In a March 19, 2019 summary order, the U.S. Court of Appeals for the Second Circuit affirmed the district court's dismissal of a purported shareholder's appeal challenging the chapter 15 recognition of a Cayman Islands restructuring of an offshore drilling contractor. See In re Ocean Rig UDW Inc., No. 18-1374, 2019 WL 1276205 (2d Cir. Mar. 19, 2019). The Court of Appeals affirmed the district court's dismissal of that appeal for lack of appellate standing. An Orrick team handled the chapter 15 proceedings in the bankruptcy court, as well as the appellate proceedings in the district court and Court of Appeals.
The appeal was brought by a self-described shareholder of debtor Ocean Rig UDW Inc. ("UDW"). The appellant sought review of an order issued by U.S. Bankruptcy Judge Martin Glenn granting recognition of provisional liquidation and scheme of arrangement proceedings in the Cayman Islands of UDW and three of its subsidiaries as "foreign main proceedings" under section 1517 of the Bankruptcy Code. That recognition order gave rise to various forms of relief, including an automatic stay with respect to the Debtors and their property within the territorial jurisdiction of the United States.
In the ancillary proceedings in the bankruptcy court, the appellant had opposed the Debtors' petition for recognition on numerous grounds, including on the basis that venue was improper in the Southern District of New York, that the Debtors failed to meet their burden of proving that their center of main interests ("COMI") was in the Cayman Islands, that the Debtors improperly manipulated their COMI, and that granting recognition would violate the public policy objectives of chapter 15. The bankruptcy court overruled those objections and granted recognition and other related relief under sections 1520 and 1521 of the Bankruptcy Code. See In re Ocean Rig UDW Inc., 570 B.R. 687 (Bankr. S.D.N.Y. 2017).
Appellant timely noticed an appeal to the district court, but did not seek a stay of the recognition order. Thus, the Debtors moved forward with their restructuring via four interrelated schemes of arrangement under Cayman Islands law (the "Schemes"). The Schemes involved the exchange of more than $3.7 billion of existing financial indebtedness for $450 million in new secured debt, approximately $288 million in cash, and new equity in UDW. Under the Schemes, existing shareholders of UDW retained a nominal amount of equity in the reorganized UDW...