George Economou’s Ocean Rig has filed for bankruptcy under Chapter 15 of the US Bankruptcy Code.

After facing big debts and a prolonged market downturn, the drillship owner saw the Grand Court appoint Simon Appell and Eleanor Fisher of AlixPartners as joint provisional liquidators (JPL).

The newly appointed JPLs commenced bankruptcy proceedings in New York yesterday, the company said.

Ocean Rig has reached an agreement with creditors representing over 72% of its outstanding debt for a financial restructuring, to be implemented by four separate but interconnected schemes under Cayman Islands law.

The company announced it was relocating to the Cayman Islands in February at the same time as revealing management changes.

Economou: "Emerge as a much stronger company"

George Economou, chairman of Ocean Rig, said: “Ocean Rig, similar to all rig operators, faces a deep and prolonged industry downturn.

“Given these conditions, Ocean Rig is taking the appropriate steps to allow us to emerge as a much stronger company that can take advantage of opportunities as they emerge.

“Our entire team at Ocean Rig is wholly committed to the success of the company and looks forward to our emergence from this financial restructuring that will ultimately enable us to better service our customers in the long term.”

According to the restructuring plans, the four scheme companies will be deleveraged through an exchange of around $3.69bn of debt for new equity, $288m of cash and $450m of new secured debt.

JPL Simon Appell added: “The Chapter 15 proceedings are also an important step for implementing a successful restructuring of the company, as recognition of the provisional liquidation proceedings as foreign main proceedings in the United States will stay creditor actions against the scheme companies in the US.

Operations to continue

Ocean Rig noted its operations will continue unaffected and trade creditors and vendors will continue to be paid as normal.

It added that the company will emerge with the industry’s youngest ultra-deep water fleet.

The Chapter 15 filing comes after months of speculation over the company’s future.

Ocean Rig was poised to proceed with a Chapter 11 filing as its debt was unsustainable with only three operating rigs.

The company’s share price declined by as much as 60% following the latest announcement at $0.29.