Court and serving such notice on the applicable counterparty within ten (10) days of the entry of such Final Order.

 

Subject to any cure claims Filed with respect thereto, assumption or assumption and assignment of any Executory Contract or Unexpired Lease pursuant to the Plan will result in the full release and satisfaction of any Claims or defaults, whether monetary or nonmonetary, including defaults of provisions restricting the change in control or ownership interest composition or other bankruptcy-related defaults, arising under any assumed Executory Contract or Unexpired Lease at any time prior to the effective date of assumption or assumption and assignment, in each case as provided in section 365 of the Bankruptcy Code, in each case subject to the remaining terms and conditions of Article VI the Plan.  Any proofs of Claim filed with respect to an Executory Contract or Unexpired Lease that has been assumed or assumed and assigned by Final Order will be deemed disallowed and expunged (subject to any cure claims Filed with respect thereto), without further notice to or action, order, or approval of the Bankruptcy Court.

 

With respect to any Executory Contract or Unexpired Lease assumed and assigned pursuant to the Plan, upon and as of the Effective Date, the applicable assignee will be deemed to be substituted as a party thereto for the applicable Debtor party to such assigned Executory

 

53


 

Contract or Unexpired Lease and, accordingly, the Debtors and the Reorganized Debtors will be relieved, pursuant to and to the extent set forth in section 365(k) of the Bankruptcy Code, from any further liability under such assigned Executory Contract or Unexpired Lease.

 

3.                                      Rejection of Executory Contracts and Unexpired Leases

 

The Debtors reserve the right (with the consent of the Required Consenting Noteholders), at any time prior to the Effective Date, except as otherwise specifically provided herein, to seek to reject any Executory Contract or Unexpired Lease and to file a motion requesting authorization for the rejection of any such contract or lease.  All Executory Contracts and Unexpired Leases listed on a Plan Schedule will be deemed rejected as of the Effective Date.  The Confirmation Order will constitute an order of the Bankruptcy Court approving the rejections described in Article VI of the Plan pursuant to sections 365 and 1123 of the Bankruptcy Code as of the Effective Date.  Rejection of any Executory Contract or Unexpired Lease pursuant to the Plan or otherwise will not constitute a termination of any preexisting obligations owed to the Debtors or the Reorganized Debtors, as applicable, under such Executory Contracts or Unexpired Leases.

 

4.                                      Claims on Account of the Rejection of Executory Contracts or Unexpired Leases

 

All proofs of Claim with respect to Claims arising from the rejection of Executory Contracts or Unexpired Leases, pursuant to the Plan or the Confirmation Order, if any, must be filed with the Bankruptcy Court within thirty (30) days after service of an order of the Bankruptcy Court (including the Confirmation Order) approving such rejection.

 

Any Person or Entity that is required to file a proof of Claim arising from the rejection of an Executory Contract or an Unexpired Lease that fails to timely do so will be forever barred, estopped and enjoined from asserting such Claim, and such Claim will not be enforceable, against the Debtors, the Reorganized Debtors or the Estates, and the Debtors, the Reorganized Debtors and their Estates and their respective assets and property will be forever discharged from any and all indebtedness and liability with respect to such Claim unless otherwise ordered by the Bankruptcy Court or as otherwise provided herein.  All such Claims will, as of the Effective Date, be subject to the permanent injunction set forth in Article X.G of the Plan.

 

5.                                      D&O Liability Insurance Policies

 

On the Effective Date, each D&O Liability Insurance Policy will be deemed and treated as an Executory Contract that is and will be assumed by the Debtors (and assigned to the applicable Reorganized Debtors, if necessary) pursuant to section 365(a) and section 1123 of the Bankruptcy Code as to which no proof of Claim, request for administrative expense, or cure claim need be Filed, and all Claims arising from the D&O Liability Insurance Policies will survive the Effective Date and be Unimpaired. Unless previously effectuated by separate order entered by the Bankruptcy Court, entry of the Confirmation Order will constitute the Bankruptcy Court’s approval of the Debtors’ assumption of each of the D&O Liability Insurance Policies. In furtherance of the foregoing, the Reorganized Debtors will maintain and continue in full force and effect such D&O Liability Insurance Policies for the benefit of the insured Persons at levels (including with respect to coverage and amount) no less favorable than those existing as of the date of entry of the Confirmation Order for a period of no less than six (6) years following the Effective Date; provided, however, that, after assumption of the D&O Liability Insurance Policies,

 

54


 

nothing in the Plan otherwise alters the terms and conditions of the D&O Liability Insurance Policies. Confirmation and Consummation of the Plan will not impair or otherwise modify any available defenses of the Reorganized Debtors under the D&O Liability Insurance Policies. For the avoidance of doubt, the D&O Liability Insurance Policies will continue to apply with respect to actions, or failures to act, that occurred on or prior to the Effective Date, subject to the terms and conditions of the D&O Liability Insurance Policies. The Debtors are further authorized to take such actions, and to execute and deliver such documents, as may be reasonably necessary or appropriate to implement, maintain, cause the binding of, satisfy any terms or conditions of, or otherwise secure for the insureds the benefits of the D&O Tail Policy, without further notice to or order of the Bankruptcy Court or approval or consent of any Person or Entity.

 

6.                                      Indemnification Provisions

 

On the Effective Date, all Indemnification Provisions will be deemed and treated as Executory Contracts that are and will be assumed by the Debtors (and assigned to the applicable Reorganized Debtors, if necessary) pursuant to section 365(a) and section 1123 of the Bankruptcy Code as to which no proof of Claim, request for administrative expense, or cure claim need be Filed, and all Claims arising from the Indemnification Provisions will survive the Effective Date and be Unimpaired.  Unless previously effectuated by separate order entered by the Bankruptcy Court, entry of the Confirmation Order will constitute the Bankruptcy Court’s approval of the Debtors’ assumption of each of the Indemnification Provisions.  Confirmation and Consummation of the Plan will not impair or otherwise modify any available defenses of the Reorganized Debtors or other applicable parties under the Indemnification Provisions.  For the avoidance of doubt, the Indemnification Provisions will continue to apply with respect to actions, or failures to act, that occurred on or prior to the Effective Date, subject to the terms and conditions of the Indemnification Provisions.

 

7.                                      Employment Plans

 

All employment agreements and severance policies, and all employment and service provider, compensation, bonus, retention, change of control, equity, benefit, pension and/or welfare plans and similar plans, policies, programs, agreements and arrangements of the Debtors and applicable to any of the Debtors’ current or former officers, directors, members, partners, employees, service providers, or retirees (collectively, the “Employment Plans”) will be maintained, continued in full force and effect and assumed by the applicable Debtors (and assigned to the applicable Reorganized Debtors, if necessary) pursuant to sections 365(a) and 1123 of the Bankruptcy Code as to which no proof of Claim, request for administrative expense, or cure claim need be Filed.  All Claims arising from the Employment Plans will be Unimpaired.

 

8.                                      Insurance Contracts

 

On the Effective Date, and without limiting the terms or provisions of Paragraph E of this Article VI, each Insurance Contract will be deemed and treated as an Executory Contract that is and will be assumed by the Debtors pursuant to section 365(a) and section 1123 of the Bankruptcy Code as to which no proof of Claim, request for administrative expense, or cure claim need be Filed.  Unless previously effectuated by separate order entered by the Bankruptcy Court, entry of the Confirmation Order will constitute the Bankruptcy Court’s approval of the Debtors’ assumption of each of the Insurance Contracts.  Confirmation and

 

55


 

Consummation of the Plan will not impair or otherwise modify any available defenses of the Reorganized Debtors or any insurer under the Insurance Contracts.

 

9.                                      Extension of Time to Assume or Reject

 

Notwithstanding anything to the contrary set forth in Article VI of the Plan, in the event of a dispute as to whether a contract is executory or a lease is unexpired, the right of the Reorganized Debtors to move to assume or reject such contract or lease will be extended until the date that is ten (10) days after entry of a Final Order by the Bankruptcy Court determining that the contract is executory or the lease is unexpired.  The deemed assumption provided for in Article VI.A of the Plan will not apply to any such contract or lease, and any such contract or lease will be assumed or rejected only upon motion of the Reorganized Debtors following the Bankruptcy Court’s determination that the contract is executory or the lease is unexpired.

 

10.                               Modifications, Amendments, Supplements, Restatements, or Other Agreements

 

Unless otherwise provided in the Plan, each Executory Contract or Unexpired Lease that is assumed by the Debtors or the Reorganized Debtors will include all modifications, amendments, supplements, restatements, or other agreements that in any manner affect such Executory Contract or Unexpired Lease, and all rights related thereto, if any, including all easements, licenses, permits, rights, privileges, immunities, options, rights of first refusal, and any other interests, unless any of the foregoing has been previously rejected or repudiated or is rejected or repudiated hereunder.  Modifications, amendments, supplements, and restatements to prepetition Executory Contracts and Unexpired Leases that have been executed by the Debtors during the Chapter 11 Cases will not be deemed to alter the prepetition nature of the Executory Contract or Unexpired Lease, or the validity, priority, or amount of any Claims that may arise in connection therewith.

 

G.                                   PROVISIONS GOVERNING DISTRIBUTIONS

 

1.                                      Distributions for Claims Allowed as of the Effective Date

 

Except as otherwise provided in the “Treatment” sections in Article III of the Plan (including in respect of the DIP Facility Claims which shall be indefeasibly paid in full in cash on the Effective Date), initial distributions to be made on account of Claims that are Allowed Claims as of the Effective Date will be made on the Initial Distribution Date or as soon thereafter as is practicable.  Any payment or distribution required to be made under the Plan on a day other than a Business Day will be made on the next succeeding Business Day.  Distributions on account of Disputed Claims that first become Allowed Claims after the Effective Date will be made pursuant to Article VIII of the Plan.

 

2.                                      No Postpetition Interest on Claims

 

Unless otherwise specifically provided for in the Plan, the Confirmation Order or Final Order of the Bankruptcy Court, or required by applicable bankruptcy law (including, without limitation, as required pursuant to section 506(b) or section 511 of the Bankruptcy Code), postpetition interest will not accrue or be paid on any Claims (except DIP Facility Claims) and no

 

56


 

Holder of a Claim (except a DIP Facility Claim) will be entitled to interest accruing on or after the Petition Date on any Claim.

 

3.                                      Distributions by the Reorganized Debtors or Other Applicable Distribution Agent

 

Other than as specifically set forth below or as otherwise provided in the Plan, the Reorganized Debtors or other applicable Distribution Agent will make all distributions required to be distributed under the Plan.  Distributions on account of the Allowed Prepetition Debt Claims and Allowed DIP Facility Claims will be made to the Prepetition Agents, the Prepetition Notes Indenture Trustee, and the DIP Facility Agent, respectively, and such agent or trustee will be, and will act as, the Distribution Agent with respect to its respective Class of Claims in accordance with the terms and conditions of the Plan and the applicable debt documents.  All distributions to Holders of Prepetition Debt Claims and DIP Facility Claims will be deemed completed when made by the Reorganized Debtors to the Prepetition Agents, the Prepetition Notes Indenture Trustee (or as directed by the Prepetition Notes Indenture Trustee), and the DIP Facility Agent, or as otherwise provided in the Plan, as applicable.  The Reorganized Debtors may employ or contract with other Entities to assist in or make the distributions required by the Plan and may pay the reasonable fees and expenses of such Entities and the Distribution Agents in the ordinary course of business.  No Distribution Agent will be required to give any bond or surety or other security for the performance of its duties unless otherwise ordered by the Bankruptcy Court. The DIP Agent shall not have any liability to any person with respect to distributions made or directed to be made by the DIP Agent.

 

The distributions of New Common Stock and New Tranche B Senior Unsecured Notes to be made under the Plan to Holders of Allowed Prepetition Notes Claims shall be made by the Debtors or Reorganized Debtors, as applicable, to the Prepetition Notes Indenture Trustee, which, subject to the right of the Prepetition Notes Indenture Trustee to assert its Prepetition Notes Indenture Trustee Charging Lien against such distributions, shall transmit (or cause to be transmitted) such distributions to Holders of Allowed Prepetition Notes Claims in accordance with the Prepetition Notes Indenture or as set forth below.  Notwithstanding anything to the contrary in the Plan, the Prepetition Notes Indenture Trustee may transfer or direct the transfer of such distributions through the facilities of DTC and, in such event, will be entitled to recognize and deal for all purposes under the Plan with Holders of the Prepetition Notes to the extent consistent with the policies or customary practices of DTC.  If such distributions cannot be made through the facilities of DTC, the Debtors or Reorganized Debtors, as applicable, shall implement procedures in consultation with the Prepetition Notes Indenture Trustee to make distributions with respect to the Prepetition Notes.  The Debtors or Reorganized Debtors (as applicable) shall use their best efforts to make the New Common Stock and New Tranche B Senior Unsecured Notes to be distributed to Holders of the Prepetition Notes eligible for distribution through the facilities of DTC.  The distributions of Subscription Rights under the Plan to Holders of Allowed Prepetition Notes Claims shall be made by the Voting and Claims Agent as provided in the Rights Offering Procedures.  The obligations of the Prepetition Notes Indenture Trustee under the Prepetition Notes Indentures, the Prepetition Notes, and the Plan shall be deemed fully satisfied upon DTC’s receipt of the distributions with respect to the Prepetition Notes.

 

The distributions of New Common Stock and New Warrants to be made under the Plan to Holders of Allowed Existing Common Stock shall be made by the Debtors or Reorganized Debtors, as applicable, and may include the distribution of that New Common Stock and New

 

57


 

Warrants through the facilities of DTC.  The Debtors or Reorganized Debtors (as applicable) shall use their best efforts to make the New Common Stock and New Warrants to be distributed to Holders of the Existing Common Stock eligible for distribution through the facilities of DTC.

 

4.                                      Delivery and Distributions; Undeliverable or Unclaimed Distributions

 

(a)                                 Record Date for Distributions

 

On the Distribution Record Date, the Claims Register (and the Debtors’ books and records with respect to the Holders of Equity Interests in Weatherford Parent) will be closed.  Accordingly, the Debtors, the Reorganized Debtors or other applicable Distribution Agent will have no obligation to recognize the assignment, transfer or other disposition of, or the sale of any participation in, any Allowed Claim (other than DIP Facility Claims and Prepetition Debt Claims) or Allowed Equity Interest that occurs after the close of business on the Distribution Record Date, and will be entitled for all purposes herein to recognize and distribute securities, property, notices and other documents only to those Holders of Allowed Claims (other than DIP Facility Claims and Prepetition Debt Claims) or Allowed Equity Interest who are Holders of such Claims or Equity Interests, or participants therein, as of the close of business on the Distribution Record Date.  The Reorganized Debtors or other applicable Distribution Agent will be entitled to recognize and deal for all purposes under the Plan with only those record holders stated on the Claims Register, or their books and records, as of the close of business on the Distribution Record Date; provided, however, that the Distribution Record Date will not apply to the DIP Facility Claims, Prepetition Debt Claims, or any securities of the Debtors deposited with DTC.

 

(b)                                 Delivery of Distributions in General

 

Except as otherwise provided herein, the Debtors, the Reorganized Debtors or other applicable Distribution Agent, as applicable, will make distributions to Holders of Allowed Claims and Allowed Equity Interests, or in care of their authorized agents, as appropriate, at the address for each such Holder or agent as indicated on the Debtors’ or other applicable Distribution Agent’s books and records as of the date of any such distribution; provided, however, that the manner of such distributions will be determined in the discretion of the applicable Distribution Agent (subject to the terms and conditions of the DIP Credit Agreement and the relevant Prepetition Debt Documents, if applicable); provided further, that the address for each Holder of an Allowed Claim will be deemed to be the address set forth in the latest proof of Claim, if any, Filed by such Holder pursuant to Bankruptcy Rule 3001 as of the Distribution Record Date and the address for each Holder of an Allowed Equity Interest will be deemed to be the address set forth in the Debtors’ books and records, or as may be held by the applicable transfer agent or similar such agency.

 

(c)                                  Minimum Distributions

 

Notwithstanding anything herein to the contrary, no Distribution Agent will be required to make distributions or payments of less than $100.00 (whether in Cash or otherwise) or to make partial distributions or payments of fractions of dollars, New Senior Unsecured Notes, or New Common Stock, in each case with respect to Impaired Claims or Impaired Equity Interests.  With respect to Impaired Claims and Impaired Equity Interests, whenever any payment or distribution of a fraction of a dollar, a fraction of a New Senior Unsecured Note in less than the denominational requirement, or a fraction of a share of New Common Stock under the Plan would otherwise be called for, the actual payment or distribution will reflect a rounding of such fraction down to the

 

58


 

nearest whole dollar, or minimum denomination of New Senior Unsecured Note, or share of New Common Stock  (and no Cash will be distributed in lieu of such fractional New Common Stock).  For the avoidance of doubt, DTC shall be considered a single holder for purposes of distributions.

 

No Distribution Agent will have any obligation to make a distribution on account of an Allowed Claim that is Impaired under the Plan if: (a) the aggregate amount of all distributions authorized to be made on the Subsequent Distribution Date in question is or has an economic value less than $25,000, unless such distribution is a final distribution; or (b) the amount to be distributed to the specific Holder of an Allowed Claim on such Subsequent Distribution Date does not constitute a final distribution to such Holder and is or has an economic value less than $25.00, which will be treated as an undeliverable distribution under Article VII.D.4 of the Plan.

 

(d)                                 Undeliverable Distributions

 

·                  Holding of Certain Undeliverable Distributions: If the distribution to any Holder of an Allowed Claim or an Allowed Equity Interest is returned to the Distribution Agent as undeliverable or is otherwise unclaimed, no further distributions will be made to such Holder unless and until the Distribution Agent is notified in writing of such Holder’s then current address in accordance with the time frames described in Article VII.D.4(b) of the Plan, at which time all currently due but missed distributions will be made to such Holder on the next Subsequent Distribution Date (or such earlier date as determined by the applicable Distribution Agent).  Undeliverable distributions will remain in the possession of the Reorganized Debtors or in the applicable reserve, subject to Article VII.D.4(b) of the Plan, until such time as any such distributions become deliverable.  Undeliverable distributions will not be entitled to any additional interest, dividends or other accruals of any kind on account of their distribution being undeliverable.

 

·                  Failure to Claim Undeliverable Distributions: Any Holder of an Allowed Claim or an Allowed Equity Interest (or any successor or assignee or other Person or Entity claiming by, through, or on behalf of, such Holder) that does not assert a right pursuant to the Plan for an undeliverable or unclaimed distribution within ninety (90) days after the later of the Effective Date or the date such distribution is due will be deemed to have forfeited its rights for such undeliverable or unclaimed distribution and will be forever barred and enjoined from asserting any such rights for an undeliverable or unclaimed distribution against the Debtors or their Estates, the Reorganized Debtors or their respective assets or property, or any Distribution Agent.  In such case, any Cash, Plan Securities, or other property reserved for distribution on account of such Claim or Equity Interest will become the property of the Reorganized Debtors, free and clear of any Claims or other rights of such Holder with respect thereto and notwithstanding any federal or state escheat laws to the contrary.  Any such Cash, Plan Securities, or other property will thereafter be distributed or allocated in accordance with the applicable terms and conditions of the Plan.  Nothing contained in the Plan will require the Debtors, the Reorganized Debtors, or any Distribution Agent to attempt to locate any Holder of an Allowed Claim or an Allowed Equity Interest.

 

59


 

·                  Failure to Present Checks: Checks issued by the Distribution Agent on account of Allowed Claims or Allowed Equity Interests will be null and void if not negotiated within ninety (90) days after the issuance of such check.  Requests for reissuance of any check will be made directly to the Distribution Agent by the Holder of the relevant Allowed Claim or Allowed Equity Interest with respect to which such check originally was issued.  Any Holder of an Allowed Claim or Allowed Equity Interest holding an un-negotiated check that does not request reissuance of such un-negotiated check within ninety (90) days after the date of mailing or other delivery of such check will have its rights for such un-negotiated check discharged and be forever barred, estopped and enjoined from asserting any such right against the Debtors, their Estates, the Reorganized Debtors, or their respective assets or property.  In such case, any Cash held for payment on account of such Claims or Equity Interests will become the property of the Reorganized Debtors, free and clear of any Claims or other rights of such Holder with respect thereto and notwithstanding any federal or state escheat laws to the contrary.  Any such Cash will thereafter be distributed or allocated in accordance with the applicable terms and conditions of the Plan.

 

5.                                      Compliance with Tax Requirements

 

In connection with the Plan and all distributions hereunder, the Reorganized Debtors or other applicable Distribution Agent will comply with all withholding and reporting requirements imposed by any federal, state, local, or foreign taxing authority, and all distributions hereunder will be subject to any such withholding and reporting requirements.  Notwithstanding any provision in the Plan to the contrary, the Reorganized Debtors or other applicable Distribution Agent will be authorized to take any and all actions that may be necessary or appropriate to comply with such withholding and reporting requirements.  All Persons holding Claims or Equity Interests will be required to provide any information necessary to effect information reporting and the withholding of such taxes (or establish eligibility for an exclusion for the withholding of taxes), and each Holder of an Allowed Claim or an Allowed Equity Interest will have the sole and exclusive responsibility for the satisfaction and payment of any tax obligations imposed by any Governmental Unit, including income, withholding, and other tax obligations, on account of such distribution. Any amounts withheld or reallocated pursuant to Article VII.E of the Plan will be treated as if distributed to the Holder of the Allowed Claim.

 

6.                                      [Intentionally Omitted]

 

7.                                      Means of Cash Payment

 

Payments of Cash made pursuant to the Plan will be in U.S. dollars and will be made, at the option of the applicable Distribution Agent, by checks drawn on, or wire transfer from, a domestic bank selected by such Distribution Agent.  Cash payments to foreign creditors may be made, at the option of the applicable Distribution Agent, in such funds and by such means as are necessary or customary in a particular foreign jurisdiction.  All Cash distributions to be made under the Plan to the DIP Agent on account of the DIP Facility Claims shall be made by wire transfer.

 

60


 

8.                                      Timing and Calculation of Amounts to Be Distributed

 

Except as otherwise provided in the “Treatment” sections in Article III of the Plan or as ordered by the Bankruptcy Court, on the Initial Distribution Date (or if a Claim is not an Allowed Claim on the Effective Date, on the Subsequent Distribution Date occurring after such Claim becomes an Allowed Claim, or as soon as reasonably practicable thereafter), each Holder of an Allowed Claim will receive the full amount of the distributions that the Plan provides for Allowed Claims in the applicable Class.  If and to the extent that there are Disputed Claims, distributions on account of any such Disputed Claims will be made pursuant to the provisions set forth in the applicable class treatment or in Article VIII of the Plan.  Except as otherwise provided herein, Holders of Claims will not be entitled to interest, dividends or accruals on the distributions provided for herein, regardless of whether such distributions are delivered on or at any time after the Effective Date.

 

9.                                      Setoffs

 

Without altering or limiting any of the rights and remedies of the Debtors and the Reorganized Debtors under section 502(d) of the Bankruptcy Code, all of which rights and remedies are hereby reserved, the Debtors and the Reorganized Debtors may, but will not be required to, withhold (but not setoff except as set forth below) from the distributions called for hereunder on account of any Allowed Claim an amount equal to any claims, Causes of Action and Litigation Claims of any nature that the Debtors or the Reorganized Debtors may hold against the Holder of any such Allowed Claim; provided that, at least ten (10) days prior to effectuating such withholding, the Debtors or the Reorganized Debtors, as applicable, will provide written notice thereof to the applicable Holder of such Claim, and all objections and defenses of such Holder to such withholding are preserved.  In the event that any such claims, Causes of Action or Litigation Claims are adjudicated by Final Order or otherwise resolved against the applicable Holder, the Debtors and the Reorganized Debtors may, pursuant to section 553 of the Bankruptcy Code or applicable non-bankruptcy law, set off against any Allowed Claim and the distributions to be made pursuant hereto on account of such Allowed Claim (before any distribution is made on account of such Allowed Claim), the amount of such adjudicated or resolved claims, Causes of Action or Litigation Claims.  Neither the failure to effect such a setoff nor the allowance of any Claim hereunder will constitute a waiver or release by the Debtors or the Reorganized Debtors of any such claims, Causes of Action or Litigation Claims, all of which are reserved unless expressly released or compromised pursuant to the Plan or the Confirmation Order.  Notwithstanding anything to the contrary herein, the Allowed DIP Facility Claims and the Allowed Prepetition Debt Claims and the distributions to be made pursuant hereto on account of such Claims will not be subject to set off by the Debtors or the Reorganized Debtors pursuant to section 553 of the Bankruptcy Code or applicable non-bankruptcy law and the Debtors and the Reorganized Debtors hereby waive any and all rights of set off against such Claims.

 

61


 

H.                                   PROCEDURES FOR RESOLVING CONTINGENT, UNLIQUIDATED AND DISPUTED CLAIMS

 

1.                                      Resolution of Disputed Claims and Equity Interests

 

(a)                                 Allowance of Claims and Equity Interests

 

After the Effective Date, and except as otherwise provided in the Plan, the Reorganized Debtors will have and will retain any and all available rights and defenses that the Debtors had with respect to any Claim or Equity Interest, including, without limitation, the right to assert any objection to Claims and Equity Interests based on the limitations imposed by section 502 or section 510 of the Bankruptcy Code.  The Debtors and the Reorganized Debtors may contest the amount and validity of any Disputed Claim or Disputed Equity Interest in the ordinary course of business in the manner and venue in which such Claim or Equity Interest would have been determined, resolved or adjudicated if the Chapter 11 Cases had not been commenced.

 

(b)                                 Prosecution of Objections to Claims and Equity Interests

 

After the Confirmation Date but before the Effective Date, the Debtors (in consultation with the Ad Hoc Noteholder Committee), and after the Effective Date, the Reorganized Debtors, will have the authority to File objections to Claims and Equity Interests (other than those that are Allowed under the Plan, including the DIP Facility Claims) and settle, compromise, withdraw or litigate to judgment objections to any and all such Claims and Equity Interests, regardless of whether such Claims and Equity Interests are in an Unimpaired Class or otherwise; provided, however, this provision will not apply to Professional Fee Claims, which may be objected to by any party-in-interest in these Chapter 11 Cases.  From and after the Effective Date, the Reorganized Debtors may settle or compromise any Disputed Claim and Disputed Equity Interest without any further notice to or action, order or approval of the Bankruptcy Court.  The Reorganized Debtors will have the sole authority to administer and adjust the Claims Register and their respective books and records to reflect any such settlements or compromises without any further notice to or action, order or approval of the Bankruptcy Court.

 

(c)                                  Claims Estimation

 

After the Confirmation Date but before the Effective Date, the Debtors (in consultation with the Ad Hoc Noteholder Committee), and after the Effective Date, the Reorganized Debtors may at any time request that the Bankruptcy Court estimate any Disputed Claim or contingent or unliquidated Claim pursuant to applicable law, including, without limitation, section 502(c) of the Bankruptcy Code, and the Bankruptcy Court will retain jurisdiction under 28 U.S.C. §§ 157 and 1334 to estimate any such Claim, whether for allowance or to determine the maximum amount of such Claim, including during the litigation concerning any objection to any Claim or during the pendency of any appeal relating to any such objection.  All of the aforementioned Claims objection, estimation and resolution procedures are cumulative and not exclusive of one another.  Claims may be estimated and subsequently compromised, settled, withdrawn or resolved by any mechanism approved by the Bankruptcy Court.  The rights and objections of all parties are reserved in connection with any such estimation.

 

62


 

(d)                                 No Filings of Proofs of Claim or Equity Interests

 

Except as otherwise provided in the Plan, including, without limitation Article VI.G, Holders of Claims or Equity Interests, including the Prepetition Notes Indenture Trustee with respect to the Prepetition Notes Indentures and the Prepetition Notes and the DIP Agent with respect to the DIP Facility Claims, will not be required to File a proof of Claim or proof of interest, and no parties should File a proof of Claim or proof of interest.  The Debtors do not intend to object in the Bankruptcy Court to the allowance of Claims Filed or Equity Interests Filed; provided, however, that the Debtors and the Reorganized Debtors, as applicable, reserve the right to object to any Claim or Equity Interest that is entitled, or deemed to be entitled, to a distribution under the Plan or is rendered Unimpaired under the Plan.  Instead, the Debtors intend to make distributions, as required by the Plan, in accordance with the books and records of the Debtors.  Unless disputed by a Holder of a Claim or an Equity Interest, the amount set forth in the books and records of the Debtors will constitute the amount of the Allowed Claim or Allowed Equity Interest of such Holder.  If any such Holder of a Claim or an Equity Interest disagrees with the Debtors’ books and records with respect to the Allowed amount of such Holder’s Claim or Equity Interest, such Holder must so advise the Debtors in writing, in which event the Claim or Equity Interest will become a Disputed Claim or a Disputed Equity Interest.  The Debtors intend to attempt to resolve any such disputes consensually or through judicial means outside the Bankruptcy Court subject to the consent of the Required Consenting Noteholders.  Nevertheless, the Debtors may, in their discretion and in consultation with the Ad Hoc Noteholder Committee, File with the Bankruptcy Court (or any other court of competent jurisdiction) an objection to the allowance of any Claim or Equity Interest or any other appropriate motion or adversary proceeding with respect thereto.  All such objections will be litigated to Final Order; provided, however, that the Debtors may, with the consent of the Required Consenting Noteholders, compromise, settle, withdraw or resolve by any other method approved by the Bankruptcy Court any objections to Claims or Equity Interests.

 

2.                                      No Distributions Pending Allowance

 

Notwithstanding any other provision of the Plan to the contrary, no payments or distributions of any kind or nature will be made with respect to all or any portion of a Disputed Claim or Disputed Equity Interest unless and until all objections to such Disputed Claim or Disputed Equity Interest have been settled or withdrawn or have been determined by Final Order, and the Disputed Claim or Disputed Equity Interest is or becomes Allowed by Final Order; provided, that, notwithstanding the foregoing, payments or distributions under the Plan to Holders of Allowed Prepetition Notes Claims will be made in full on the Initial Distribution Date, regardless of whether such Holders hold any Disputed Claims.

 

3.                                      Distributions on Account of Disputed Claims and Disputed Equity Interests Once They Are Allowed and Additional Distributions on Account of Previously Allowed Claims and Allowed Equity Interests

 

On each Subsequent Distribution Date (or such earlier date as determined by the Reorganized Debtors in their sole discretion), the Reorganized Debtors or other applicable Distribution Agent will make distributions (a) on account of any Disputed Claim and Disputed Equity Interest that has become Allowed during the preceding calendar quarter, and (b) on account of previously Allowed Claims and Allowed Equity Interests of property that would have been distributed to the Holders thereof on the dates distributions previously were made to Holders of

 

63


 

Allowed Claims and Allowed Equity Interests in such Class had the Disputed Claims and Disputed Equity Interests that have become Allowed or disallowed been Allowed or disallowed, as applicable, on such dates.  Such distributions will be made pursuant to the applicable provisions of Article VII of the Plan.  For the avoidance of doubt, but without limiting the terms or conditions of Article VII.B of the Plan, any dividends or other distributions arising from property distributed to holders of Allowed Claims and Allowed Equity Interests in a Class and paid to such Holders under the Plan will also be paid, in the applicable amounts, to any Holder of a Disputed Claim and Disputed Equity Interest in such Class that becomes Allowed after the date or dates that such dividends or other distributions were earlier paid to holders of Allowed Claims and Allowed Equity Interests in such Class.

 

4.                                      Reserve for Disputed Claims and Disputed Equity Interests

 

The Debtors, the Reorganized Debtors, and the Distribution Agent may establish such appropriate reserves for Disputed Claims and Disputed Equity Interests in the applicable Class(es) as it determines necessary and appropriate, in each case with the consent of the Required Consenting Noteholders or as approved by order of the Bankruptcy Court.  Without limiting the foregoing, reserves (if any) for Disputed Claims and Disputed Equity Interests will equal, as applicable, an amount of property equal to 100% of distributions to which Holders of Disputed Claims and Disputed Equity Interests in each applicable Class would otherwise be entitled under the Plan as of such date if such Disputed Claims and Disputed Equity Interests were Allowed based on the Debtors’ books and records; provided, however, that the Debtors and the Reorganized Debtors, as applicable, will have the right to file a motion seeking to estimate any Disputed Claims or Disputed Equity Interest.

 

I.                                        CONDITIONS PRECEDENT TO CONFIRMATION AND CONSUMMATION OF THE PLAN

 

1.                                      Conditions Precedent to Confirmation

 

Unless satisfied or waived pursuant to the provisions of Article IX.C of the Plan, the following are conditions precedent to Confirmation of the Plan.

 

64


 

(a)                                 The Plan and the Restructuring Documents are in form and substance acceptable to the Debtors and the Required Consenting Noteholders in the manner set forth in the Restructuring Support Agreement, and, to the extent required by the DIP Credit Agreement, in form and substance satisfactory or reasonably satisfactory, as applicable, to the DIP Agent and the DIP Required Lenders in the manner set forth in the DIP Facility Documents and otherwise consistent with the Restructuring Term Sheet and the Restructuring Support Agreement;

 

(b)                                 The Confirmation Order has been entered by the Bankruptcy Court, and such order is in form and substance consistent in all respects with the Restructuring Term Sheet and the Restructuring Support Agreement and otherwise reasonably acceptable to the Debtors and to the Required Consenting Noteholders in the manner set forth in the Restructuring Support Agreement and, to the extent required by the DIP Credit Agreement, in form and substance satisfactory or reasonably satisfactory, as applicable, to the DIP Agent and the DIP Required Lenders in the manner set forth in the DIP Facility Documents; and

 

(c)                                  The Restructuring Support Agreement is in full force and effect and has not been terminated in accordance with its terms.

 

2.                                      Conditions Precedent to Consummation

 

Unless satisfied or waived pursuant to the provisions of Article IX.C of the Plan, the following are conditions precedent to Consummation of the Plan.

 

(a)                                 The Confirmation Order has become a Final Order and such order has not been amended, modified, vacated, stayed, or reversed;

 

(b)                                 The Bankruptcy Court has entered one or more Final Orders (which may include the Confirmation Order), in form and substance acceptable to the Debtors and Required Consenting Noteholders, authorizing the assumption, assumption and assignment and rejection of the Executory Contracts and Unexpired Leases by the Debtors as contemplated in the Plan and the Plan Supplement;

 

(c)                                  The Plan and the Restructuring Documents have not been amended or modified other than in a manner in form and substance consistent in all respects with the Restructuring Term Sheet, otherwise acceptable to the Debtors and the Required Consenting Noteholders in the manner set forth in the Restructuring Support Agreement and, to the extent required by the Credit Agreement, in form and substance satisfactory or reasonably satisfactory, as applicable, to the DIP Agent and the DIP Required Lenders in the manner set forth in the DIP Facility Documents;

 

65


 

(d)                                 The Restructuring Documents have been filed, tendered for delivery, and been effectuated or executed by all Entities party thereto (as appropriate), and in each case in full force and effect.  All conditions precedent to the effectiveness of such Restructuring Documents, including, without limitation, the Exit Facility Credit Agreement and the New Senior Unsecured Notes Indentures, have been satisfied or waived pursuant to the terms of such applicable Restructuring Documents (or will be satisfied concurrently with the occurrence of the Effective Date) and such agreements have closed or will close simultaneously with the effectiveness of the Plan;

 

(e)                                  Any documents governing the New Tranche A Senior Unsecured Notes, which shall be in form and substance acceptable to the Debtors and the Backstop Parties, each in their sole discretion, and otherwise reasonably satisfactory to the Required Consenting Noteholders, have become effective or will become effective concurrently with effectiveness of the Plan and all conditions precedent to issuance of the New Tranche A Senior Unsecured Notes have been satisfied or waived;

 

(f)                                   Any documents governing the New Tranche B Senior Unsecured Notes, which shall be in form and substance acceptable to the Debtors and the Required Consenting Noteholders, have become effective or will become effective concurrently with effectiveness of the Plan and all conditions precedent to issuance of the New Tranche B Senior Unsecured Notes have been satisfied or waived;

 

(g)                                  All DIP Facility Claims have been indefeasibly paid in full in Cash, or will have been paid in full in Cash simultaneously with the effectiveness of the Plan, in accordance with the terms of the DIP Credit Agreement;

 

(h)                                 The Debtors have received, or concurrently with the occurrence of the Effective Date will receive, $1,250,000,000 as contemplated in connection with the Backstop Commitment Agreement and the Rights Offering provided to the Prepetition Noteholders;

 

(i)                                     Any Amended/New Corporate Governance Documents, which shall be in form and substance acceptable to the Required Consenting Noteholders in their sole discretion, have become effective or will become effective concurrently with the effectiveness of the Plan;

 

(j)                                    The Irish Scheme of Arrangement has been approved by the High Court of Ireland, or such other structure as is reasonably acceptable to the Required Consenting Noteholders, and to the extent required by the DIP Credit Agreement, the DIP Agent and the Required Lenders, and has become effective in accordance with its terms or will become effective concurrently with effectiveness of the Plan;

 

66


 

(k)                                 The appointment of provisional liquidators has been approved and the implementation of a scheme of arrangement in Bermuda under section 99 of the Companies Act 1981 of Bermuda has been sanctioned by the Bermuda court, or such other structure as is reasonably acceptable to the Required Consenting Noteholders, and to the extent required by the DIP Credit Agreement, the DIP Agent and the Required Lenders, and has become effective in accordance with its terms or will become effective concurrently with effectiveness of the Plan.

 

(l)                                     All consents, actions, documents, certificates and agreements necessary to implement the Plan and the transactions contemplated by the Plan have been, as applicable, obtained and not otherwise subject to unfulfilled conditions, effected or executed and delivered to the required parties and, to the extent required, filed with the applicable governmental units in accordance with applicable laws, and in each case in full force and effect;

 

(m)                             All governmental approvals and consents, including Bankruptcy Court approval and Irish Takeover Panel approval, that are applicable and legally required for the consummation of the Plan have been obtained, not be subject to unfulfilled conditions and be in full force and effect, and, to the extent applicable, all applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and any foreign jurisdictions has expired;

 

(n)                                 The New Board has been selected in accordance with the Restructuring Support Agreement.

 

(o)                                 The Executive Arrangements, as defined in the Restructuring Support Agreement, relating to change in control and severance matters have been modified in a manner acceptable to the Required Consenting Noteholders;

 

(p)                                 The Restructuring Support Agreement is in full force and effect and has not been terminated in accordance with its terms;

 

(q)                                 The Professional Fee Claim Reserve has been funded in full in Cash by the Debtors in accordance with the terms and conditions of the Plan;

 

(r)                                    The DIP Final Order is in full force and effect and there are no events of default existing and continuing thereunder or under the DIP Financing Documents; and

 

(s)                                   To the extent invoiced, all Ad Hoc Noteholder Committee Fees and Expenses and Prepetition Notes Indenture Trustee Fees and Expenses have been paid in full in Cash.

 

3.                                      Waiver of Conditions

 

Subject to section 1127 of the Bankruptcy Code, the conditions to Confirmation and Consummation of the Plan set forth in Article IX of the Plan may be waived by the Debtors, with the

 

67


 

consent of the Required Consenting Noteholders in the manner set forth in the Restructuring Support Agreement, or, in the case of Article IX. B.15, B.19 and B.9 of the Plan, the Required Consenting Noteholders in their sole discretion, without notice, leave or order of the Bankruptcy Court or any formal action other than proceeding to confirm or consummate the Plan.  The failure of the Debtors or Reorganized Debtors to exercise any of the foregoing rights will not be deemed a waiver of any other rights, and each right will be deemed an ongoing right that may be asserted at any time.

 

4.                                      Effect of Non-Occurrence of Conditions to Confirmation or Consummation

 

If the Confirmation or the Consummation of the Plan does not occur with respect to one or more of the Debtors, then the Plan will, with respect to such applicable Debtor or Debtors, be null and void in all respects and nothing contained in the Plan or the Disclosure Statement will: (1) constitute a waiver or release of any claims by or Claims against or Equity Interests in the Debtors; (2) prejudice in any manner the rights of the Debtors, any Holders or any other Entity; (3) constitute an Allowance of any Claim or Equity Interest; or (4) constitute an admission, acknowledgment, offer or undertaking by the Debtors, any Holders or any other Entity in any respect.

 

J.                                      RELEASE, DISCHARGE, INJUNCTION AND RELATED PROVISIONS

 

1.                                      General

 

Pursuant to section 1123 of the Bankruptcy Code, and in consideration for the classification, distributions, releases and other benefits provided under the Plan, upon the Effective Date, the provisions of the Plan shall constitute a good faith compromise and settlement of all Claims and Equity Interests and controversies resolved pursuant to the Plan.  The entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval of the compromise or settlement of all such Claims, Equity Interests and controversies, as well as a finding by the Bankruptcy Court that any such compromise or settlement is in the best interests of the Debtors, their Estates, and any Holders of Claims and Equity Interests and is fair, equitable and reasonable.

 

Notwithstanding anything contained herein to the contrary, the allowance, classification and treatment of all Allowed Claims and Equity Interests and their respective distributions (if any) and treatments hereunder, takes into account the relative priority and rights of the Claims and the Equity Interests in each Class in connection with any contractual, legal and equitable subordination rights relating thereto whether arising under general principles of equitable subordination, section 510 of the Bankruptcy Code or otherwise.  As of the Effective Date, any and all contractual, legal and equitable subordination rights, whether arising under general principles of equitable subordination, section 510 of the Bankruptcy Code or otherwise, relating to the allowance, classification and treatment of all Allowed Claims and Equity Interests and their respective distributions (if any) and treatments hereunder, are settled, compromised, terminated and released pursuant hereto; provided, however, that nothing contained herein shall preclude any Person or Entity from exercising their rights pursuant to and consistent with the terms of the Plan and the contracts, instruments, releases, indentures, and other agreements or documents delivered under or in connection with the Plan.

 

68


 

2.                                      Release of Claims and Causes of Action

 

(a)                                   Release by the Debtors and their Estates.  Pursuant to section 1123(b) and any other applicable provisions of the Bankruptcy Code, and except as otherwise expressly provided in the Plan, effective as of the Effective Date, for good and valuable consideration provided by each of the Released Parties, the adequacy and sufficiency of which is hereby confirmed, the Debtors and the Reorganized Debtors, in their respective individual capacities and as debtors-in-possession, and on behalf of themselves and their respective Estates, including, without limitation, any successor to the Debtors or any Estate representative appointed or selected pursuant to section 1123(b)(3) of the Bankruptcy Code (collectively, the “Debtor Releasing Parties”) shall be deemed to have conclusively, absolutely, unconditionally, irrevocably, and forever provided a full discharge, waiver and release to each of the Released Parties (and each such Released Party so released shall be deemed forever released, waived and discharged by the Debtor Releasing Parties) and their respective assets and properties (the “Debtor Release”) from any and all Claims, Causes of Action, Litigation Claims and any other debts, obligations, rights, suits, damages, actions, remedies, and liabilities whatsoever, whether known or unknown, foreseen or unforeseen, whether directly or derivatively held, existing as of the Effective Date or thereafter arising, in law, at equity or otherwise, whether for tort, contract, violations of federal or state securities laws, or otherwise, based in whole or in part upon any act or omission, transaction, or other occurrence or circumstances existing or taking place prior to or on the Effective Date arising from or related in any way in whole or in part to any of the Debtors or their Affiliates, including, without limitation, (i) the Chapter 11 Cases, the Disclosure Statement, the Plan, the Restructuring Support Agreement, the Restructuring Documents, and the DIP Financing Documents, (ii) the subject matter of, or the transactions or events giving rise to, any Claim or Equity Interest that is treated in the Plan, (iii) the business or contractual arrangements between any Debtor and any Released Parties, (iv) the negotiation, formulation or preparation of the Restructuring Support Agreement, the Plan, the Disclosure Statement, the Plan Supplement, the Restructuring Documents, the DIP Financing Documents, or related agreements, instruments or other documents, (v) the restructuring of Claims or Equity Interests prior to or during the Chapter 11 Cases, (vi) the purchase, sale, or rescission of the purchase or sale of any Equity Interest of the Debtors or the Reorganized Debtors, and/or (vii) the Confirmation or Consummation of the Plan or the solicitation of votes on the Plan that such Debtor Releasing Party would have been legally entitled to assert (whether individually or collectively) or that any Holder of a Claim or Equity Interest or other Entity would have been legally entitled to assert for, or on behalf or in the name of, any Debtor, its respective Estate or any Reorganized Debtor (whether directly or derivatively) against any of the Released

 

69


 

Parties; provided, however, that the foregoing provisions of this Debtor Release shall not operate to waive or release: (i) any Causes of Action arising from willful misconduct, actual fraud, or gross negligence of such applicable Released Party as determined by Final Order of the Bankruptcy Court or any other court of competent jurisdiction; and/or (ii) the rights of such Debtor Releasing Party to enforce the Plan and the contracts, instruments, releases, indentures, and other agreements or documents delivered under or in connection with the Plan or assumed pursuant to the Plan or assumed pursuant to Final Order of the Bankruptcy Court.  The foregoing release shall be effective as of the Effective Date without further notice to or order of the Bankruptcy Court, act or action under applicable law, regulation, order, or rule or the vote, consent, authorization or approval of any Person and the Confirmation Order shall permanently enjoin the commencement or prosecution by any Person or Entity, whether directly, derivatively or otherwise, of any claims, obligations, suits, judgments, damages, demands, debts, rights, Causes of Action, or liabilities released pursuant to this Debtor Release.  Notwithstanding the foregoing, nothing in Article X.B of the Plan shall or shall be deemed to (i) prohibit the Debtors or the Reorganized Debtors from asserting and enforcing any claims, obligations, suits, judgments, demands, debts, rights, Causes of Action or liabilities they may have against any Person that is based upon an alleged breach of a confidentiality or non-compete obligation owed to the Debtors or the Reorganized Debtors and/or (ii) operate as a release or waiver of any Intercompany Claims or any obligations of any Entity arising after the Effective Date under the Exit Facility Loan Documents or any document, instrument or agreement set forth in the Plan Supplement, in each case unless otherwise expressly provided for in the Plan.

 

Entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval, pursuant to Bankruptcy Rule 9019, of the Debtor Release, which includes by reference each of the related provisions and definitions contained herein, and further, shall constitute the Bankruptcy Court’s finding that the Debtor Release is:  (i) in exchange for the good and valuable consideration provided by the Released Parties; (ii) a good faith settlement and compromise of the Claims released by the Debtor Release; (iii) in the best interest of the Debtors and their Estates; (iv) fair, equitable and reasonable; and (v) given and made after due notice and opportunity for hearing.

 

(b)                                   Release By Third Parties.  Except as otherwise expressly provided in the Plan, effective as of the Effective Date, to the fullest extent permitted by applicable law, for good and valuable consideration provided by each of the Released Parties, the adequacy and sufficiency of which is hereby confirmed, and without limiting or otherwise modifying the scope of the Debtor Release provided by the Debtor Releasing Parties

 

70


 

above, each Non-Debtor Releasing Party (together with the Debtor Releasing Parties, the “Releasing Parties”) shall be deemed to have conclusively, absolutely, unconditionally, irrevocably, and forever provided a full discharge, waiver and release to each of the Released Parties (and each such Released Party so released shall be deemed forever released, waived and discharged by the Non-Debtor Releasing Parties) and their respective assets and properties (the “Third Party Release”) from any and all Claims, Causes of Action, Litigation Claims and any other debts, obligations, rights, suits, damages, actions, remedies, and liabilities whatsoever, whether known or unknown, foreseen or unforeseen, whether directly or derivatively held, existing as of the Effective Date or thereafter arising, in law, at equity or otherwise, whether for tort, contract, violations of federal or state securities laws, or otherwise, based in whole or in part upon any act or omission, transaction, or other occurrence or circumstances existing or taking place prior to or on the Effective Date arising from or related in any way in whole or in part to any of the Debtors or their Affiliates, including, without limitation, (i) the Chapter 11 Cases, the Disclosure Statement, the Plan, the Restructuring Support Agreement, the Restructuring Documents, and the DIP Financing Documents, (ii) the subject matter of, or the transactions or events giving rise to, any Claim or Equity Interest that is treated in the Plan, (iii) the business or contractual arrangements between any Debtor and any Released Parties, (iv) the negotiation, formulation or preparation of the Restructuring Support Agreement, the Plan, the Disclosure Statement, the Plan Supplement, the Restructuring Documents, the DIP Financing Documents, or related agreements, instruments or other documents, (v) the restructuring of Claims or Equity Interests prior to or during the Chapter 11 Cases, (vi) the purchase, sale or rescission of the purchase or sale of any Equity Interest of the Debtors or the Reorganized Debtors, and/or (vii) the Confirmation or Consummation of the Plan or the solicitation of votes on the Plan that such Non-Debtor Releasing Party would have been legally entitled to assert (whether individually or collectively) against any of the Released Parties; provided, however, that the foregoing provisions of this Third Party Release shall not operate to waive or release (i) any Causes of Action arising from willful misconduct, actual fraud, or gross negligence of such applicable Released Party as determined by Final Order of the Bankruptcy Court or any other court of competent jurisdiction; (ii) the rights of such Non-Debtor Releasing Party to enforce the Plan and the contracts, instruments, releases, indentures, and other agreements and documents delivered under or in connection with the Plan or assumed pursuant to the Plan or Final Order of the Bankruptcy Court; and/or (iii) any obligations of any Entity arising after the Effective Date under the Exit Facility Loan Documents or any document, instrument or agreement set forth in the Plan Supplement.  The foregoing release

 

71


 

shall be effective as of the Effective Date without further notice to or order of the Bankruptcy Court, act or action under applicable law, regulation, order, or rule or the vote, consent, authorization or approval of any Person and the Confirmation Order shall permanently enjoin the commencement or prosecution by any Person or Entity, whether directly, derivatively or otherwise, of any claims, obligations, suits, judgments, damages, demands, debts, rights, Causes of Action, or liabilities released pursuant to this Third Party Release.

 

Entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval of the Third Party Release, which includes by reference each of the related provisions and definitions contained herein, and further, shall constitute the Bankruptcy Court’s finding that the Third Party Release is:  (i) in exchange for the good and valuable consideration provided by the Released Parties; (ii) a good faith settlement and compromise of the Claims released by the Third Party Release; (iii) in the best interest of the Debtors and all Holders of Claims and Equity Interests; (iv) fair, equitable and reasonable; and (v) given and made after due notice and opportunity for hearing.

 

3.                                      Waiver of Statutory Limitations on Releases

 

Each of the Releasing Parties in each of the releases contained above expressly acknowledges that although ordinarily a general release may not extend to Claims which the Releasing Party does not know or suspect to exist in its favor, which if known by it may have materially affected its settlement with the party released, they have carefully considered and taken into account in determining to enter into the above releases the possible existence of such unknown losses or claims.  Without limiting the generality of the foregoing, each Releasing Party expressly waives any and all rights conferred upon it by any statute or rule of law which provides that a release does not extend to claims which the claimant does not know or suspect to exist in its favor at the time of providing the release, which if known by it may have materially affected its settlement with the released party.  The releases contained in the Plan are effective regardless of whether those released matters are presently known, unknown, suspected or unsuspected, foreseen or unforeseen.

 

4.                                      Discharge of Claims and Equity Interests

 

To the fullest extent provided under section 1141(d)(1)(A) and other applicable provisions of the Bankruptcy Code, except as otherwise expressly provided by the Plan (including, without limitation, Article V.D and V.E of the Plan) or the Confirmation Order, effective as of the Effective Date, all consideration distributed under the Plan shall be in exchange for, and in complete satisfaction, settlement, discharge, and release of, all Claims, Equity Interests and Causes of Action of any kind or nature whatsoever against the Debtors or any of their respective assets or properties, including any interest accrued on such Claims or Equity Interests from and after the Petition Date, and regardless of whether any property shall have been abandoned by order of the Bankruptcy Court, distributed or retained pursuant to the Plan on account of such Claims, Equity Interests or Causes of Action.

 

72


 

Except as otherwise expressly provided by the Plan (including, without limitation, Article V.D and V.E of the Plan) or the Confirmation Order, upon the Effective Date, the Debtors and their Estates shall be deemed discharged and released under and to the fullest extent provided under sections 524 and 1141(d)(1)(A) and other applicable provisions of the Bankruptcy Code from any and all Claims of any kind or nature whatsoever, including, but not limited to, demands and liabilities that arose before the Confirmation Date, and all debts of the kind specified in sections 502(g), 502(h), or 502(i) of the Bankruptcy Code.  Such discharge shall void any judgment obtained against the Debtors or the Reorganized Debtors at any time, to the extent that such judgment relates to a discharged Claim.

 

Except as otherwise expressly provided by the Plan (including, without limitation, Article V.D and V.E of the Plan) or the Confirmation Order, upon the Effective Date: (i) the rights afforded herein and the treatment of all Claims and Equity Interests shall be in exchange for and in complete satisfaction, settlement, discharge, and release of all Claims and Equity Interests of any nature whatsoever, including any interest accrued on such Claims from and after the Petition Date, against the Debtors or any of their respective assets, property, or Estates; (ii) all Claims and Equity Interests shall be satisfied, discharged, and released in full, and each of the Debtor’s liability with respect thereto shall be extinguished completely without further notice or action; and (iii) all Entities shall be precluded from asserting against the Debtors, the Estates, the Reorganized Debtors, each of their respective successors and assigns, and each of their respective assets and properties, any such Claims or Equity Interests, whether based upon any documents, instruments or any act or omission, transaction, or other activity of any kind or nature that occurred prior to the Effective Date or otherwise.

 

5.                                      Exculpation

 

Effective as of the Effective Date, to the fullest extent permitted by law, the Exculpated Parties shall neither have nor incur any liability to any Person or Entity for any claims or Causes of Action arising prior to or on the Effective Date for any act taken or omitted to be taken in connection with, or related to, formulating, negotiating, preparing, disseminating, implementing, administering, confirming or effecting the Confirmation or Consummation of the Plan, the Disclosure Statement, the Restructuring Documents, the DIP Financing Documents, or any contract, instrument, release or other agreement or document created or entered into in connection with the Plan, including the Restructuring Support Agreement, or any other prepetition or postpetition act taken or omitted to be taken in connection with or in contemplation of the restructuring of the Debtors, the approval of the Disclosure Statement or Confirmation or Consummation of the Plan; provided, however, that the foregoing provisions of this exculpation shall not operate to waive or release: (i) any Causes of Action arising from willful misconduct, actual fraud, or gross negligence of such applicable Exculpated Party as determined by Final Order of the Bankruptcy Court or any other court of competent jurisdiction; and/or (ii) the rights of any Person or Entity to enforce the Plan and the contracts, instruments, releases, indentures, and other agreements and documents delivered under or in connection with the Plan or assumed pursuant to the Plan or Final Order of the Bankruptcy Court; provided, further, that each Exculpated Party shall be entitled to rely upon the advice of counsel concerning its respective duties pursuant to, or in connection with, the above referenced documents, actions or inactions.  The foregoing exculpation shall be effective as of the Effective Date without further notice to or order of the Bankruptcy Court, act or action under applicable law, regulation, order, or rule or the vote, consent, authorization or approval of any Person.  Notwithstanding the foregoing, nothing in Article X.E

 

73


 

of the Plan shall or shall be deemed to prohibit the Debtors or the Reorganized Debtors from asserting and enforcing any claims, obligations, suits, judgments, demands, debts, rights, Causes of Action or liabilities they may have against any Person that is based upon an alleged breach of a confidentiality or non-compete obligation owed to the Debtors or the Reorganized Debtors, in each case unless otherwise expressly provided for in the Plan.

 

6.                                      Preservation of Causes of Action

 

(a)                                 Maintenance of Causes of Action

 

Except as otherwise provided in Article X of the Plan (including, without limitation, and for the avoidance of doubt, the Releases contained in Article X.B of the Plan and Exculpation contained in Article X.E of the Plan) or elsewhere in the Plan or the Confirmation Order, after the Effective Date, the Reorganized Debtors shall retain all rights to commence, pursue, litigate or settle, as appropriate, any and all Litigation Claims, whether existing as of the Petition Date or thereafter arising, in any court or other tribunal including, without limitation, in an adversary proceeding Filed in the Chapter 11 Cases.  The Reorganized Debtors, as the successors-in-interest to the Debtors and the Estates, may, and shall have the exclusive right to, enforce, sue on, settle, compromise, transfer or assign (or decline to do any of the foregoing) any or all of such Litigation Claims without notice to or approval from the Bankruptcy Court.

 

(b)                                 Preservation of All Causes of Action Not Expressly Settled or Released

 

The Debtors expressly reserve all Causes of Action and Litigation Claims for later adjudication by the Debtors or the Reorganized Debtors (including, without limitation, Causes of Action and Litigation Claims not specifically identified or of which the Debtors may presently be unaware or which may arise or exist by reason of additional facts or circumstances unknown to the Debtors at this time or facts or circumstances that may change or be different from those the Debtors now believe to exist) and, therefore, no preclusion doctrine, including, without limitation, the doctrines of res judicata, collateral estoppel, issue preclusion, claim preclusion, waiver, estoppel (judicial, equitable or otherwise) or laches shall apply to such Causes of Action or Litigation Claims upon or after the Confirmation or Consummation of the Plan based on the Disclosure Statement, the Plan or the Confirmation Order, except in each case where such Causes of Action or Litigation Claims have been expressly waived, relinquished, released, compromised or settled in the Plan (including, without limitation, and for the avoidance of doubt, the Releases contained in Article X.B of the Plan and Exculpation contained in Article X.E of the Plan) or any other Final Order (including, without limitation, the Confirmation Order).  In addition, the Debtors and the Reorganized Debtors expressly reserve the right to pursue or adopt any claims alleged in any lawsuit in which any of the Debtors are a plaintiff, defendant or an interested party, against any Person or Entity, including, without limitation, the plaintiffs or co-defendants in such lawsuits.

 

7.                                      Injunction

 

EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THE PLAN OR THE CONFIRMATION ORDER, FROM AND AFTER THE EFFECTIVE DATE, ALL PERSONS AND ENTITIES ARE, TO THE FULLEST EXTENT PROVIDED UNDER SECTION 524 AND OTHER APPLICABLE PROVISIONS OF THE BANKRUPTCY CODE, PERMANENTLY ENJOINED FROM (I) COMMENCING OR CONTINUING, IN ANY MANNER OR IN ANY PLACE, ANY SUIT, ACTION OR OTHER PROCEEDING;

 

74


 

(II) ENFORCING, ATTACHING, COLLECTING, OR RECOVERING IN ANY MANNER ANY JUDGMENT, AWARD, DECREE, OR ORDER; (III) CREATING, PERFECTING, OR ENFORCING ANY LIEN OR ENCUMBRANCE; (IV) ASSERTING A SETOFF OR RIGHT OF SUBROGATION OF ANY KIND; OR (V) COMMENCING OR CONTINUING IN ANY MANNER ANY ACTION OR OTHER PROCEEDING OF ANY KIND,  IN EACH CASE ON ACCOUNT OF OR WITH RESPECT TO ANY CLAIM, DEMAND, LIABILITY, OBLIGATION, DEBT, RIGHT, CAUSE OF ACTION, EQUITY INTEREST, OR REMEDY RELEASED OR TO BE RELEASED, EXCULPATED OR TO BE EXCULPATED, SETTLED OR TO BE SETTLED OR DISCHARGED OR TO BE DISCHARGED PURSUANT TO THE PLAN OR THE CONFIRMATION ORDER AGAINST ANY PERSON OR ENTITY SO RELEASED, DISCHARGED, OR EXCULPATED (OR THE PROPERTY OR ESTATE OF ANY PERSON OR ENTITY SO RELEASED, DISCHARGED, OR EXCULPATED).  ALL INJUNCTIONS OR STAYS PROVIDED FOR IN THE CHAPTER 11 CASES UNDER SECTION 105 OR SECTION 362 OF THE BANKRUPTCY CODE, OR OTHERWISE, AND IN EXISTENCE ON THE CONFIRMATION DATE, SHALL REMAIN IN FULL FORCE AND EFFECT UNTIL THE EFFECTIVE DATE.

 

8.                                      Binding Nature Of Plan

 

ON THE EFFECTIVE DATE, AND EFFECTIVE AS OF THE EFFECTIVE DATE, THE PLAN SHALL BIND, AND SHALL BE DEEMED BINDING UPON, THE DEBTORS, THE REORGANIZED DEBTORS, ANY AND ALL HOLDERS OF CLAIMS AGAINST AND EQUITY INTERESTS IN THE DEBTORS, ALL PERSONS AND ENTITIES THAT ARE PARTIES TO OR ARE SUBJECT TO THE SETTLEMENTS, COMPROMISES, RELEASES, DISCHARGES, AND INJUNCTIONS DESCRIBED IN THE PLAN, EACH PERSON AND ENTITY ACQUIRING PROPERTY UNDER THE PLAN, ANY AND ALL NON-DEBTOR PARTIES TO EXECUTORY CONTRACTS AND UNEXPIRED LEASES WITH THE DEBTORS AND THE RESPECTIVE SUCCESSORS AND ASSIGNS OF EACH OF THE FOREGOING, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, AND NOTWITHSTANDING WHETHER OR NOT SUCH PERSON OR ENTITY (I) SHALL RECEIVE OR RETAIN ANY PROPERTY, OR INTEREST IN PROPERTY, UNDER THE PLAN, (II) HAS FILED A PROOF OF CLAIM OR INTEREST IN THE CHAPTER 11 CASES OR (III) FAILED TO VOTE TO ACCEPT OR REJECT THE PLAN, AFFIRMATIVELY VOTED TO REJECT THE PLAN OR IS CONCLUSIVELY PRESUMED TO REJECT THE PLAN.

 

9.                                      Protection Against Discriminatory Treatment

 

To the extent provided by section 525 of the Bankruptcy Code and the Supremacy Clause of the United States Constitution, all Persons and Entities, including Governmental Units, shall not discriminate against the Reorganized Debtors or deny, revoke, suspend or refuse to renew a license, permit, charter, franchise or other similar grant to, condition such a grant to, discriminate with respect to such a grant, against the Reorganized Debtors, or another Person or Entity with whom the Reorganized Debtors have been associated, solely because any Debtor has been a debtor under chapter 11 of the Bankruptcy Code, has been insolvent before the commencement of the Chapter 11 Cases (or during the Chapter 11 Cases but before the Debtors are granted or denied a discharge) or has not paid a debt that is dischargeable in the Chapter 11 Cases.

 

75


 

10.                               Integral Part of Plan

 

Each of the provisions set forth in the Plan with respect to the settlement, release, discharge, exculpation, injunction, indemnification and insurance of, for or with respect to Claims and/or Causes of Action are an integral part of the Plan and essential to its implementation.  Accordingly, each Entity that is a beneficiary of such provision shall have the right to independently seek to enforce such provision and such provision may not be amended, modified, or waived after the Effective Date without the prior written consent of such beneficiary.

 

K.                                   RETENTION OF JURISDICTION

 

Pursuant to sections 105(c) and 1142 of the Bankruptcy Code and notwithstanding the entry of the Confirmation Order and the occurrence of the Effective Date, the Bankruptcy Court will, on and after the Effective Date, retain exclusive jurisdiction over the Chapter 11 Cases and all Entities with respect to all matters related to the Chapter 11 Cases, the Debtors and the Plan as legally permissible, including, without limitation, jurisdiction to:

 

(a)                                 allow, disallow, determine, liquidate, classify, estimate or establish the priority or secured or unsecured status of any Claim or Equity Interest, including, without limitation, the resolution of any request for payment of any Administrative Claim and the resolution of any and all objections to the allowance or priority of any such Claim or Equity Interest;

 

(b)                                 grant or deny any applications for allowance of compensation or reimbursement of expenses authorized pursuant to the Bankruptcy Code or the Plan, for periods ending on or before the Effective Date; provided, however, that, from and after the Effective Date, the Reorganized Debtors will pay Professionals in the ordinary course of business for any work performed after the Effective Date and such payment will not be subject to the approval of the Bankruptcy Court;

 

(c)                                  resolve any matters related to the assumption, assignment or rejection of any Executory Contract or Unexpired Lease and to adjudicate and, if necessary, liquidate, any Claims arising therefrom, including, without limitation, those matters related to any amendment to the Plan after the Effective Date to add Executory Contracts or Unexpired Leases to the list of Executory Contracts and Unexpired Leases to be assumed or rejected (as applicable);

 

(d)                                 resolve any issues related to any matters adjudicated in the Chapter 11 Cases;

 

(e)                                  ensure that distributions to Holders of Allowed Claims or Allowed Equity Interests are accomplished pursuant to the provisions of the Plan;

 

(f)                                   decide or resolve any motions, adversary proceedings, contested or litigated matters and any other Causes of Action that are pending as of the Effective Date or that may be commenced in the future, and grant or deny any applications involving the Debtors that may be pending on the Effective

 

76


 

Date or instituted by the Reorganized Debtors after the Effective Date, provided, however that the Reorganized Debtors will reserve the right to commence actions in all appropriate forums and jurisdictions;

 

(g)                                  enter such orders as may be necessary or appropriate to implement or consummate the provisions of the Plan and all other contracts, instruments, releases, indentures and other agreements or documents adopted in connection with the Plan, the Plan Supplement or the Disclosure Statement;

 

(h)                                 resolve any cases, controversies, suits or disputes that may arise in connection with the Consummation, interpretation or enforcement of the Plan or any Person or Entity’s obligations incurred in connection with the Plan;

 

(i)                                     hear and determine all Causes of Action that are pending as of the Effective Date or that may be commenced in the future;

 

(j)                                    issue injunctions and enforce them, enter and implement other orders or take such other actions as may be necessary or appropriate to restrain interference by any Person or Entity with Consummation or enforcement of the Plan;

 

(k)                                 enforce the terms and conditions of the Plan, the Confirmation Order, and the Restructuring Documents;

 

(l)                                     resolve any cases, controversies, suits or disputes with respect to the Release, the Exculpation, the indemnification and other provisions contained in Article X of the Plan and enter such orders or take such others actions as may be necessary or appropriate to implement or enforce all such provisions;

 

(m)                             hear and determine all Litigation Claims;

 

(n)                                 enter and implement such orders or take such other actions as may be necessary or appropriate if the Confirmation Order is modified, stayed, reversed, revoked or vacated;

 

(o)                                 resolve any other matters that may arise in connection with or relate to the Plan, the Disclosure Statement, the Confirmation Order or any release or exculpation adopted in connection with the Plan; and

 

(p)                                 enter an order concluding or closing the Chapter 11 Cases.

 

Notwithstanding the foregoing, (i) any dispute arising under or in connection with the Exit Loan Facility or the New Senior Unsecured Notes Indentures or any other contract or agreement binding on the Reorganized Debtors that contains provisions governing jurisdiction for litigation of disputes thereunder will be addressed in accordance with the provisions of the applicable document and (ii) if the Bankruptcy Court abstains from exercising, or declines to exercise, jurisdiction or is otherwise without jurisdiction over any matter arising in, arising under, or related

 

77


 

to the Chapter 11 Cases, including the matters set forth in this Article of the Plan, the provisions of Article XI of the Plan will have no effect upon and will not control, prohibit, or limit the exercise of jurisdiction by any other court having jurisdiction with respect to such matter.

 

L.                                    MISCELLANEOUS PROVISIONS

 

1.                                      Substantial Consummation

 

“Substantial Consummation” of the Plan, as defined in 11 U.S.C. § 1101(2), will be deemed to occur on the Effective Date.

 

2.                                      Payment of Statutory Fees; Post-Effective Date Fees and Expenses

 

All fees payable pursuant to section 1930 (a) of the Judicial Code, as determined by the Bankruptcy Court at a hearing pursuant to section 1128 of the Bankruptcy Code to the extent necessary, shall be paid by each of the Debtors or the Reorganized Debtors (or the Distribution Agent on behalf of each of the Debtors or Reorganized Debtors), as applicable, for each quarter (including any fraction thereof) until the earliest to occur of the entry of (a) a final decree closing such Debtor’s Chapter 11 Case, (b) an order dismissing such Debtor’s Chapter 11 Case, or (c) an order converting such Debtor’s Chapter 11 Case to a case under chapter 7 of the Bankruptcy Code.

 

The Reorganized Debtors will pay the liabilities and charges that they incur on or after the Effective Date for Professionals’ fees, disbursements, expenses, or related support services (including reasonable fees, costs and expenses incurred by Professionals relating to the preparation of interim and final fee applications and obtaining Bankruptcy Court approval thereof) in the ordinary course of business and without application or notice to, or order of, the Bankruptcy Court, including, without limitation, the reasonable fees, expenses, and disbursements of the Distribution Agents and the fees, costs and expenses incurred by Professionals in connection with the implementation, enforcement and Consummation of the Plan and the Restructuring Documents.

 

3.                                      Statutory Committee

 

On the Effective Date, the current and former members of the Committee, if any, and their respective officers, employees, counsel, advisors and agents, will be released and discharged of and from all further authority, duties, responsibilities and obligations related to and arising from and in connection with the Chapter 11 Cases and the Committee will dissolve; provided, however, that following the Effective Date, the Committee will continue in existence and have standing and a right to be heard for the limited purpose of pursuing claims and final fee applications filed pursuant to sections 330 and 331 of the Bankruptcy Code.  Following the completion of the Committee’s remaining duties set forth above, the Committee will be dissolved, and the retention or employment of the Committee’s respective attorneys, accountants and other agents will terminate without further notice to, or action by, any Entity.

 

4.                                      Conflicts

 

In the event that a provision of the Restructuring Documents or the Disclosure Statement (including any and all exhibits and attachments thereto) conflicts with a provision of the Plan or the Confirmation Order, the provision of the Plan and the Confirmation Order (as applicable) will govern and control to the extent of such conflict.  In the event that a provision of the Plan conflicts

 

78


 

with a provision of the Confirmation Order, the provision of the Confirmation Order will govern and control to the extent of such conflict.

 

5.                                      Modification of Plan

 

Effective as of the date hereof and subject to the limitations and rights contained in the Plan: (a) the Debtors reserve the right, in accordance with the Bankruptcy Code and the Bankruptcy Rules, to amend or modify the Plan prior to the entry of the Confirmation Order in a way that is in form and substance consistent in all material respects with the Restructuring Term Sheet and otherwise acceptable to the Debtors and the Required Consenting Noteholders in the manner set forth in the Restructuring Support Agreement, and to the extent required by the DIP Credit Agreement, shall be in form and substance satisfactory or reasonably satisfactory, as applicable, to the DIP Agent and the DIP Required Lenders in the manner set forth in the DIP Facility Documents, in accordance with section 1127(a) of the Bankruptcy Code; and (b) after the entry of the Confirmation Order, the Debtors or the Reorganized Debtors, as applicable, may, upon order of the Bankruptcy Court, amend or modify the Plan in a way that is in form and substance consistent in all material respects with the Restructuring Term Sheet and otherwise acceptable to the Debtors and the Required Consenting Noteholders in the manner set forth in the Restructuring Support Agreement, and to the extent required by the DIP Credit Agreement, shall be in form and substance satisfactory or reasonably satisfactory, as applicable, to the DIP Agent and the DIP Required Lenders in the manner set forth in the DIP Facility Documents, in accordance with section 1127(b) of the Bankruptcy Code or to remedy any defect or omission or reconcile any inconsistency in the Plan in such manner as may be necessary to carry out the purpose and intent of the Plan.  A Holder of a Claim or Equity Interest that has accepted the Plan will be deemed to have accepted the Plan, as altered, amended or modified, if the proposed alteration, amendment or modification does not materially and adversely change the treatment of the Claim or Equity Interest of such Holder.

 

6.                                      Revocation or Withdrawal of Plan

 

The Debtors reserve the right to revoke or withdraw the Plan prior to the Effective Date and/or to File subsequent chapter 11 plans, with respect to one or more of the Debtors.  If the Debtors revoke or withdraw the Plan, or if Confirmation or Consummation of the Plan does not occur with respect to one or more of the Debtors, then with respect to the applicable Debtor or Debtors for which the Plan was revoked or withdrawn or for which Confirmation or Consummation of the Plan did not occur: (1) the Plan will be null and void in all respects; (2) any settlement or compromise embodied in the Plan, assumption or rejection of Executory Contracts or Unexpired Leases effected by the Plan and any document or agreement executed pursuant hereto will be deemed null and void except as may be set forth in a separate order entered by the Bankruptcy Court; and (3) nothing contained in the Plan will: (a) constitute a waiver or release of any Claims by or against, or any Equity Interests in, the applicable Debtors or any other Entity; (b) prejudice in any manner the rights of the applicable Debtors or any other Entity; or (c) constitute an admission, acknowledgement, offer or undertaking of any sort by the applicable Debtors or any other Entity.

 

7.                                      Successors and Assigns

 

The Plan will be binding upon and inure to the benefit of the Debtors, the Reorganized Debtors, all present and former Holders of Claims and Equity Interests, other parties-in-interest,

 

79


 

and their respective heirs, executors, administrators, successors, and assigns.  The rights, benefits, and obligations of any Person or Entity named or referred to in the Plan will be binding on, and will inure to the benefit of, any heir, executor, administrator, successor, or assign of such Person or Entity.

 

8.                                      Reservation of Rights

 

Except as expressly set forth herein, the Plan will have no force or effect unless and until the Bankruptcy Court enters the Confirmation Order and the Plan is Consummated.  Neither the filing of the Plan, any statement or provision contained herein, nor the taking of any action by the Debtors or any other Entity with respect to the Plan will be or will be deemed to be an admission or waiver of any rights of: (1) the Debtors with respect to the Holders of Claims or Equity Interests or other Entity; or (2) any Holder of a Claim or an Equity Interest or other Entity prior to the Effective Date.

 

9.                                      Further Assurances

 

The Debtors or the Reorganized Debtors, as applicable, all Holders of Claims receiving distributions hereunder and all other Entities will, from time to time, prepare, execute and deliver any agreements or documents and take any other actions as may be necessary or advisable to effectuate the provisions and intent of the Plan or the Confirmation Order.

 

10.                               Severability

 

If, prior to the Confirmation Date, any term or provision of the Plan is determined by the Bankruptcy Court to be invalid, void, or unenforceable, the Bankruptcy Court will have the power to alter and interpret such term or provision to make it valid or enforceable to the maximum extent practicable, consistent with the original purpose of the term or provision held to be invalid, void, or unenforceable, and such term or provision will then be applicable as altered or interpreted.  Notwithstanding any such holding, alteration or interpretation, the remainder of the terms and provisions of the Plan will remain in full force and effect and will in no way be affected, impaired, or invalidated by such holding, alteration, or interpretation.  The Confirmation Order will constitute a judicial determination and will provide that each term and provision of the Plan, as it may have been altered or interpreted in accordance with the foregoing, is valid and enforceable pursuant to its terms.

 

11.                               Service of Documents

 

Any notice, direction or other communication given regarding the matters contemplated by the Plan (each, a “Notice”) must be in writing, sent by personal delivery, electronic mail, courier or facsimile and addressed as follows:

 

If to the Debtors:

 

Weatherford International plc

2000 St. James Place

Houston, Texas 77056

Fax: (713) 836-5032

Attn: Christina M. Ibrahim

Email: christina.ibrahim@weatherford.com

 

80


 

with a copy to:

 

Latham & Watkins LLP

885 Third Avenue

New York, NY 10022

Attn:  George A. Davis and Keith A. Simon

Direct Dial:  (212) 906-1200

Fax:  (212) 751-4864

Email: george.davis@lw.com and keith.simon@lw.com  

 

If to the Ad Hoc Noteholder Committee:

 

Akin Gump Strauss Hauer & Feld LLP
One Bryant Park
Bank of America Tower
New York, NY 10036-6745
Attn: Michael S Stamer, Meredith Lahaie
Direct Dial: (212) 872-1000
Fax: (212) 872-1002
Email: mstamer@akingump.com and mlahaie@akingump.com

 

and -

 

2001 K Street N.W.
Washington, DC 20006
Attn: Kate Doorley
Direct Dial: (202) 887-4592
Fax: (202) 887-4288
Email: kdoorley@akingump.com

 

A Notice is deemed to be given and received (a) if sent by personal delivery or courier, on the date of delivery if it is a Business Day and the delivery was made prior to 4:00 p.m. (local time in place of receipt) and otherwise on the next Business Day, or (b) if sent by facsimile, on the Business Day following the date of confirmation of transmission by the originating facsimile, or (c) if sent by electronic mail, when the sender receives an email from the recipient acknowledging receipt, provided that an automatic “read receipt” does not constitute acknowledgment of an email for purposes of this Section.  Any party may change its address for service from time to time by providing a Notice in accordance with the foregoing.  Any element of a party’s address that is not specifically changed in a Notice will be assumed not to be changed.  Sending a copy of a Notice to a party’s legal counsel as contemplated above is for information purposes only and does not constitute delivery of the Notice to that party.  The failure to send a copy of a Notice to legal counsel does not invalidate delivery of that Notice to a party.

 

81


 

12.                               Exemption from Transfer Taxes Pursuant to Section 1146(a) of the Bankruptcy Code

 

Pursuant to and to the fullest extent permitted by section 1146(a) of the Bankruptcy Code, any issuance, transfer, or exchange of a security, or the making or delivery of an instrument of transfer of property, pursuant to or in connection with the Plan or the Restructuring Documents will not be subject to any Stamp or Similar Tax or governmental assessment in the United States or by any other Governmental Unit, and the Confirmation Order will direct the appropriate federal, state or local (domestic or foreign) governmental officials or agents to forgo the collection of any such Stamp or Similar Tax or governmental assessment and to accept for filing and recordation instruments or other documents evidencing such action or event without the payment of any such Stamp or Similar Tax or governmental assessment.  Such exemption specifically applies, without limitation, to (i) all actions, agreements and documents necessary to evidence and implement the provisions of, transactions contemplated by and the distributions to be made under the Plan or the Restructuring Documents, (ii) the issuance and distribution of the New Common Stock or Plan Securities and Documents, and (iii) the maintenance or creation of security interests or any Lien as contemplated by the Plan or the Restructuring Documents.

 

13.                               Governing Law

 

Except to the extent that the Bankruptcy Code, the Bankruptcy Rules or other federal law is applicable, or to the extent that a Restructuring Document or an exhibit or schedule to the Plan provides otherwise, the rights and obligations arising under the Plan will be governed by, and construed and enforced in accordance with, the laws of New York, without giving effect to the principles of conflicts of law of such jurisdiction.

 

14.                               Tax Reporting and Compliance

 

The Reorganized Debtors are hereby authorized, on behalf of the Debtors, to request an expedited determination under section 505(b) of the Bankruptcy Code of the tax liability of the Debtors for all taxable periods ending after the Petition Date through and including the Effective Date.

 

15.                               Schedules

 

All exhibits and schedules to the Plan, including the Exhibits and Plan Schedules, are incorporated herein and are a part of the Plan as if set forth in full herein.

 

16.                               No Strict Construction

 

The Plan is the product of extensive discussions and negotiations between and among, inter alia, the Debtors, the Consenting Noteholders, and their respective professionals.  Each of the foregoing was represented by counsel of its choice who either participated in the formulation and documentation of, or was afforded the opportunity to review and provide comments on, the Plan, the Disclosure Statement, the Exhibits and the Plan Schedules, and the agreements and documents ancillary or related thereto.  Accordingly, unless explicitly indicated otherwise, the general rule of contract construction known as “contra proferentem” or other rule of strict construction will not apply to the construction or interpretation of any provision of the Plan, the Disclosure Statement, the Exhibits or the Plan Schedules, or the documents ancillary and related thereto.

 

82


 

17.                               Entire Agreement

 

Except as otherwise provided herein or therein, the Plan and the Restructuring Documents supersede all previous and contemporaneous negotiations, promises, covenants, agreements, understandings, and representations on such subjects, all of which have become merged and integrated into the Plan and the Restructuring Documents.

 

18.                               Closing of Chapter 11 Cases

 

The Reorganized Debtors will, promptly after the full administration of the Chapter 11 Cases, File with the Bankruptcy Court all documents required by Bankruptcy Rule 3022 and any applicable order of the Bankruptcy Court to close the Chapter 11 Cases.

 

19.                               2002 Notice Parties

 

After the Effective Date, the Debtors and the Reorganized Debtors, as applicable, are authorized to limit the list of Entities receiving documents pursuant to Bankruptcy Rule 2002 to those Entities who have Filed a renewed request after the Confirmation Hearing to receive documents pursuant to Bankruptcy Rule 2002.

 

83


 

V.
PLAN-RELATED RISK FACTORS

 

PRIOR TO VOTING TO ACCEPT OR REJECT THE PLAN, ALL HOLDERS OF CLAIMS OR EQUITY INTERESTS THAT ARE IMPAIRED SHOULD READ AND CONSIDER CAREFULLY THE FACTORS SET FORTH HEREIN, AS WELL AS ALL OTHER INFORMATION SET FORTH OR OTHERWISE REFERENCED IN THIS DISCLOSURE STATEMENT.  ALTHOUGH THESE RISK FACTORS ARE MANY, THESE FACTORS SHOULD NOT BE REGARDED AS CONSTITUTING THE ONLY RISKS PRESENT IN CONNECTION WITH THE DEBTORS’ BUSINESSES, THE PLAN OR THE IMPLEMENTATION OF THE PLAN.

 

A.                                    CERTAIN BANKRUPTCY LAW CONSIDERATIONS

 

1.                                      General

 

Although the Debtors believe that the Chapter 11 Cases will be of short duration and will not be materially disruptive to their businesses, the Debtors cannot be certain that this will be the case.  Although the Plan is designed to minimize the length of the Chapter 11 Cases, it is impossible to predict with certainty the amount of time that one or more of the Debtors may spend in bankruptcy or to assure parties in interest that the Plan will be confirmed.  Even if confirmed on a timely basis, the Chapter 11 Cases could have an adverse effect on the Debtors’ businesses.  Among other things, it is possible that bankruptcy proceedings could adversely affect the Debtors’ relationships with their key customers and employees.  The cases will also involve additional expense and may divert some of the attention of the Debtors’ management away from business operations.

 

2.                                      Parties in Interest May Object to the Debtors’ Classification of Claims and Equity Interests.

 

Section 1122 of the Bankruptcy Code provides that a plan may place a claim or an equity interest in a particular class only if such claim or equity interest is substantially similar to the other claims or equity interests in such class.  The Debtors believe that the classification of Claims and Equity Interests under the Plan complies with the requirements set forth in the Bankruptcy Code because the Debtors created Classes of Claims and Equity Interests, each encompassing Claims or Equity Interests, as applicable, that are substantially similar to the other Claims and Equity Interests in each such Class.  Nevertheless, there can be no assurance that the Bankruptcy Court will reach the same conclusion.

 

3.                                      The Debtors May Fail to Satisfy the Vote Requirement.

 

If votes are received in number and amount sufficient to enable the Bankruptcy Court to confirm the Plan, the Debtors intend to seek, as promptly as practicable thereafter, confirmation of the Plan.  In the event that sufficient votes are not received, the Debtors may seek to accomplish an alternative chapter 11 plan of reorganization.  There can be no assurance that the terms of any such alternative chapter 11 plan would be similar or as favorable to the Holders of Allowed Claims as those proposed in the Plan.

 

84


 

4.                                      The Debtors May Not Be Able to Secure Confirmation of the Plan.

 

In the event that any impaired class of claims or equity interests does not accept or is deemed not to accept a plan of reorganization, a bankruptcy court may nevertheless confirm such plan at the proponent’s request if at least one impaired class has voted to accept the plan (with such acceptance being determined without including the vote of any “insider” in such class), and as to each impaired class that has not accepted the plan, the bankruptcy court determines that the plan “does not discriminate unfairly” and is “fair and equitable” with respect to the dissenting impaired classes.  Should any Class vote to reject the Plan, then these requirements must be satisfied with respect to such rejecting Classes.

 

Even if the requisite acceptances are received, there can be no assurance that the Bankruptcy Court will confirm the Plan.  A non-accepting Holder of an Allowed Claim or Equity Interest might challenge either the adequacy of this Disclosure Statement or whether the balloting procedures and voting results satisfy the requirements of the Bankruptcy Code or Bankruptcy Rules.  Even if the Bankruptcy Court determined that the Disclosure Statement, the balloting procedures and voting results were appropriate, the Bankruptcy Court could still decline to confirm the Plan if it found that any of the statutory requirements for confirmation were not met, including the requirement that the terms of the Plan do not “unfairly discriminate” and are “fair and equitable” to non-accepting Classes.  If the Plan is not confirmed, it is unclear what distributions holders of Claims or Equity Interests ultimately would receive with respect to their Claims or Equity Interests in a subsequent plan of reorganization.

 

5.                                      Non-Consensual Confirmation of the Plan May Be Necessary.

 

In the event that any impaired class of claims or equity interests does not accept a chapter 11 plan, a bankruptcy court may nevertheless confirm such a plan at the proponents’ request if at least one impaired class has accepted the plan (with such acceptance being determined without including the vote of any “insider” in such class), and, as to each impaired class that has not accepted the plan, the bankruptcy court determines that the plan “does not discriminate unfairly” and is “fair and equitable” with respect to the dissenting impaired classes.  The Debtors believe that the Plan satisfies these requirements and the Debtors may request such non-consensual confirmation in accordance with subsection 1129(b) of the Bankruptcy Code.  Nevertheless, in the event that the Voting Classes do not accept the Plan, there can be no assurance that the Bankruptcy Court will reach this conclusion.

 

6.                                      Risk of Termination of the Restructuring Support Agreement.

 

As more fully set forth in sections 9-11 of the Restructuring Support Agreement, the Restructuring Support Agreement contains certain provisions that give the Required Consenting Noteholders (as defined in the Restructuring Support Agreement) the ability to terminate the Restructuring Support Agreement upon the occurrence of certain events or conditions.  In the event the Restructuring Support Agreement is terminated, the Debtors may be forced to file an alternative plan that lacks the same broad noteholder support.  The termination of the Restructuring Support Agreement could result in protracted Chapter 11 Cases, which could significantly and detrimentally impact the Debtors’ relationships with vendors, suppliers, and major customers.

 

85


 

7.                                      The Effective Date May Not Occur.

 

As more fully set forth in Article IX of the Plan, the Effective Date is subject to a number of conditions precedent.  If such conditions precedent are not met or waived, the Effective Date will not take place.  There can be no assurance as to such timing or as to whether the Effective Date will, in fact, occur.

 

8.                                      The Exit Facility Credit Agreement and the Transactions Contemplated Thereby, May Not Become Effective.

 

Although the Debtors believe that the Exit Facility Credit Agreement will become effective shortly after the Confirmation Date, there can be no assurance as to such timing or as to whether the Exit Facility Credit Agreement and the transactions contemplated thereunder, will become effective.

 

9.                                      Contingencies Will Not Affect Votes of the Voting Classes to Accept or Reject the Plan.

 

The distributions available to Holders of Allowed Claims and Equity Interests under the Plan can be affected by a variety of contingencies.  The occurrence of any and all such contingencies, which could affect distributions available to Holders of Allowed Claims and Equity Interests under the Plan, will not affect the validity of the vote taken by the Voting Classes to accept or reject the Plan or require any sort of revote by the Impaired Classes.

 

10.                               The Debtors Cannot State with Certainty What Recovery Will be Available to Holders of Allowed Prepetition Notes Claims.

 

The estimated Claims and recoveries set forth in this Disclosure Statement are based on various assumptions, and the actual Allowed amounts of Claims may significantly differ from the estimates.  Should one or more of the underlying assumptions ultimately prove to be incorrect, the actual Allowed amounts of Claims may vary from the estimated amounts contained in this Disclosure Statement.  Moreover, the Debtors cannot determine with any certainty at this time the number or amount of Claims that will ultimately be Allowed.  Accordingly, because certain Claims under the Plan will be paid on a Pro Rata basis, the Debtors cannot state with certainty what recoveries will be available to Holders of Allowed Prepetition Notes Claims.

 

11.                               Conversion into Chapter 7 Cases.

 

If no plan of reorganization can be confirmed, or if the Bankruptcy Court otherwise finds that it would be in the best interest of holders of Claims and Interests, the Chapter 11 Cases may be converted to cases under chapter 7 of the Bankruptcy Code, pursuant to which a trustee would be appointed or elected to liquidate the Debtors’ assets for distribution in accordance with the priorities established by the Bankruptcy Code.  See Section XI.A hereof, as well as the Liquidation Analysis attached hereto as Exhibit C, for a discussion of the effects that a chapter 7 liquidation would have on the recoveries of holders of Claims and Equity Interests.

 

86


 

12.                               Releases, Injunctions, and Exculpation Provisions May Not Be Approved.

 

The Plan provides for certain releases, injunctions, and exculpations.  However, such releases, injunctions, and exculpations are subject to objection by parties in interest and may not be approved.  If the releases are not approved, certain Released Parties may not support the Plan.

 

B.                                    ADDITIONAL FACTORS AFFECTING THE VALUE OF THE REORGANIZED DEBTORS

 

1.                                      Claims Could be More than Projected.

 

There can be no assurance that the estimated Allowed amount of Claims in certain Classes will not be significantly more than projected, which in turn, could cause the value of distributions to be reduced substantially.  Inevitably, some assumptions will not materialize, and unanticipated events and circumstances may affect the ultimate results.  Therefore, the actual amount of Allowed Claims may vary materially from the Debtors’ projections and feasibility analysis.

 

2.                                      Projections and other Forward-Looking Statements Are Not Assured and Actual Results May Vary.

 

Certain of the information contained in the Disclosure Statement, including the Financial Projections in Exhibit D, is, by nature, forward-looking, and contains estimates and assumptions, which might ultimately prove to be incorrect, and projections, which may be materially different from actual future experiences.  There are uncertainties associated with any projections and estimates, and they should not be considered assurances or guarantees of the amount of funds or the amount of Claims in the various Classes that might be allowed.

 

3.                                      Post-Effective Date Indebtedness.

 

Following the Effective Date, the Reorganized Debtors will have approximately $1 billion of secured funded indebtedness and a $500 million letter of credit from the Exit Facility, and up to $2.500 billion of unsecured funded indebtedness composed of up to $1.250 billion principal amount of New Tranche A Senior Unsecured Notes and up to $1.250 billion principal amount of New Tranche B Senior Unsecured Notes.  The Reorganized Debtors’ ability to service their debt obligations will depend, among other things, on their future operating performance, which depends partly on economic, financial, competitive, and other factors beyond the Reorganized Debtors’ control.  The Reorganized Debtors may not be able to generate sufficient cash from operations to meet their debt service obligations as well as fund necessary capital expenditures and investments in sales and marketing.  In addition, if the Reorganized Debtors need to refinance their debt, obtain additional financing, or sell assets or equity, they may not be able to do so on commercially reasonable terms, if at all.

 

4.                                      Restrictive Covenants of Indebtedness.

 

The financing agreements governing the Reorganized Debtors’ indebtedness will contain various covenants that may limit the discretion of the Reorganized Debtors’ management by restricting the Reorganized Debtors’ ability to, among other things, incur additional indebtedness, incur liens, pay dividends or make certain restricted payments, consummate certain asset sales, enter into certain transactions with affiliates, merge, consolidate and/or sell or dispose of all or

 

87


 

substantially all of their assets.  In addition, it is expected that certain of the agreements will require the Reorganized Debtors to meet certain financial covenants.  As a result of these covenants, the Reorganized Debtors will be limited in the manner in which they conduct their businesses and they may be unable to engage in favorable business activities or finance future operations or capital needs.

 

Any failure to comply with the restrictions of the financing agreements may result in an event of default.  An event of default may allow the creditors to accelerate the related debt as well as any other debt to which a cross-acceleration or cross-default provision applies. If the Reorganized Debtors are unable to repay amounts outstanding under their financing agreements when due, the lenders thereunder could, subject to the terms of the financing agreements, seek to foreclose on the collateral that is pledged to secure the indebtedness outstanding under such facility.

 

5.                                      Transfers or Issuances Of Existing Common Stock or New Common Stock, Before or in Connection with the Debtors’ Chapter 11 Cases, May Impair The Debtors’ Ability To Utilize Their U.S. Federal Income Tax Net Operating Loss Carryforwards In Future Years.

 

Under U.S. federal income tax law, a corporation is generally permitted to deduct from taxable income net operating losses carried forward from prior years. The Debtors’ U.S. consolidated group, of which Weatherford Delaware will become the parent prior to the Effective Date, had consolidated net operating losses and net operating loss carryforwards of approximately $2 billion as of December 31, 2017, of which approximately 85% will be allocable to Weatherford Delaware.  The Debtors believe that their U.S. consolidated group generated additional net operating losses for the 2018 taxable year.  The U.S. group’s ability to utilize its net operating loss carryforwards to offset future taxable income and to reduce its U.S. federal income tax liability is subject to certain requirements and restrictions.  Since the Weatherford Parent (and indirectly the U.S. group) will experience an “ownership change,” as defined in Section 382 of the U.S. Internal Revenue Code of 1986, as amended (the “IRC”), the U.S. group’s ability to use its net operating loss carryforwards may be substantially limited, which could have a negative impact on its financial position and results of operations.  Generally, there is an “ownership change” if one or more stockholders owning 5% or more of a corporation’s common stock have aggregate increases in their ownership of such stock of more than 50 percentage points over the prior three-year period.  Under IRC Section 382, absent an applicable exception, if a corporation undergoes an “ownership change,” the amount of its net operating losses that may be utilized to offset future table income generally is subject to an annual limitation.  Even if the net operating loss carryforwards are subject to limitation under IRC Section 382, the net operating losses can be further reduced by the amount of discharge of indebtedness arising in a Chapter 11 Case under IRC Section 108.  The Debtors intend to request that the Bankruptcy Court approve restrictions on certain transfers of Existing Common Stock to limit the risk of an “ownership change” occurring prior to the issuance of New Common Stock.

 

88


 

6.                                      Transfers of Prepetition Note Claims During the Debtors’ Chapter 11 Cases, May Impair The Debtors’ Ability To Utilize Their U.S. Federal Income Tax Net Operating Loss Carryforwards In Future Years, and May be Subject to a Sell Down Order.

 

Under the Plan, each Holder of an Allowed Prepetition Notes Claim will receive its Pro Rata share of (i) 99% of the New Common Stock, subject to dilution on account of equity issued pursuant to the New Management Incentive Plan, the New Tranche B Equity Conversion, and the New Common Stock issuable pursuant to the New Warrants, (ii) the New Tranche B Senior Unsecured Notes and (iii) Subscription Rights to purchase its Pro Rata share of New Tranche A Senior Unsecured Notes pursuant to the Rights Offering. As a result, the consummation of the Plan is expected to result in an “ownership change” of Weatherford Delaware and all other members of the U.S. Group. The Debtors believe that the application of IRC Section 382(l)(5) could result in significant future savings and are seeking to protect the continued existence of the their significant tax attributes (including net operating losses ranging between $1.5 billion to $2 billion that are expected to remain after taking into account the impact of the Restructuring Transactions) without annual limitations on the use of its net operating losses and net unrealized built-in loss pursuant to IRC Section 382(l)(5). Refer to Article X under the caption “Certain U.S. Federal Income Tax Consequences of the Plan—Consequences to the Debtors—Section 382 Limitation on Net Operating Losses and Built-In Losses” for a discussion on IRC Section 382 and the exception under IRC Section 382(l)(5).

 

Accordingly, the Debtors will file a First Day Motion to seek an order establishing a record date and sell-down procedures for trading claims. Pursuant to the First Day Motion:

 

i.    The Record Date will be set as of the date the First Day Motion is filed.

 

ii.          A date will be set in August 2019 (the “Reporting Deadline”), at which time the Holder of any Prepetition Notes Claim who would own more than 4.75% of the New Common Stock on emergence shall be required to provide notice of its Prepetition Note Claims, including the amount of such Claims and date of acquisition.  For this purpose, the person or Entity required to file such notice is the beneficial owner determined under the rules set forth in IRC Section 382 and the regulations thereunder, described below in Article X under the caption “Certain U.S. Federal Income Tax Consequences of the Plan—Consequences to the Debtors—Section 382 Limitation on Net Operating Losses and Built-In Losses.”  If, after the Reporting Deadline, the Holder acquires or disposes of Prepetition Notes Claims, it is required to report such changes in ownership within the time period specified in the motion.

 

iii.       In connection with confirmation of the Plan, the Debtors will seek an additional motion requiring a Holder who would own more than 4.75% of the New Common Stock at emergence (A) to not make any purchases of Prepetition Notes Claims without providing notice before such acquisition and obtaining advance approval of the Debtors, (B) to notify the Debtors of any sale of Prepetition Note Claims within a specified time period of such sale, and (C) giving Debtors the authority (but not requiring Debtors) to require such Holders to sell down their holdings of Prepetition Note Claims to an amount determined by the Debtors that will permit the Debtors to qualify for the benefits of IRC section 382(l)(5).

 

89


 

For purposes of this section, the amounts of Prepetition Notes Claims required to be sold in a sell down procedure may depend, in part, on whether such Claims were acquired more than eighteen months before the Petition Date.

 

7.                                      The New Common Stock Will be Subject to Trading Restrictions in Order to Protect the Reorganized Debtors’ Tax Attributes.

 

In order to preserve the Debtors’ tax attributes post-emergence, the Debtors intend to impose trading restrictions on the New Common Stock in a form similar to those used by U.S. debtor corporations emerging from bankruptcy.

 

C.                                    RISK FACTORS THAT MAY AFFECT THE VALUE OF SECURITIES TO BE ISSUED UNDER THE PLAN AND/OR RECOVERIES UNDER THE PLAN

 

1.                                      The Valuation of the Reorganized Debtors May Not Be Adopted by the Bankruptcy Court.

 

Parties in interest in these Chapter 11 Cases may oppose confirmation of the Plan by alleging that the value of the Reorganized Debtors is higher than estimated by the Debtors and that the Plan thereby improperly limits or extinguishes their rights to recoveries under the Plan.  At the Confirmation Hearing, the Bankruptcy Court will hear evidence regarding the views of the Debtors and opposing parties, if any, with respect to the valuation of the Reorganized Debtors.  Based on that evidence, the Bankruptcy Court will determine the appropriate valuation for the Reorganized Debtors for purposes of the Plan.

 

2.                                      The Estimated Valuation of the Reorganized Debtors, the New Common Stock, the New Warrants, and the New Senior Unsecured Notes and the Estimated Recoveries to Holders of Allowed Claims and Equity Interests Are Not Intended to Represent the Private or Public Sale Values.

 

The Debtors’ estimated recoveries to Holders of Allowed Claims and Allowed Equity Interests are not intended to represent the private or public sale values of the Reorganized Debtors’ securities.  The estimated recoveries are based on numerous assumptions (the realization of many of which is beyond the control of Reorganized Debtors), including, without limitation:  (a) the successful reorganization of the Debtors; (b) an assumed date for the occurrence of the Effective Date; (c) the Debtors’ ability to achieve the operating and financial results included in the Financial Projections; and (d) the Debtors’ ability to maintain adequate liquidity to fund operations.

 

3.                                      There May Be a Lack of a Trading Market For the New Common Stock.

 

Although Weatherford Parent will use commercially reasonable efforts to list the New Common Stock on a national securities exchange, there can be no assurance that there will be an active trading market for the New Common Stock or the other Plan Securities.  In addition, there may be trading restrictions on shares of New Common Stock (or any interest therein) following the Effective Time. Accordingly, there can be no assurance that any market will develop or as to the liquidity of any market that may develop for any such securities.

 

90


 

4.                                      The New Common Stock Will be Subordinated to the New Senior Unsecured Notes and Other Indebtedness of Reorganized Parent.

 

In any subsequent liquidation, dissolution, or winding up of Reorganized Parent, the New Common Stock would rank below all debt claims against Reorganized Parent.  As a result, holders of the New Common Stock would not be entitled to receive any payment or other distribution of assets upon the liquidation, dissolution, or winding up of Reorganized Parent until after all applicable holders of debt have been paid in full.

 

5.                                      The New Warrants May Not Become Exercisable Prior to Expiration.

 

There can be no assurance that the total enterprise value of the Reorganized Debtors will ever reach the thresholds at which the New Warrants become exercisable prior to the expiration of the New Warrants.

 

6.                                      The Reorganized Debtors May Not Be Able to Achieve Projected Financial Results or Service Their Debt.

 

Although the Financial Projections represent management’s view based on current known facts and assumptions about the future operations of the Reorganized Debtors there is no guarantee that the Financial Projections will be realized.  The Reorganized Debtors may not be able to meet their projected financial results or achieve projected revenues and Cash flows assumed in projecting future business prospects.  To the extent the Reorganized Debtors do not meet their projected financial results or achieve projected revenues and Cash flows, the Reorganized Debtors may lack sufficient liquidity to continue operating as planned after the Effective Date, may be unable to service their debt obligations as they come due or may not be able to meet their operational needs.  Any one of these failures may preclude the Reorganized Debtors from, among other things: (a) taking advantage of future opportunities; (b) growing their businesses; or (c) responding to future changes in the oil and gas industry.  Further, a failure of the Reorganized Debtors to meet their projected financial results or achieve projected revenues and cash flows could lead to cash flow and working capital constraints, which constraints may require the Reorganized Debtors to seek additional working capital.  The Reorganized Debtors may not be able to obtain such working capital when it is required.

 

7.                                      A Small Number of Holders Will Own a Significant Percentage of the New Common Stock.

 

Consummation of the Plan will result in a small number of holders owning a significant percentage of the outstanding New Common Stock.  Accordingly, these holders may, among other things, have significant influence over the business and affairs of the Reorganized Debtors and have the power to elect directors or managers and approve or disapprove of proposed mergers and other material corporate transactions.

 

8.                                      If a United States Person is Treated as Owning At Least 10% of the New Common Stock, Such Holder May be Subject to Adverse U.S. Federal Income Tax Consequences.

 

Many of Weatherford Parent’s non-U.S. subsidiaries are classified as “controlled foreign corporations” for U.S. federal income tax purposes due to the application of certain ownership

 

91


 

attribution rules within a multinational corporate group (although there is a legislative proposal to significantly limit the application of these rules).  If a United States person is treated as owning (directly, indirectly or constructively) at least 10% of the value or voting power of Weatherford Parent’s shares, such person may be treated as a “United States shareholder” with respect to one or more of Weatherford Parent’s controlled foreign corporation subsidiaries.  In addition, if Weatherford Parent’s shares are treated as owned more than 50% (by voting power or value) by United States shareholders, Weatherford Parent itself would be treated as a controlled foreign corporation.  A United States shareholder of a controlled foreign corporation may be required to annually report and include in its U.S. taxable income, as ordinary income, its pro rata share of “Subpart F income,” “global intangible low-taxed income” and investments in U.S. property by controlled foreign corporations, whether or not Weatherford Parent makes any distributions to such United States shareholder.  An individual United States shareholder generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a corporate United States shareholder.  A failure by a United States shareholder to comply with its reporting obligations may subject the United States shareholder to significant monetary penalties and may extend the statute of limitations with respect to the United States shareholder’s U.S. federal income tax return for the year for which such reporting was due.  Weatherford Parent cannot provide any assurances that it will assist investors in determining whether it or any of its non-U.S. subsidiaries are controlled foreign corporations.  Weatherford Parent also cannot guarantee that it will furnish to United States shareholders information that may be necessary for them to comply with the aforementioned obligations.  The risk of being subject to increased reporting and compliance obligations and taxation could impact the demand for, and value of, New Common Stock.

 

D.                                    RISK FACTORS THAT COULD NEGATIVELY IMPACT THE DEBTORS’ AND REORGANIZED DEBTORS’ BUSINESSES AND FINANCIAL CONDITION(7)

 

1.                                      DIP Facility.

 

The DIP Facility is intended to provide liquidity to the Debtors during the pendency of the Chapter 11 Cases.  If the Chapter 11 Cases take longer than expected to conclude, or in the event of a breach of a milestone or another event of default under the DIP Facility, which could occur if the Plan is not confirmed on the proposed timeline, the Debtors may exhaust or lose access to their financing.  There is no assurance that they will be able to obtain additional financing from their existing lenders or otherwise.  In either such case, the liquidity necessary for the orderly functioning of the Debtors’ businesses may be materially impaired.

 

2.                                      Fluctuations in Oil and Gas Prices May Continue to Adversely Affect the Debtors’ and the Reorganized Debtors’ Financial Condition, Financial Results, Cash Flows, Access to Capital and Ability to Grow.

 

Demand for the Debtors’ services and products is tied to the level of exploration, development and production activity and the corresponding capital expenditures by oil and natural gas companies, including national oil companies.  The level of exploration, development, and production activity is directly affected by fluctuations in oil and natural gas prices, which historically have been volatile and are likely to continue to be volatile in the future, especially

 


(7)  Additional factors are provided in the Company’s 10-K and 10-Q, filed with the Securities and Exchange Commission on February 15, 2019 and May 10, 2019, respectively.

 

92


 

given current geopolitical and economic conditions.  Therefore, declines in oil and natural gas prices or sustained low oil and natural gas prices or customer perceptions that oil and natural gas prices will remain depressed or will further decrease in the future could result in a continued reduction in the demand and pricing for the Debtors’ equipment and will likely continue at lower rates for the Debtors’ services.

 

Prices for oil and natural gas are highly volatile and are subject to large fluctuations in response to relatively minor changes in the supply of and demand for oil and natural gas.  Factors that can or could cause these price fluctuations include: excess supply of crude oil relative to demand; domestic and international drilling activity; global market uncertainty; the risk of slowing economic growth or recession in the United States, China, Europe or emerging markets; the ability of the Organization of the Petroleum Exporting Countries (“OPEC”) to set and maintain production levels for oil; the decision of OPEC to abandon production quotas and/or member-country quota compliance within OPEC; oil and gas production levels by non-OPEC countries; the nature and extent of governmental regulation, including environmental regulation; technological advances affecting energy consumption; adverse weather conditions and a variety of other economic factors that are beyond the Debtors’ control.  Any perceived or actual further reduction in oil and natural gas prices will depress the immediate levels of exploration, development and production activity and decrease spending by the Debtors’ customers, which could have a material adverse effect on the Debtors’ businesses, financial conditions and results of operations.

 

Sustained lower oil and natural gas prices have led to a significant decrease in spending by the Debtors’ customers over the past several years, and thus significant decreases in the Debtors’ revenues.  Further decreases in oil and natural gas prices could lead to further cuts in spending and lower revenues.  The Debtors’ customers also take into account the volatility of energy prices and other risk factors when determining whether to pursue capital projects and higher perceived risks generally mandate higher required returns.  Any of these factors could affect the demand for oil and natural gas and could have a material adverse effect on the Debtors’ businesses, financial conditions, results of operations and cash flow.

 

3.                                      The Credit Risks of the Debtors’ Concentrated Customer Base in the Energy Industry Could Result in Operating Losses and Negatively Impact Liquidity.

 

The concentration of the Debtors’ customer base in the energy industry may impact the Debtors overall exposure to credit risk as customers may be similarly affected by prolonged changes in economic and industry conditions.  Some of the Debtors’ customers are experiencing financial distress as a result of continued low commodity prices and may be forced to seek protection under applicable bankruptcy laws.  Furthermore, countries that rely heavily upon income from hydrocarbon exports have been negatively and significantly affected by low oil prices, which could affect the Debtors’ ability to collect from customers in these countries, particularly national oil companies.  Laws in some jurisdictions in which the Debtors operate could make collection difficult or time consuming.  The Debtors perform on-going credit evaluations of customers and do not generally require collateral in support of trade receivables.  While the Debtors maintain reserves for potential credit losses, the Debtors cannot assure such reserves will be sufficient to meet write-offs of uncollectible receivables or that losses from such receivables will be consistent with the Debtors’ expectations.  Additionally, in the event of a bankruptcy of

 

93


 

any of the Debtors’ customers, the Debtors may be treated as an unsecured creditor and may collect substantially less, or none, of the amounts owed to the Debtors by such customer.

 

4.                                      Reductions in Capital Spending by Customers May Continue to Have an Adverse Effect on the Debtors’ and the Reorganized Debtors’ Business, Financial Condition and Financial Results.

 

Sustained low oil and natural gas prices have led to lower capital expenditures by the Debtors’ customers.  Most of the Debtors’ contracts can be cancelled by a customer at any time.  Low commodity prices, the short-term tenor of most of the Debtors’ contracts and the extreme financial stress experienced by customers (some of whom may have to seek bankruptcy protection) have combined to generate demands by many of the Debtors’ customers for reductions in the prices of the Debtors’ products and services.  Further reductions in capital spending or requests for further cost reductions by the Debtors’ customers could directly impact the Debtors’ business by reducing demand for services and products and have a material adverse effect on the Debtors’ business, financial condition, results of operations and prospects.  Spending by exploration and production companies can also be impacted by conditions in the capital markets, which have been volatile in recent years.  Limitations on the availability of capital or higher costs of capital may cause exploration and production companies to make additional reductions to capital budgets even if oil and natural gas prices increase from current levels.  Any such cuts in spending will curtail drilling programs as well as discretionary spending on well services, which may result in a reduction in the demand for the Debtors’ services, the rates the Debtors can charge and the utilization of their assets.  Moreover, reduced discovery rates of new oil and natural gas reserves or a decrease in the development rate of reserves in the Debtors’ market areas, whether due to increased governmental regulation, limitations on exploration and drilling activity or other factors, could also have a material adverse impact on the Debtors’ businesses, even in a stronger oil and natural gas price environment.  With respect to national oil company customers, the Debtors are also subject to risk of policy, regime, currency and budgetary changes all of which may affect their capital expenditures.

 

5.                                      Severe or Unseasonable Weather Could Adversely Affect Demand for the Debtors’ or the Reorganized Debtors’ Products and Services.

 

Variation from normal weather patterns, such as cooler or warmer summers and winters, can have a significant impact on demand.  Adverse weather conditions, such as hurricanes in the Gulf of Mexico or extreme winter conditions in Canada, Russia and the North Sea, may interrupt or curtail operations, or the Debtors’ customers’ operations, cause supply disruptions or loss of productivity or result in a loss of revenue or damage to equipment and facilities, which may or may not be insured.  Any of these outcomes could have a material adverse effect on the Debtors’ business, financial condition and results of operations.

 

6.                                      Competition in the Oilfield Services Industry Is Intense and Many of the Debtors’ Competitors Have Greater Financial and Other Resources Than The Debtors Do.

 

The Debtors’ businesses are highly competitive, particularly with respect to the marketing of products and services to customers as well as securing equipment and trained personnel.  Currently the oilfield service industry has excess capacity relative to customer demand, and, in

 

94


 

most cases, multiple sources of comparable oilfield services are available from a number of different competitors.  This competitive environment could impact the Debtors’ ability to maintain market share, defend, maintain or increase pricing for products and services and negotiate acceptable contract terms with customers and suppliers.  In order to remain competitive, the Debtors must continue to add value for customers by providing, relative to their peers, new technologies, reliable products and services and competent personnel.  The anticipated timing and cost of the development of competitive technology and new product introductions can impact the Debtors’ financial results, particularly if one of the Debtors’ competitors were to develop competing technology that accelerates the obsolescence of any of the Debtors’ products or services.  Additionally, the Debtors may be disadvantaged competitively and financially by a significant movement of exploration and production operations to areas of the world in which they are not currently active, particularly if one or more of the Debtors’ competitors is already operating in that area of the world.

 

Mergers, combinations and consolidations in the Debtors’ industry could result in existing competitors increasing their market share and may result in stronger competitors, which in turn, could have a material adverse effect on the Debtors’ business, financial condition and results of operations.  The Debtors may not be able to compete successfully in an increasingly consolidated industry and cannot predict with certainty how industry consolidation will affect other competitors or the Debtors.

 

7.                                      Liability Claims Resulting From Catastrophic Incidents Could Have a Material Adverse Effect on the Debtors’ and the Reorganized Debtors’ Business, Financial Condition and Financial Results.

 

Drilling for and producing hydrocarbons, and the associated products and services that the Debtors provide, include inherent dangers that may lead to property damage, personal injury, death or the discharge of hazardous materials into the environment.  Many of these events are outside the Debtors’ control.  Typically, the Debtors provide products and services at a well site where personnel and equipment are located together with personnel and equipment of the Debtors’ customer and third parties, such as other service providers.  At many sites, the Debtors depend on other companies and personnel to conduct drilling operations in accordance with appropriate safety standards.  From time to time, personnel are injured or equipment or property is damaged or destroyed as a result of accidents, failed equipment, faulty products or services, failure of safety measures, uncontained formation pressures or other dangers inherent in drilling for oil and natural gas.  Any of these events can be the result of human error.  With increasing frequency, products and services are deployed on more challenging prospects both onshore and offshore, where the occurrence of the types of events mentioned above can have an even more catastrophic impact on people, equipment and the environment.  Such events may expose the Debtors to significant potential losses.

 

8.                                      The Debtors May Not Be Fully Indemnified Against Financial Losses In All Circumstances Where Damage To Or Loss Of Property, Personal Injury, Death Or Environmental Harm Occur.

 

As is customary in the Debtors’ industry, the Debtors’ contracts typically require that customers and other third parties indemnify the Debtors for claims arising from the injury or death of their employees (and those of their other contractors), the loss or damage of their equipment

 

95


 

(and that of their other contractors), damage to the well or reservoir and pollution originating from the customer’s equipment or from the reservoir (including uncontained oil flow from a reservoir) and claims arising from catastrophic events, such as a well blowout, fire, explosion and from pollution below the surface.  Conversely, the Debtors typically indemnify their customers and certain other third parties for claims arising from the injury or death of the Debtors’ employees, the loss or damage of the Debtors’ equipment (other than equipment lost in the hole) or pollution originating from the Debtors’ equipment.

 

The Debtors’ indemnification arrangements may not protect the Debtors in every case.  For example, from time to time the Debtors may enter into contracts with less favorable indemnities or perform work without a contract that provides protection.  The Debtors’ indemnity arrangements may also be held to be overly broad in some courts and/or contrary to public policy in some jurisdictions, and to that extent may be unenforceable.  Additionally, some jurisdictions which permit indemnification nonetheless limit its scope by statute.  The Debtors may be subject to claims brought by third parties or government agencies with respect to which they are not indemnified.  Furthermore, the parties from which indemnity is sought may not be solvent, may become bankrupt, may lack resources or insurance to honor their indemnities or may not otherwise be able to satisfy their indemnity obligations to the Debtors.  The lack of enforceable indemnification could expose the Debtors to significant potential losses.

 

Further, the Debtors’ assets are generally are not insured against loss from political violence such as war, terrorism or civil commotion.  If assets are damaged or destroyed as a result of an uninsured cause, the Debtors could recognize a loss of those assets.

 

9.                                      The Debtors’ Businesses May Be Exposed To Uninsured Claims And, As A Result, Litigation Might Result In Significant Potential Losses.  The Cost Of The Debtors’ Insured Risk Management Program May Increase.

 

In the ordinary course of business, the Debtors become the subject of various claims and litigation.  The Debtors maintain liability insurance, which includes insurance against damage to people, property and the environment, up to maximum limits of $435 million, subject to self-insured retentions and deductibles.

 

These insurance policies are subject to exclusions, limitations and other conditions and may not apply in all cases, for example where willful wrongdoing on the Debtors part is alleged.  It is possible an unexpected judgment could be rendered against the Debtors in cases in which the Debtors could be uninsured and beyond the amounts the Debtors currently have reserved or anticipate incurring, and in some cases those potential losses could be material.

 

The Debtors’ insurance may not be sufficient to cover any particular loss or insurance may not cover all losses.  For example, although the Debtors maintain product liability insurance, this type of insurance is limited in coverage and it is possible an adverse claim could arise in excess of that coverage.  Additionally, insurance rates have in the past been subject to wide fluctuation and may be unavailable on terms that the Debtors or the Debtors’ customers believe are economically acceptable.  Reductions in coverage, changes in the insurance markets and accidents affecting the Debtors’ industry may result in further cost increases and higher deductibles and retentions in future years and may also result in reduced activity levels in certain markets.  Any of these events would have an adverse impact on the Debtors’ financial performance.

 

96


 

10.                               The Debtors’ Operations Are Subject To Numerous Laws And Regulations, Including Environmental Laws And Regulations, That May Expose The Debtors To Significant Liabilities And Could Reduce Business Opportunities And Revenues.

 

The Debtors are subject to various laws and regulations relating to the energy industry in general and the environment in particular.  These laws are often complex and may not always be applied consistently in emerging markets.  These laws and regulations often change and can cover broad subject matters, including tax, trade, customs (import/export) and the environment.  In the case of environmental regulations, an environmental claim could arise with respect to one or more of the Debtors’ current businesses, products or services, or a business or property that one of the Debtors’ predecessors owned or used, and such claims could involve material expenditures.  Generally, environmental laws have in recent years become more stringent and have sought to impose greater liability on a larger number of potentially responsible parties.  The scope of regulation of the Debtors’ industry and the Debtors’ products and services may increase further, including possible increases in liabilities or funding requirements imposed by governmental agencies.  The Debtors also cannot ensure that future business in the deepwater Gulf of Mexico, if any, will be profitable in light of regulations that have been, and may continue to be, promulgated and in light of the current risk environment and insurance markets.  Additional regulations on deepwater drilling elsewhere in the world could be imposed, and those regulations could limit the Debtors’ business where they are imposed.

 

In addition, members of the U.S. Congress, the U.S. Environmental Protection Agency and various agencies of several states within the U.S. frequently review, consider and propose more stringent regulation of hydraulic fracturing, a service the Debtors previously provided (and may, in the future, resume providing) to clients.  Regulators are investigating whether any chemicals used in the fracturing process might adversely affect groundwater or whether the fracturing processes could lead to other unintended effects or damages.  In recent years, several cities and states within the U.S. passed new laws and regulations concerning or banning hydraulic fracturing.  A significant portion of North American service activity today is directed at prospects that require hydraulic fracturing in order to produce hydrocarbons.  Therefore, additional regulation could increase the costs of conducting business by subjecting fracturing to more stringent regulation.  Such regulation, among other things, may change construction standards for wells intended for hydraulic fracturing, require additional certifications concerning the conduct of hydraulic fracturing operations, change requirements pertaining to the management of water used in hydraulic fracturing operations, require other measures intended to prevent operational hazards or ban hydraulic fracturing completely.  Any such federal, state, local or foreign legislation could increase the costs of providing services or could materially reduce potential business opportunities and revenues if the Debtors’ customers decrease their levels of activity in response to such regulation or if the Debtors are not able to pass along any cost increases to customers.  The Debtors are unable to predict whether changes in laws or regulations or any other governmental proposals or responses will ultimately occur, and accordingly, are unable to assess the potential financial or operational impact they may have on the Debtors’ businesses.

 

97


 

11.                               A Significant Portion of the Debtors’ Revenue is Derived From the Debtors’ Non-United States Operations, Which Exposes the Debtors to Risks Inherent in Doing Business in the Over 80 Countries in Which They Operate.

 

The Debtors’ non-United States operations accounted for approximately $4.1 billion of their consolidated revenue in both 2018 and 2017 and $4.2 billion in 2016.  Operations in countries other than the United States are subject to various risks, including:

 

·                  volatility in political, social and economic conditions;

 

·                  exposure to expropriation of the Debtors’ assets or other governmental actions;

 

·                  social unrest, acts of terrorism, war or other armed conflict;

 

·                  confiscatory taxation or other adverse tax policies;

 

·                  deprivation of contract rights;

 

·                  trade and economic sanctions or other restrictions imposed by the European Union, the United States or other countries;

 

·                  exposure under the United States Foreign Corrupt Practices Act or similar legislation;

 

·                  restrictions on the repatriation of income or capital;

 

·                  currency exchange controls;

 

·                  inflation; and

 

·                  currency exchange rate fluctuations and devaluations.

 

12.                               The Debtors May Not Be Able To Complete Their Strategic Divestitures And May Not Achieve The Intended Benefits Of Any Acquisition, Divestiture Or Joint Venture.

 

From time to time, the Debtors may pursue strategic divestitures, acquisitions, investments and joint ventures “transactions”.  Such divestitures can be complex in nature and may be affected by unanticipated developments, such as the recent significant and sustained decrease in the price of crude oil, delays in obtaining regulatory, governmental, customer or other third party approvals and challenges in establishing processes and infrastructure for both the underlying business and for potential investors or buyers of the business, which may result in such divestiture being delayed, or in limited circumstances not being completed at all, any of which could have a negative impact on the Debtors’ ability to repay indebtedness or their liquidity and otherwise expose the Debtors to increased competitive pressures and additional risks.

 

Even if successful, any of these contemplated or other future transactions may reduce earnings for a number of reasons, and pose many other risks that could adversely affect the Debtors’ operations or financial results, including:

 

98


 

·                  these transactions have and do require significant investment of time and resources, may disrupt business, distract management from other responsibilities and may result in losses on disposal or continued financial involvement in any divested business, including through indemnification, guarantee or other financial arrangements, for a period of time following the transaction, which may adversely affect the Debtors’ financial results, including cash flow, repayment of indebtedness or compliance with debt covenants;

 

·                  acquired entities or joint ventures may not operate profitably, which could adversely affect operating income or operating margins, and the Debtors may be unable to recover their investments;

 

·                  the Debtors may not be able to effectively influence the operations of joint ventures, or may be exposed to certain liabilities if the Debtors’ joint venture partners do not fulfill their obligations; and

 

·                  the Debtors may not be able to fully realize the intended or expected benefits of consummating such transactions, including receiving the expected cash proceeds.

 

13.                               The Ability to Retain or Attract Employees, Including Executive Officers and Other Key Personnel, Could Have a Material Adverse Effect on the Debtors’ Businesses.

 

The Debtors’ businesses are dependent on their ability to attract, develop, and retain qualified employees and workers.  The Debtors’ ability to meet employment and staffing needs is subject to external and internal factors such as the current and future prices of oil and natural gas, the demand for workers by companies in the Debtors’ industry, the Debtors’ reputation within the labor market (particularly in a highly competitive industry), and the Debtors’ workers’ perception of opportunities with the Debtors as compared to the Debtors’ peers (including as to financial performance and incentives related thereto).  If the Debtors are unable to attract and retain adequate numbers and an appropriate mix of qualified workers, the quality of products and services provided to customers may decrease and financial performance may be adversely affected.  Further, the Debtors depend on the contributions of key personnel for future success.  Departures of key employees can cause disruptions to, and uncertainty in, the Debtors’ businesses and operations.  Future departures of key employees, including changes in senior management, could disrupt the Debtors’ businesses and have a materially adverse effect on the Debtors’ financial condition and results of operations.

 

14.                               If Another Party Claims That the Debtors Have Infringed its Intellectual Property Rights, the Debtors May be Subject to Litigation or May Need to Take Remedial Steps to Eliminate or Mitigate Liability.

 

A third party may claim that the Debtors sell equipment or perform services that infringes upon the third party’s patent rights or unlawfully uses the third party’s trade secrets.  Addressing such claims of patent infringement or trade secret misappropriation could result in significant legal and other costs and may adversely impact the Debtors’ businesses.  To resolve such claims, the Debtors may be required to enter into license agreements that require them to make royalty payments to continue selling equipment or providing of services.  Alternatively, the development

 

99


 

of non-infringing technologies could be costly.  If an allegation of patent infringement or trade secret misappropriation cannot be resolved through a license agreement, the Debtors might not be able to continue selling particular equipment or providing particular services, which could adversely affect their financial conditions, results of operations, and cash flow.

 

15.                               The Debtors and Holders of Allowed Claims and Allowed Equity Interests May Suffer Adverse U.S. Federal Income Tax Consequences as a Result of the Implementation of the Plan

 

Following the Effective Date, the Reorganized Debtors intend to continue to operate under Weatherford Parent, which is expected to be an Irish tax resident following the Irish Migration (as defined below).  The United States Internal Revenue Service (the “IRS”) may, however, assert that Weatherford Parent should be treated as a U.S. corporation for U.S. federal income tax purposes pursuant to IRC Section 7874.  For U.S. federal tax purposes, a corporation generally is classified as either a U.S. corporation or a foreign corporation by reference to the jurisdiction of its organization or incorporation. Because Weatherford Parent is an Irish incorporated entity, it would generally be classified as a foreign corporation under these rules. IRC Section 7874 provides (i) an exception to this general rule under which a foreign incorporated entity may, in certain circumstances, be treated as a U.S. corporation for U.S. federal income tax purposes, or, in the alternative, (ii) for certain adverse tax consequences in certain cases where a foreign incorporated entity is treated as a non-U.S. corporation for U.S. federal income tax purposes.

 

The application of IRC Section 7874 to Weatherford Parent is unclear and subject to factual uncertainty and may result in significant adverse tax consequences.  For additional information regarding the application of IRC Section 7874, see Article X below.

 

16.                               The Rights Of The Debtors’ Shareholders Are Governed By Irish Law; Irish Law Differs From The Laws In Effect In The United States And May Afford Less Protection To Holders Of The Debtors’ Securities.

 

As an Irish company, Weatherford Parent is governed by the Irish Companies Act, which differs in some material respects from laws generally applicable to U.S. corporations and shareholders, including, among others, provisions relating to interested directors, mergers and acquisitions, takeovers, shareholder lawsuits and indemnification of directors.  Likewise, the duties of directors and officers of an Irish company generally are owed to the company alone, as a separate legal entity, and not to individual shareholders (save in the case of insolvency, where the directors will primarily owe their duties to a company’s creditors).  Shareholders of Irish companies generally do not have a personal right of action against directors or officers of the company and may exercise such rights of action on behalf of the company only in limited circumstances.  Accordingly, holders of the Debtors’ securities may have more difficulty protecting their interests than would holders of securities of a corporation incorporated in a jurisdiction of the United States.  Additionally, while Weatherford Parent is an Irish company, Weatherford Parent currently holds shareholders meetings in Switzerland, and in the future may hold shareholders meetings in Ireland which may make attendance in person more difficult for some investors.

 

100


 

17.                               Weatherford Parent Is Incorporated In Ireland and a Significant Portion of the Debtors’ Assets are Located Outside the United States.  As a Result, it Might Not Be Possible For Shareholders to Enforce Civil Liability Provisions of the Federal or State Securities Laws of the United States.

 

Weatherford Parent is organized under the laws of Ireland, and a significant portion of the Debtors’ assets are located outside the United States.  The United States currently does not have a treaty with Ireland providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters.  As such, a shareholder who obtains a court judgment based on the civil liability provisions of U.S. federal or state securities laws may be unable to enforce the judgment against the Debtors in Ireland.  In addition, there is some doubt as to whether the courts of Ireland and other countries would recognize or enforce judgments of U.S. courts obtained against the Debtors or the Debtors’ directors or officers based on the civil liabilities provisions of the federal or state securities laws of the United States or would hear actions against the Debtors or those persons based on those laws.  The laws of Ireland do, however, as a general rule, provide that if an order of recognition by the Irish Court is granted, the judgments of the courts of the United States have the same validity in Ireland as if rendered by Irish Courts.  Certain important requirements must be satisfied before the Irish Courts will recognize the U.S. judgment.  These include the following: the judgment must be a money judgment for a liquidated sum, the originating court must have been a court of competent jurisdiction, the judgment must be final and conclusive, and the judgment may not be recognized if it was obtained by fraud or its recognition would be contrary to Irish public policy.  Any judgment obtained in contravention of the rules of natural justice or that is irreconcilable with an earlier foreign judgment would not be enforced in Ireland.

 

18.                               Weatherford Parent Will Require “Profits Available for Distribution” to Pay Dividends and Generally to Make Share Repurchases and Redemptions.

 

Under Irish law, dividends may only be paid, and share repurchases and redemptions may generally only be made, by Weatherford Parent from its “profits available for distribution”. Immediately following the Effective Date, Weatherford Parent may not have any profits available for distribution. In such circumstances, no dividends, other distributions, share repurchases or redemptions will be permitted under Irish law until such time as Weatherford Parent has generated sufficient profits available for distribution from its business activities or, to the extent possible, reorganized its capital structure to create such profits.

 

E.                                    CERTAIN RISK FACTORS RELATING TO THE IRISH EXAMINERSHIP PROCEEDING

 

1.                                      General.

 

The Irish proceeding, the examinership in relation to Weatherford Parent, will be of shorter duration than the Chapter 11 Cases and will run concurrently with the Chapter 11 Cases.  It will entail the same risks with regard to the Debtors’ business.

 

101


 

2.                                      Parties in Interest May Object to the Appointment of an Examiner to the Weatherford Parent.

 

Section 509 of the Companies Act 2014 (Ireland) provides that the High Court of Ireland may appoint an examiner to an Irish registered company if it is insolvent, has not been put into liquidation, no receiver has been appointed for three consecutive days prior to the presentation of the petition and that there is a reasonable prospect of the survival of both the company and its undertaking.  In the case of the latter proof, Weatherford Parent, as the ultimate parent company of the Weatherford group, will be required to satisfy the High Court of Ireland that it has an undertaking in its own right and that there is a reasonable prospect of survival of its undertaking as a going concern.  Weatherford Parent believes that it will be possible to satisfy each of these proofs but there can be no assurance that the High Court of Ireland will reach the same conclusion.

 

3.                                      The Examiner May Not Put the Proposals Before the Members and Creditors of Weatherford Parent and Seek their Approval by the High Court of Ireland.

 

The examiner, when appointed, will be an independent officer of the High Court of Ireland and will be free to adopt or decline to adopt the terms of the proposals for a scheme of arrangement accompanying the petition to have an examiner appointed to Weatherford Parent.  Weatherford Parent believes that the examiner will adopt and put the proposals before meetings of Weatherford Parent’s shareholders and creditors and subsequently seek their approval by the High Court of Ireland, because the proposals will, insofar as Weatherford Parent is concerned, mirror the Plan and the Plan represents the best solution achievable for the Debtors, their creditors and shareholders.  There can be no assurance however that the examiner will reach the same conclusion.

 

4.                                      The Examiner May Fail to Satisfy the Vote Requirement.

 

Section 541 of the Companies Act 2014 (Ireland) provides that at least one class of creditors whose claims would be impaired by the scheme of arrangement must have voted in favor of the scheme of arrangement.  A class is deemed to vote in favor if a majority in number and value of claims of those present and voting at the class meeting convened by the examiner votes in favor.  In the event that the only class which will be impaired, the Prepetition Notes Claims creditors (entitled to claim pursuant to guarantees provided by Weatherford Parent), do not vote in favor of the scheme of arrangement it cannot be approved by the High Court of Ireland and will therefore not become effective.  In such circumstances, such alternative structure as is approved by the Required Consenting Noteholders may be put in place.

 

5.                                      Parties in Interest May Object to the Examiner’s Classification of Claims.

 

The examiner will be required, pursuant to section 539 of the Companies Act 2014 (Ireland), to place creditors in classes of creditors and provide equal treatment for each claim within a particular class unless the holder of a particular claim agrees to less favorable treatment.  It is likely that in considering any objection to the basis upon which classes have been formulated the High Court of Ireland would take the view that each class must be confined to those parties whose rights are not so dissimilar as to make it impossible for them to consult together with a view

 

102


 

to their common interest.  There can be no assurance that the High Court of Ireland will decide that the examiner’s formulation of classes was correct.

 

6.                                      The Examiner May Not Be Able to Secure Confirmation of the Proposals for a Scheme of Arrangement.

 

Section 541 of the Companies Act 2014 (Ireland) provides that the High Court of Ireland is precluded from confirming proposals for a scheme of arrangement unless it is satisfied that the proposals are fair and equitable in relation to any class of members or creditors that has not accepted the proposals and whose interests or claims would be impaired by implementation of the proposals and not unfairly prejudicial to the interests of any interested party.  Whether proposals are fair and equitable or not unfairly prejudicial to any party will usually be assessed by reference to how such party would be treated in a liquidation, pursuant to Part 11 of the Companies Act 2014 (Ireland), of Weatherford Parent.  A shareholder or creditor should not be unfairly prejudiced and a class of shareholders or creditors should not be considered to have been treated unfairly or inequitably if that party’s treatment approximates to, or is better than, the manner in which such party would be treated in a liquidation of Weatherford Parent.  Any creditor or shareholder whose interests would be impaired by the proposals if implemented and who did not vote in favor of the proposals may object to the proposals in the High Court of Ireland at the hearing convened to confirm the proposals.  Weatherford Parent believes that the terms of the Plan insofar as they relate to Weatherford Parent would not, if mirrored in a scheme of arrangement pursuant to Part 10 of the Companies Act 2014 (Ireland), be unfair or inequitable to any class of shareholders or creditors of Weatherford Parent and would not be unfairly prejudicial to the interests of any interested party.  There is no assurance however that the High Court of Ireland will reach the same conclusion.

 

F.                                     CERTAIN RISK FACTORS RELATING TO THE BERMUDA PROCEEDING

 

1.                                      Risk that the Bermuda Court Will Not Sanction the Bermuda Scheme or Grant Recognition of the Confirmation Order.

 

Prior to the Effective Date, the Bermuda Debtor intends to put forward the Bermuda Scheme in Bermuda or alternatively seek recognition of the Confirmation Order in Bermuda.  In the event that the Bermuda Scheme is put forward, the Bermuda Court is expected to direct that a meeting of creditors affected by the Bermuda Scheme be convened at which point such creditors are expected to approve the Bermuda Scheme.  There is a risk that the creditors will not approve the Bermuda Scheme in accordance with the requisite majority under Bermuda law (a majority of those present and voting and seventy-five percent in value of those present and voting. There is a risk that the Bermuda Court will not sanction the scheme, which may affect the Bermuda Debtor’s ability to ensure that certain creditors are bound by the terms of the Confirmation order. There is a risk that, in the event that the Bermuda Debtor applies for recognition of the Confirmation Order, the Bermuda Court will not grant such recognition, which may affect the Bermuda Debtor’s ability to effectuate certain relief granted pursuant to the Confirmation Order in Bermuda.

 

2.                                      The Bermuda Debtor’s Bye-Laws Restrict Shareholders From Bringing Legal Action Against the Bermuda Debtor’s Officers and Directors.

 

The Bermuda Debtor’s bye-laws contain a broad waiver by its shareholders of any claim or right of action, both individually and on the Bermuda Debtor’s behalf, against any of its officers

 

103


 

or directors.  The waiver applies to any action taken by an officer or director, or the failure of an officer or director to take any action, in the performance of his or her duties, except with respect to any matter involving any fraud or dishonesty on the part of the officer or director.  This waiver limits the right of shareholders to assert claims against the Bermuda Debtor’s officers and directors unless the act or failure to act involves fraud or dishonesty.

 

VI.
SOLICITATION AND VOTING PROCEDURES

 

A.                                    SOLICITATION PROCEDURES

 

Each Eligible Holder(8) of a Prepetition Notes Claim as of June 24, 2019 (the “Prepetition Notes Voting Record Date”) is entitled to vote to accept or reject the Plan and shall receive the Solicitation Package (as defined below) in accordance with the solicitation procedures described herein.

 

Each Holder of Existing Common Stock as of July 2, 2019 (the “Common Stock Voting Record Date” and together with the Prepetition Notes Voting Record Date, the “Record Date”) is entitled to vote to accept or reject the Plan and shall receive the Solicitation Package (as defined below) in accordance with the solicitation procedures described herein.

 

The discussion of the procedures below is a summary of the solicitation and voting process.  Detailed voting instructions will be provided with each ballot.

 

PLEASE REFER TO THE INSTRUCTIONS ACCOMPANYING THE BALLOTS

FOR MORE INFORMATION REGARDING VOTING

REQUIREMENTS TO ENSURE THAT YOUR BALLOT IS PROPERLY AND TIMELY

SUBMITTED SUCH THAT YOUR VOTE MAY BE COUNTED.

 

1.                                      The Voting and Claims Agent

 

The Debtors have sought authority to retain Prime Clerk LLC (“Prime Clerk”) to, among other things, act as Voting and Claims Agent.

 

Specifically, the Voting and Claims Agent will assist the Debtors with: (a) mailing notices of the Confirmation Hearing for the Plan; (b) mailing Solicitation Packages (as defined and described below); (c) soliciting votes on the Plan; (d) receiving, tabulating, and reporting on ballots cast for or against the Plan by Holders of Claims against and Equity Interests in the Debtors; (e) responding to inquiries from creditors and stakeholders relating to the Plan, the Disclosure Statement, the Ballots and matters related thereto, including, without limitation, the procedures and requirements for voting to accept or reject the Plan and objecting to the Plan; and (f) if necessary, contacting creditors regarding the Plan and their Ballots.

 


(8)  Eligible Holder” means a holder of Prepetition Notes who certifies that they are (i) located inside the United States and are (a) “qualified institutional buyers” (as defined in Rule 144A under the Securities Act) or (b) “accredited investors” (as defined in Rule 501(a) of Regulation D under the Securities Act) or (ii) located outside the United States and are persons other than “U.S. persons” (as defined in Rule 902 under the Securities Act).

 

104


 

2.                                      Contents of the Solicitation Package

 

The following documents and materials will collectively constitute the Solicitation Package:

 

·                  a cover letter from the Debtors explaining the solicitation process and urging Holders of Claims and Equity Interests in the Voting Classes to vote to accept the Plan;

 

·                  this Disclosure Statement (and exhibits annexed thereto, including the Plan); and

 

·                  to the extent applicable, a ballot and/or notice, appropriate for the specific creditor (as may be modified for particular classes and with instruction attached thereto).

 

B.                                    VOTING PROCEDURES

 

Before voting to accept or reject the Plan, each eligible holder of a Prepetition Notes Claim and each holder of Existing Common Stock as of the applicable Record Date (each an “Eligible Holder”) should carefully review the Plan attached hereto as Exhibit A.  All descriptions of the Plan set forth in this Disclosure Statement are subject to the terms and conditions of the Plan.

 

1.                                      Voting Deadline

 

All Eligible Holders have been sent a Ballot together with this Disclosure Statement.  Such holders should read the Ballot carefully and follow the instructions contained therein.  Please use only the Ballot that accompanies this Disclosure Statement to cast your vote.  Special procedures are set forth below for holders of securities through a broker, dealer, commercial bank, trust company, or other agent or nominee (“Nominee”).

 

IF YOU ARE AN ELIGIBLE HOLDER OF ALLOWED PREPETITION NOTES CLAIMS, FOR YOUR VOTE TO BE COUNTED, YOUR VOTE MUST BE RECEIVED BY THE VOTING AND CLAIMS AGENT AT THE ADDRESS SET FORTH BELOW ON OR BEFORE THE PREPETITION NOTES VOTING DEADLINE OF 5:00 P.M., PREVAILING CENTRAL TIME, ON AUGUST 1, 2019, UNLESS EXTENDED BY THE DEBTORS.

 

AS SET FORTH IN THE BALLOTS, A SEPARATE VOTING DEADLINE WILL BE ESTABLISHED FOR HOLDERS OF EXISTING COMMON STOCK. SUCH HOLDERS OF EXISTING COMMON STOCK WILL RECEIVE FURTHER INFORMATION AND INSTRUCTIONS FOR VOTING AT THAT TIME.

 

AN ELIGIBLE HOLDER HOLDING THE PREPETITION NOTES IN “STREET NAME” THROUGH A NOMINEE MAY VOTE AS FURTHER DESCRIBED BELOW.

 

IF YOU MUST RETURN YOUR BALLOT TO YOUR NOMINEE, YOU MUST RETURN YOUR BALLOT TO THEM IN SUFFICIENT TIME FOR THEM TO PROCESS IT AND RETURN THE MASTER BALLOT TO THE VOTING AND CLAIMS AGENT BEFORE THE VOTING DEADLINE.

 

IF A BALLOT IS DAMAGED OR LOST, YOU MAY CONTACT THE VOTING AND CLAIMS AGENT AT THE NUMBER SET FORTH BELOW TO RECEIVE A REPLACEMENT BALLOT. ANY BALLOT THAT IS EXECUTED AND RETURNED BUT WHICH DOES NOT

 

105


 

INDICATE A VOTE FOR ACCEPTANCE OR REJECTION OF THE PLAN WILL NOT BE COUNTED.

 

IF YOU HAVE ANY QUESTIONS CONCERNING VOTING PROCEDURES, YOU MAY CONTACT THE VOTING AND CLAIMS AGENT AT:

 

Weatherford International plc Balloting Center

c/o Prime Clerk LLC

One Grand Central Place, 60 East 42nd Street, Suite 1440,

New York, NY 10165

Attention: Weatherford International plc Ballot Processing

Tel: 844-233-5155 (domestic) or 917-942-6392 (international)

 

Questions (but not documents) may be directed to weatherfordballots@PrimeClerk.com (please reference “Weatherford” in the subject line).

 

Additional copies of this Disclosure Statement are available upon request made to the Voting and Claims Agent, at the telephone numbers or e-mail address set forth immediately above.

 

2.                                      Voting Instructions

 

Under the Plan, Eligible Holders of Claims and Holders Equity Interests in the Voting Classes are entitled to vote to accept or reject the Plan.  Those Holders may so vote by completing a Ballot or a Beneficial Holder Ballot as applicable, and returning it to the Voting and Claims Agent prior to the Voting Deadline.  Each Ballot will also allow Holders of Claims and Equity Interests in the Voting Classes to opt-out of the Third Party Release set forth in Article X of the Plan.  Any Holder of Claims or Equity Interests in the Voting Classes that opts out of the Third Party Release will not receive a Debtor Release or a Third Party Release from the Releasing Parties.

 

PLEASE REFER TO THE INSTRUCTIONS ATTACHED TO THE BALLOTS OR BENEFICIAL HOLDER BALLOTS THAT YOU HAVE RECEIVED FOR MORE DETAILED INFORMATION REGARDING THE VOTING REQUIREMENTS, RULES AND PROCEDURES APPLICABLE TO VOTING YOUR CLAIM.

 

To be counted as votes to accept or reject the Plan, all Ballots, pre-validated Beneficial Holder Ballots and Master Ballots, as applicable, (all of which will clearly indicate the appropriate return address) must be properly executed, completed, dated and delivered according to the instructions contained thereon, so that they are actually received on or before the Voting Deadline by the Voting and Claims Agent at the following address:

 

Weatherford Balloting Center
c/o Prime Clerk LLC
One Grand Central Place

60 East 42nd Street

Suite 1440

New York, NY 10165

 

106


 

If you have any questions on the procedures for voting on the Plan, please call the Voting and Claims Agent at: 844-233-5155 (Toll Free) 917-942-6392 (International)

 

3.                                      Voting Procedures

 

The Debtors are providing the Solicitation Packages to eligible holders of the Prepetition Notes Claims, which are defined as Holders who certified that they are (i) located inside the United States and are (a) “qualified institutional buyers” (as defined in Rule 144A under the Securities Act) or (b) “accredited investors” (as defined in Rule 501(a) of Regulation D under the Securities Act) or (ii) located outside the United States and are persons other than “U.S. persons” (as defined in Rule 902 under the Securities Act), and record holders of the Existing Common Stock.  Record holders may include Nominees.  If such entities do not hold Prepetition Notes Claims or Existing Common Stock for their own account, they must provide copies of the Solicitation Package to their customers that are the Eligible Holders thereof as of the Record Date. Any Eligible Holder of Prepetition Notes Claims or Existing Common Stock who has not received a Ballot should contact his, her, or its Nominee, or the Voting and Claims Agent.

 

Holders of Prepetition Notes Claims and Existing Common Stock should provide all of the information requested by the Ballot.  Holders of Prepetition Notes Claims and Existing Common Stock should complete and return all Ballots received in the enclosed, self-addressed, postage-paid envelope provided with each such Ballot either to the Voting and Claims Agent or their Nominee, as applicable.

 

The applicable indenture trustee under the Prepetition Notes Claims will not vote on behalf of its respective holders.  Holders of the Prepetition Notes Claims must submit their own Ballot.

 

4.                                      Parties Entitled to Vote

 

Under the Bankruptcy Code, only holders of claims or interests in “impaired” classes are entitled to vote on a plan. Under section 1124 of the Bankruptcy Code, a class of claims or interests is deemed to be “impaired” under a plan unless: (i) the plan leaves unaltered the legal, equitable, and contractual rights to which such claim or interest entitles the holder thereof; or (ii) notwithstanding any legal right to an accelerated payment of such claim or interest, the plan cures all existing defaults (other than defaults resulting from the occurrence of events of bankruptcy) and reinstates the maturity of such claim or interest as it existed before the default.

 

If, however, the holder of an impaired claim or interest will not receive or retain any distribution under the plan on account of such claim or interest, the Bankruptcy Code deems such holder to have rejected the plan, and, accordingly, holders of such claims and interests do not actually vote on the plan.  If a claim or interest is not impaired by the plan, the Bankruptcy Code deems the holder of such claim or interest to have accepted the plan and, accordingly, holders of such claims and interests are not entitled to vote on the Plan.

 

A vote may be disregarded if the Bankruptcy Court determines, pursuant to section 1126(e) of the Bankruptcy Code, that it was not solicited or procured in good faith or in accordance with the provisions of the Bankruptcy Code.

 

107


 

The Bankruptcy Code defines “acceptance” of a plan by a class of claims as acceptance by creditors in that class that hold at least two-thirds (2/3) in dollar amount and more than one-half (1/2) in number of the claims that cast ballots for acceptance or rejection of the plan.

 

Pursuant to section 1126(d) of the Bankruptcy Code and except as otherwise provided in section 1126(e) of the Bankruptcy Code, an impaired class of equity interests has accepted a plan if the holders of at least two-thirds (2/3) in amount of the allowed equity interests in such class actually have voted to accept the plan.

 

The claims and equity interests in the following classes are impaired under the Plan and entitled to vote to accept or reject the Plan:

 

·                  Class 7 — Prepetition Notes Claims

 

·                  Class 10 — Existing Common Stock

 

(a)                                 Beneficial Holders

 

An Eligible Holder who holds Prepetition Notes Claims as a record holder in its own name should vote on the Plan by completing and signing a Ballot (a “Beneficial Holder Ballot”) and returning it directly to the Voting and Claims Agent on or before the Voting Deadline using the enclosed self-addressed, postage paid envelope.

 

An Eligible Holder holding the Unsecured Notes Claims in “street name” through a Nominee may vote on the Plan by one of the following two methods (as selected by such Eligible Holder’s Nominee):

 

·                  Complete and sign the enclosed Beneficial Holder Ballot.  Return the Beneficial Holder Ballot to your Nominee as promptly as possible and in sufficient time to allow such Nominee to process your instructions and return a completed Master Ballot to the Voting and Claims Agent by the Voting Deadline.  If no self-addressed, postage-paid envelope was enclosed for this purpose, contact the Voting and Claims Agent for instructions; or

 

·                  Complete and sign the pre-validated Beneficial Holder Ballot (as described below) provided to you by your Nominee.  Return the pre-validated Beneficial Holder Ballot to the Voting and Claims Agent by the Voting Deadline using the return envelope provided in the Solicitation Package.

 

Any Beneficial Holder Ballot returned to a Nominee by an Eligible Holder will not be counted for purposes of acceptance or rejection of the Prepackaged Plan until such Nominee properly completes and delivers to the Voting and Claims Agent that Beneficial Holder Ballot (properly validated) or a Master Ballot casting the vote of such Eligible Holder.

 

If any Eligible Holder owns the Prepetition Notes Claims through more than one Nominee, such Eligible Holder may receive multiple mailings containing the Beneficial Holder Ballots.  The Eligible Holder should execute a separate Beneficial Holder Ballot for each block of the Prepetition Notes Claims that it holds through any particular Nominee and return each Beneficial Holder Ballot to the respective Nominee in the return envelope provided therewith.  Eligible Holders who

 

108


 

execute multiple Beneficial Holder Ballots with respect to the Prepetition Notes Claims in a single class held through more than one Nominee must indicate on each Beneficial Holder Ballot the names of all such other Nominees and the additional amounts of such Prepetition Notes Claims so held and voted.

 

(b)                                 Nominees

 

A Nominee that, on the Record Date, is the record holder of the Prepetition Notes Claims for one or more Eligible Holders can obtain the votes of the Eligible Holders of such Prepetition Notes Claims, consistent with customary practices for obtaining the votes of securities held in “street name,” in one of the following two ways:

 

·                  Pre-Validated Ballots

 

The Nominee may “pre-validate” a Beneficial Holder Ballot by: (i) signing the Beneficial Holder Ballot and indicating on the Beneficial Holder Ballot the name of the Nominee and DTC Participant Number; (ii) the amount and the account number of the Prepetition Notes Claims held by the Nominee for the Eligible Holder; and (iii) forwarding such Beneficial Holder Ballot, together with this Disclosure Statement, a pre-addressed, postage-paid return envelope addressed to, and provided by, the Voting and Claims Agent, and other materials requested to be forwarded, to the Eligible Holder for voting.

 

The Eligible Holder must then complete the information requested in Item 2 and Item 3 of the Beneficial Holder Ballot, and return the Beneficial Holder Ballot directly to the Voting and Claims Agent in the pre-addressed, postage paid return envelope so that it is RECEIVED by the Voting and Claims Agent on or before the Voting Deadline.  A list of the Eligible Holders to whom “pre-validated” Beneficial Holder Ballots were delivered should be maintained by Nominees for inspection for at least one year from the Voting Deadline.

 

·                  Master Ballots

 

If the Nominee elects not to pre-validate Beneficial Holder Ballots, the Nominee may obtain the votes of Eligible Holders by forwarding to the Eligible Holders the unsigned Beneficial Holder Ballots, together with this Disclosure Statement, a pre-addressed, postage-paid return envelope provided by, and addressed to, the Nominee, and other materials requested to be forwarded.  Each such Eligible Holder must then indicate his, her, or its vote on the Beneficial Holder Ballot, complete the information requested on the Beneficial Holder Ballot, review the certifications contained on the Beneficial Holder Ballot, execute the Beneficial Holder Ballot, and return the Beneficial Holder Ballot to the Nominee.  After collecting the Beneficial Holder Ballots, the Nominee should, in turn, complete a Master Ballot compiling the votes and other information from the Beneficial Holder Ballots, execute the Master Ballot, and deliver the Master Ballot to the Voting and Claims Agent so that it is RECEIVED by the Voting and Claims Agent on or before the Voting Deadline.  All Beneficial Holder Ballots returned by Eligible Holders should either be forwarded to the Voting and Claims Agent (along with the Master Ballot) or retained by Nominees for inspection for at least one year from the Voting Deadline.

 

EACH NOMINEE SHOULD ADVISE ITS ELIGIBLE HOLDERS TO RETURN THEIR BENEFICIAL HOLDER BALLOTS TO THE NOMINEE BY A DATE CALCULATED BY THE NOMINEE TO ALLOW IT TO PREPARE AND RETURN THE MASTER BALLOT TO

 

109


 

THE VOTING AND CLAIMS AGENT SO THAT IT IS RECEIVED BY THE VOTING AND CLAIMS AGENT ON OR BEFORE THE VOTING DEADLINE.

 

5.                                      Miscellaneous

 

All Ballots must be signed by the holder of record of the Prepetition Notes Claims or the Existing Common Stock, as applicable, or any person who has obtained a properly completed Ballot proxy from the record holder of the Prepetition Notes Claims or the Existing Common Stock, as applicable, on such date.  For purposes of voting to accept or reject the Plan, the Eligible Holders of the Prepetition Notes Claims and Existing Common Stock will be deemed to be the “holders” of the claims represented by such Prepetition Notes or Existing Common Stock.  Unless otherwise ordered by the Bankruptcy Court, Ballots that are signed, dated, and timely received, but on which a vote to accept or reject the Plan has not been indicated, will not be counted.  The Debtors, in their sole discretion, may request that the Voting and Claims Agent attempt to contact such voters to cure any such defects in the Ballots.  Any ballot marked to both accept and reject the Plan will not be counted.   If you return more than one Ballot voting different Prepetition Notes Claims or Existing Common Stock, the Ballots are not voted in the same manner, and you do not correct this before the Voting Deadline, those Ballots will not be counted.  An otherwise properly executed Ballot (other than a Master Ballot) that attempts to partially accept and partially reject the Plan will likewise not be counted.

 

The Ballots provided to Eligible Holders will reflect the principal amount of such Eligible Holder’s Claim; however, when tabulating votes, the Voting and Claims Agent may adjust the amount of such Eligible Holder’s Claim by multiplying the principal amount by a factor that reflects all amounts accrued between the Record Date and the Petition Date including, without limitation, interest.

 

Nominees are authorized to collect votes to accept or to reject the Plan from Beneficial Holders in accordance with their customary practices, including the use of a “voting instruction form” in lieu of (or in addition to) a Beneficial Owner Ballot, as well as collecting votes from Beneficial Holders through online voting, by phone, facsimile, or other electronic means.

 

Under the Bankruptcy Code, for purposes of determining whether the requisite votes for acceptance have been received, only holders of the Prepetition Notes Claims or Existing Common Stock, as applicable, who actually vote will be counted. The failure of a holder to deliver a duly executed Ballot to the Voting and Claims Agent or its Nominee will be deemed to constitute an abstention by such holder with respect to voting on the Plan and such abstentions will not be counted as votes for or against the Plan.

 

Except as provided below, unless the Ballot is timely submitted to the Voting and Claims Agent before the Voting Deadline together with any other documents required by such Ballot, the Debtors may, in their sole discretion, reject such Ballot as invalid, and therefore decline to utilize it in connection with seeking confirmation of the Plan.

 

6.                                      Fiduciaries and Other Representatives

 

If a Beneficial Holder Ballot is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation, or another, acting in a fiduciary or representative

 

110


 

capacity, such person should indicate such capacity when signing and, if requested, must submit proper evidence satisfactory to the Debtors of authority to so act. Authorized signatories should submit the separate Beneficial Holder Ballot of each Eligible Holder for whom they are voting.

 

UNLESS THE BALLOT OR THE MASTER BALLOT IS SUBMITTED TO THE VOTING AND CLAIMS AGENT ON OR PRIOR TO THE APPLICABLE VOTING DEADLINE, SUCH BALLOT WILL BE REJECTED AS INVALID AND WILL NOT BE COUNTED AS AN ACCEPTANCE OR REJECTION OF THE PLAN; PROVIDED, HOWEVER, THAT THE DEBTORS RESERVE THE RIGHT, IN THEIR SOLE DISCRETION, TO REQUEST THE BANKRUPTCY COURT TO ALLOW SUCH BALLOT TO BE COUNTED.

 

7.                                      Agreements Upon Furnishing Ballots

 

The delivery of an accepting Ballot pursuant to one of the procedures set forth above will constitute the agreement of the creditor with respect to such Ballot to accept: (i) all of the terms of, and conditions to, this Solicitation; and (ii) the terms of the Plan including the injunction, releases, and exculpations set forth in sections 10.5, 10.6, 10.7, 10.8, and 10.9 therein.  All parties in interest retain their rights under the Bankruptcy Code and the Plan, including, but not limited to the right to object to confirmation of the Plan pursuant to section 1128 of the Bankruptcy Code, subject to any applicable terms of the Restructuring Support Agreement.

 

8.                                      Change of Vote

 

Any party who has previously submitted to the Voting and Claims Agent prior to the applicable Voting Deadline a properly completed Ballot may revoke such Ballot and change its vote by submitting to the Voting and Claims Agent prior to the applicable Voting Deadline a subsequent, properly completed Ballot voting for acceptance or rejection of the Plan.

 

9.                                      Waivers of Defects, Irregularities, etc.

 

Unless otherwise directed by the Bankruptcy Court, all questions as to the validity, form, eligibility (including time of receipt), acceptance, and revocation or withdrawals of Ballots will be determined by the Voting and Claims Agent and/or the Debtors, as applicable, in their sole discretion, which determination will be final and binding.  The Debtors reserve the right, in consultation with the Required Consenting Noteholders, to reject any and all Ballots submitted by any of their respective creditors not in proper form, the acceptance of which would, in the opinion of the Debtors or their counsel, as applicable, be unlawful.  The Debtors further reserve their respective rights, in consultation with the Required Consenting Noteholders, to waive any defects or irregularities or conditions of delivery as to any particular Ballot by any of their creditors.  The interpretation (including the Ballot and the respective instructions thereto) by the applicable Debtor, unless otherwise directed by the Bankruptcy Court, will be final and binding on all parties.  Unless waived, any defects or irregularities in connection with deliveries of Ballots must be cured within such time as the Debtors (or the Bankruptcy Court) determines.  Neither the Debtors nor any other person will be under any duty to provide notification of defects or irregularities with respect to deliveries of Ballots nor will any of them incur any liabilities for failure to provide such notification.  Unless otherwise directed by the Bankruptcy Court, delivery of such Ballots will not be deemed to have been made until such irregularities have been cured or waived. Ballots

 

111


 

previously furnished (and as to which any irregularities have not theretofore been cured or waived) will be invalidated.

 

10.                               Further Information, Additional Copies

 

If you have any questions or require further information about the voting procedures for voting your Prepetition Notes Claims and/or Existing Common Stock as applicable, or about the packet of material you received, or if you wish to obtain an additional copy of the Plan, this Disclosure Statement, or any exhibits to such documents, please contact the Voting and Claims Agent.

 

11.                               Filing of the Plan Supplement

 

The Debtors will file the Plan Supplement no later than seven (7) days prior to the Confirmation Hearing.  The Debtors will transmit a copy of the Plan Supplement to the Distribution List, as defined herein.  Additionally, parties may request (and obtain at the Debtors’ expense) a copy of the Plan Supplement by:  (a) calling the Voting and Claims Agent at 844-233-5155 (Toll Free) 917-942-6392 (International); (b) writing to Weatherford International plc Balloting Center, c/o Prime Clerk LLC, One Grand Central Place, 60 East 42nd Street Suite 1440, New York, NY 10165; and/or (c) visiting the Debtors’ restructuring website at: http://www.primeclerk.com/Weatherford.  Parties may also obtain any documents filed in the Chapter 11 Cases for a fee via PACER at https://www.txs.uscourts.gov/bankruptcy.

 

The Plan Supplement will include all Exhibits and Plan Schedules that were not already filed as exhibits to the Plan or this Disclosure Statement, all of which are incorporated by reference into, and are an integral part of, the Plan, as all of the same may be amended, supplemented, or modified from time to time.

 

As used herein, the term “Distribution List” means (a) the Office of the United States Trustee, (b) counsel to the Ad Hoc Noteholders Committee, (c) counsel to the Prepetition Notes Indenture Trustee, (d) Depository Trust Company (the “Transfer Agent”), (e) the Internal Revenue Service, and (f) all parties that, as of the applicable date of determination, have filed requests for notice in this Chapter 11 Cases pursuant to Bankruptcy Rule 2002.

 

12.                               Tabulation of Votes

 

THE FOLLOWING IS IMPORTANT INFORMATION REGARDING VOTING THAT SHOULD BE READ CAREFULLY BY ALL HOLDERS OF CLAIMS AND EQUITY INTERESTS IN THE VOTING CLASSES.

 

·                  FOR YOUR VOTE TO BE COUNTED, YOUR BALLOT, PRE-VALIDATED BENEFICIAL HOLDER BALLOT OR MASTER BALLOT, AS APPLICABLE, MUST BE PROPERLY EXECUTED, COMPLETED, DATED AND DELIVERED SUCH THAT IT IS ACTUALLY RECEIVED ON OR BEFORE THE APPLICABLE VOTING DEADLINE BY THE VOTING AND CLAIMS AGENT.

 

·                  A HOLDER OF A CLAIM OR EQUITY INTEREST MAY CAST ONLY ONE VOTE PER EACH CLAIM OR EQUITY INTEREST SO HELD.  BY SIGNING AND

 

112


 

RETURNING A BALLOT, BENEFICIAL HOLDER BALLOT OR MASTER BALLOT, EACH HOLDER OF A CLAIM OR EQUITY INTEREST WILL CERTIFY TO THE BANKRUPTCY COURT AND THE DEBTORS THAT NO OTHER BALLOTS, BENEFICIAL HOLDER BALLOTS OR MASTER BALLOTS WITH RESPECT TO SUCH CLAIM OR EQUITY INTEREST HAS BEEN CAST OR, IF ANY OTHER BALLOT, BENEFICIAL HOLDER BALLOTS OR MASTER BALLOTS HAVE BEEN CAST WITH RESPECT TO SUCH CLAIM OR EQUITY INTEREST, SUCH EARLIER BALLOT, BENEFICIAL HOLDER BALLOTS OR MASTER BALLOTS ARE THEREBY SUPERSEDED AND REVOKED.

 

·                  ANY BALLOT, BENEFICIAL HOLDER BALLOT OR MASTER BALLOT THAT IS RECEIVED AFTER THE APPLICABLE VOTING DEADLINE WILL NOT BE COUNTED TOWARD CONFIRMATION OF THE PLAN UNLESS THE DEBTORS HAVE GRANTED AN EXTENSION OF THE VOTING DEADLINE IN WRITING WITH RESPECT TO SUCH BALLOT, BENEFICIAL HOLDER BALLOT OR MASTER BALLOT.

 

·                  ADDITIONALLY, THE FOLLOWING BALLOTS, BENEFICIAL HOLDER BALLOTS AND MASTER BALLOTS WILL NOT BE COUNTED:

 

·                            any Ballot, Beneficial Holder Ballot or Master Ballot that is illegible or contains insufficient information to permit the identification of the Holder of the Claim or Equity Interest;

 

·                            any Ballot, Beneficial Holder Ballot or Master Ballot cast by or on behalf of an entity that does not hold a Claim or Equity Interest in one of the Voting Classes;

 

·                            any Ballot, Beneficial Holder Ballot or Master Ballot cast for a Claim listed in the Schedules as contingent, unliquidated or disputed for which the applicable bar date has passed and no proof of claim was timely filed;

 

·                            any Ballot, Beneficial Holder Ballot or Master Ballot that (a) is properly completed, executed and timely filed, but does not indicate an acceptance or rejection of the Plan, or (b) indicates both an acceptance and rejection of the Plan, or (c) partially accepts and partially rejects the Plan;

 

·                            any Ballot, Beneficial Holder Ballot or Master Ballot cast for a Claim that is subject to an objection pending as of the Voting Record Date (except as otherwise provided herein);

 

·                            any Ballot, Beneficial Holder Ballot or Master Ballot sent to the Debtors, the Debtors’ agents/representatives (other than the Voting and Claims Agent), any indenture trustee or the Debtors’ financial or legal advisors;

 

·