PARALLEL RESTRUCTURING PROCEEDINGS FOR BERMUDA COMPANY – BERMUDA PROVISIONAL LIQUIDATION AND CHAPTER 11 PROCEEDINGS IN THE US – APPLICATION BY PROVISIONAL LIQUIDATOR FOR PROSPECTIVE RECOGNITION OF US PLAN CONFIRMATION ORDER – JURISDICTION TO RECOGNISE RESTRUCTURING ORDERS MADE BY FOREIGN COURTS
Energy XXI Ltd (the “Company”) is the holding company of a US-based group and one of the debtors in a Chapter 11 filing in the United States Bankruptcy Court (“USBC”). The Company petitioned for its own winding up in the Bermuda Court and applied for and was granted an Order appointing a Provisional Liquidator, creating a stay preventing actions being commenced against the Company in Bermuda. The Provisional Liquidator applied for an order giving recognition in Bermuda to the proposed reorganisation plan of the USBC by granting a permanent stay of proceedings against the Company upon the USBC confirming the plan of reorganisation in the Chapter 11 proceedings (the “Recognition Order”). The USBC had appointed an official committee of equity holders of the Company (the “Equity Committee”), who would receive nothing under the proposed plan.
The Equity Committee objected to the Provisional Liquidator’s application for the Recognition Order on a number of grounds, including: (i) the Company’s lack of standing to file the petition, (ii) the Court had no statutory or common law power to grant a Recognition Order such as the one sought in the present proceedings (relying on Cambridge Gas Transport Corp -v- Official Committee of Unsecured Creditors of Navigator Holdings Plc  1 AC 508), and (iii) that even if the Court did have such a power, it should not grant such an order prospectively due to the large number of issues in dispute before the USBC. In addition, the Equity Committee argued that it may have, as yet undetermined and unidentified, claims against the Bermuda Company and need more time to consider such claims.