Skip to main content

Energy XXI Bankruptcy Holders Receive Cash Payout

Key Facts

  • Billions of dollars of secured and unsecured debt
  • Largest oil and gas developer in the Gulf of Mexico
  • Highly contentious case involving eight different tranches of debt

The Situation

We represented Wilmington Savings Fund Society, FSB as indenture trustee for holders of $367 million in convertible notes in the bankruptcy case of Energy XXI, Inc., which was filed in the US Bankruptcy Court for the District of Texas. At the time, Energy XXI, Inc. was the largest oil and gas developer in the Gulf of Mexico. Energy XXI, Inc. was a publicly traded company and had 67 subsidiaries, not all of which filed for bankruptcy. The obligor of our client’s note claims was a Bermuda company that also filed a companion “winding-up” petition in the Bermuda courts.

The Approach

The case was highly contentious, with eight different tranches of debt, including two classes of secured debt, all having different priority over common, as well as separate, collateral. The debtor owed in excess of $3 billion of secured and unsecured debt. Some debt was structurally subordinated by virtue of being held at parent levels, which engendered intense disputes over the valuation of subsidiaries and their assets, the movement of cash and assets among the subsidiaries, and the claims against those assets at various levels of the capital stack. Over the course of approximately 120 days, our team of litigators participated in 67 depositions, the preparation of thousands of pages of written and electronic discovery, and weeks of mediation and court appearances.

The Outcome

Ultimately, all disputes were settled, and a consensual plan was confirmed that doubled the payout originally offered to our noteholders and, unlike other note tranches, immediately paid our noteholders in cash.