COURT: Oro Negro Singapore proceeding sent to Mexico due to lack of jurisdiction; liquidity situation remains tight

14 September 2018
 
 
A Singapore lawsuit initiated by Oro Negro bondholders against the Mexican oil driller and its executives has been dismissed due to a lack of jurisdiction, a spokesperson for the bondholders and a source close to the situation told Debtwire today. The Singaporean judge that has been handling the proceeding since its filing in late January has ruled that the case must be sent to the Mexican courts, the spokesperson and the source added.
 
As a result of the lack-of-jurisdiction ruling, the judge has also lifted the injunctions that had been imposed on the defendants – parent Integradora de Servicios Petroleros Oro Negro, CEO Gonzalo Gil White and chief legal officer Alonso del Val, the source said.
 
As part of the proceeding, a judge at the High Court of the Republic of Singapore on 30 January granted certain injunctions to plaintiffs, including a prohibition on the three defendants commencing, continuing and/or maintaining any bankruptcy or insolvency proceeding in Mexico or elsewhere on behalf of bond issuer Oro Negro Drilling PTE and the owners of the five jack-up drilling rigs that act as collateral for the notes. The bondholders have been acting in this proceeding through the bond issuer and the five drilling rig owners, as they claim the ownership of these six Singapore-based entities after an event of default and subsequent collateral attachment, as reported.
 
“We [the bondholders] think it [the ruling] is wrong, and we will appeal,” the spokesperson said, noting that this is not the end of the Singaporean case.
 
Since January, the parties have been summoned to several pre-trial conferences, which in most cases were held before an assistant registrar.
 
Hearings with the judge handling the case were held on 11 September, 12 September and today, according to a brief summons published on the website of the Singapore court system.
 
As part of the lack-of-jurisdiction decision, the judge has also ordered the plaintiffs to pay the legal expenses for the case, the source close said.
 
The plaintiffs are represented in the proceeding by Haridass Ho & Partners, while the defendants have retained Drew & Napier, as reported.
 
Parent Integradora and operating subsidiary Perforadora Oro Negro have just entered concurso, or bankruptcy protection in Mexico. The bankruptcy declaration came exactly one year after the company’s initial voluntary filing, on 11 September 2017.
 
However, the Mexican judge in early May dismissed the bankruptcy request for the six Singaporean entities, including Oro Negro Drilling PTE. He based the decision on the fact that the requests didn’t comply with the petitioners’ bylaws, which required the consent of a special independent director, something that didn’t happen.
 
Oro Negro Drilling PTE is the issuer of USD 916.1m in 7.5% senior secured bonds due 2019. Therefore, pending a required ruling recognizing the creditors and the amounts owed that will be issued in the upcoming months, the bond claim isn’t part of the Mexican concurso proceeding as of now.
 
Pemex transfers USD 96m to Mexican trustee
 
Through a Chapter 15 proceeding in a New York court, Oro Negro in May was awarded recognition of the Mexican concurso in the US. As part of the recognition, the driller pledged to keep the New York judge updated on relevant issues arising from the Mexican concurso, as reported.
 
Amid that information commitment, Oro Negro said now that Pemex, which was its sole client, has finally transferred USD 96m to Deutsche Bank, a trustee tasked with receiving payments from the Mexican government-owned oil producer for the rental of Oro Negro’s five jack-up rigs and distributing the money between the troubled driller and its bondholders.
 
The payments were made on 4 September and 6 September, according to a court document submitted to the Chapter 15 judge.
 
The Mexican concurso judge had ordered Pemex several times to make such a transfer, which corresponded to works carried out by Oro Negro before 3 October 2017, when the oil producer terminated the rental contracts for the jack-ups.
 
Following the Pemex payment, Oro Negro on 10 September instructed Deutsche Bank to transfer USD 27m to Perforadora, corresponding to value added tax and other expenses incurred by the operating subsidiary, the document shows.
 
“Unless Deutsche [Bank] Mexico immediately disburses funds to Perforadora, Oro Negro will soon run out of funds and be unable to maintain the jack-up rigs, the bondholders’ only collateral,” the driller noted in the document submitted to the Chapter 15 judge.
 
Oro Negro has requested bond trustee Nordic Trustee to assist it on the collection of the USD 27m, but has received no response, and the driller has also filed a motion with the concurso judge to force Deutsche Bank to transfer the money.
 
In December 2017, Deutsche Bank transferred USD 23m to the bondholders through Nordic Trustee, but such a payment has been a source of dispute between the drillers and its creditors, as reported. Oro Negro is still challenging a ruling from a Mexican court that stated that such a transfer didn’t violate any injunction under the concurso proceeding, the Chapter 15 document shows.
 
Bondholder access to jack-ups still unresolved
 
The maintenance of the rigs has been a cause of great concern for the bondholders, especially as Oro Negro is running out of cash following the cancellation of the five Pemex contracts, which were the company’s sole source of revenue. The creditors have tried to get assurance of proper maintenance through the Mexican bankruptcy process and through separate proceedings in the US, as reported.
 
However, the concurso judge in July rejected a request from Nordic Trustee for an injunction that was aimed at giving bondholders access to the oil driller’s jack-ups.
 
The Chapter 15 judge, for its part, has ruled that both parties must engage in “good faith negotiations” regarding the access of the bondholders to the rigs.
 
“On 5 July, the Foreign Representative [Oro Negro’s chief legal officer] sent counsel to the Interested Parties [the bondholders] a proposal to give them reasonable access to the jack-up rigs,” Oro Negro said in the document submitted to the Chapter 15 judge. “The Interested Parties did not accept the proposal and have not offered a counter-proposal, and have not further indicated any need to inspect the jack-up rigs.”
 
by Pablo Dominguez