Intercreditor tensions, coupled with poor market conditions make reaching a consensual deal extremely challenging. Consequently, there have been a number of insolvency filings in the sector recently e.g. Swiber, Atlantic Offshore, and restructuring filings, for example Ultrapetrol, Toisa Ltd to name a few. That said, insolvency generally remains an unattractive option without careful planning to preserve value.
The most successful restructurings have laid out clear principles from the outset and have engaged with all stakeholders - not just lenders and shareholders - so that, where possible, common ground can be established early in the proceedings.
Inevitably in the circumstances, sticking plasters have been applied in a number of cases in the hope of better pricing conditions materialising by the end of the decade. We expect some of these companies will require a second round of restructuring in a couple of years’ time to address over-levered capital structures and in some cases to shore up liquidity with new money.