The American Bankruptcy Institute's (ABI's) International Committee has recognised the financial restructuring of McDermott International as its 2024 "International Matter of the Year."

The multi-billion-dollar restructuring involved the amendment and extension of McDermott's letter of credit (L/C) and term loan facilities and provided a comprehensive discharge and release of approximately US$2 billion of unsecured litigation claims.

Background

Multinational engineering, procurement, construction (EPC) company, McDermott faced severe financial difficulties in the late 2010s due to a combination of over-ambitious and poor strategic decisions, industry downturns, and operational challenges.

McDermott has since worked to rebuild its business through restructuring and refocusing on its core strengths, but its 2010s financial troubles remain a cautionary tale for the energy and construction sectors.

Restructuring outline

The EPC giant's financial restructuring, initiated during its Chapter 11 bankruptcy filing in January 2020, focused on stabilising its operations, reducing its overwhelming debt burden, and positioning itself for a sustainable future.

The restructuring involved several key elements, including debtor-in-possession (DIP) financing, which opened up the opportunity for the company to secure new financing to maintain operations during the bankruptcy process, providing critical liquidity to stabilise and restructure the business.

DIP and exit financing

McDermott obtained US$2.81 billion in DIP financing, which included US$1.1 billion in L/C capacity and US$1.7 billion in new term loans.

The company secured additional financing as it exited Chapter 11, ensuring liquidity for ongoing projects and operational stability.

ABI award

The restructuring is being implemented through restructuring plan proceedings in England and Dutch restructuring law proceedings in the Netherlands.

"Everyone involved in the [restructuring] case displayed excellence from beginning to end, including a high level of professional expertise, creativity and skill, which brought about the successful completion of the matter," according to an ABI statement.

Amongst those involved in the case were lawyers Akin Gump Strauss Hauer & Feld LLP and investment bank Houlihan Lokey who participated in an ad hoc L/C group.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.