First Amended Chapter 11 Plan of Reorganization Dated March 28, 2013 of Virgin Offshore U.s.a., Inc.

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UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF LOUISIANA
IN RE: VIRGIN OFFSHORE USA, INC., DEBTOR
CASE NO. 11-13028 CHAPTER 11 CHIEF JUDGE ELIZABETH W. MAGNER
FIRST AMENDED CHAPTER 11 PLAN OF REORGANIZATION DATED MARCH 28, 2013 OF VIRGIN OFFSHORE U.S.A., INC. SUBMITTED BY GERALD H. SCHIFF, CHAPTER 11 TRUSTEE FOR THE ESTATE OF VIRGIN OFFSHORE U.S.A., INC.
GORDON, ARATA, MCCOLLAM, DUPLANTIS & EAGAN, LLC By: /s/ Louis M. Phillips Louis M. Phillips (La. Bar No. 10505) GORDON, ARATA, MCCOLLAM, DUPLANTIS, & EAGAN, LLC One American Place 301 Main Street, Suite 1600 Baton Rouge, LA 70825 Phone: (225) 381-9643 Email: lphillips@gordonarata.com - AND Patrick Rick M. Shelby (La Bar. No. 31963) James D. Rhorer (La. Bar No. 34052) 201 St. Charles Avenue, 40th Floor New Orleans, LA 70170-4000 Telephone: (504) 582-1111 Email: pshelby@gordonarata.com - AND Armistead M. Long (La. Bar No. 33949) GORDON, ARATA, MCCOLLAM, DUPLANTIS, & EAGAN, LLC 400 East Kaliste Saloom Road, Suite 4200 Lafayette, LA 70508 Phone: (337) 237-0132 Facsimile: (337) 237-3451 Email: along@gordonarata.com Attorneys for Gerald H. Schiff, Chapter 11 Trustee
Dated: March 28, 2013
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TABLE OF CONTENTS I. DEFINITIONS, RULES OF INTERPRETATION, COMPUTATION OF TIME, AND GOVERNING LAW ................................................................ 1 A. B. II. Rules of Interpretation, Computation of Time, and Governing Law ............................................................................................................. 1 Defined Terms ........................................................................................... 2
UNCLASSIFIED CLAIMS ................................................................................ 13 A. B. C. D. E. Unclassified Claims ................................................................................. 13 Time for Filing Administrative Claims and Professional Compensation Claims ............................................................................. 13 Allowance of Administrative Claims ..................................................... 14 Allowed Priority Tax Claims ................................................................. 14 United States Trustee Fees ..................................................................... 14
III.
CLASSIFICATION AND TREATMENT OF CLASSIFIED CLAIMS AND EQUITY INTERESTS.............................................................................. 14 A. B. SUMMARY ............................................................................................. 14 CLASSIFIED CLAIMS AND TREATMENT ..................................... 15
CLASS 1 EMPIRE SECURED CLAIMS...................................................... 15

Claim..................................................................................................................................15 Treatment.......................................................................................................................... 15 Voting................................................................................................................................ 16
CLASS 2 RLI INSURANCE CLAIM ............................................................ 16

CLASS 3 UNSECURED CLAIMS ................................................................. 17

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CLASS 4 EQUITY INTERESTS ................................................................... 18

Classification...................................................................................................................... 18 Treatment.......................................................................................................................... 18 Voting................................................................................................................................ 18
IV.
ACCEPTANCE OR REJECTION OF THE PLAN........................................ 18 A. B. C. D. Voting Classes.......................................................................................... 18 Voting Rights as to Confirmation of the Plan; Necessity of Allowance of Claims ............................................................................... 19 Acceptance by Impaired Classes ........................................................... 19 Non-Consensual Confirmation .............................................................. 19
V.
PROCEDURES FOR RESOLUTION OF DISPUTED, CONTINGENT AND UNLIQUIDATED CLAIMS OR EQUITY INTERESTS ........................................................................................................ 19 A. B. C. D. Prosecution of Objections to Claims ..................................................... 19 Allowance of Claims ............................................................................... 19 Controversy Concerning Impairment................................................... 20 Payments and Distributions on Disputed Claims and Class 3 Claims....................................................................................................... 20
VI.
MEANS OF IMPLEMENTATION OF THE PLAN ...................................... 20 A. B. i. ii. iii. iv. v. Operation of Reorganized Offshore Post-Effective Date .................... 20 The Offshore Equity Trust and Appointment, Powers and Removal of the Offshore Equity Trustee .............................................. 22 Establishment of the Offshore Equity Trust ........................................ 22 Purpose of the Offshore Equity Trust................................................... 22 Issuance of Equity by the Debtor to the Offshore Equity Trust......... 22 Appointment of and Compensation for the Offshore Equity Trustee ..................................................................................................... 23 Powers and Duties of the Offshore Equity Trustee ............................. 23
ii
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vi. vii. C. D. E. VII.
Indemnification of the Offshore Equity Trustee .................................. 24 Tax Treatment of the Offshore Equity Trust ....................................... 24 Offshore Equity Trust Distributions ..................................................... 24 Term and Termination of the Offshore Equity Trust and Offshore Equity Trustee ......................................................................... 26 Causes of Action and Avoidance Actions.............................................. 27
EXECUTORY CONTRACTS AND UNEXPIRED LEASES ........................ 28
VIII. CONDITIONS PRECEDENT TO CONFIRMATION AND CONSUMMATION OF THE PLAN ................................................................ 29 A. B. 1. 2. 3. C. D. 1. 2. 3. 4. 5. X. XI. XII. The Effective Date ................................................................................... 29 Conditions Precedent to Effective Date ................................................ 30 Confirmation Order................................................................................ 30 Documents ............................................................................................... 30 Authorizations ......................................................................................... 30 Waiver of Conditions .............................................................................. 30 Effects of Confirmation .......................................................................... 30 Assets of the Debtor ................................................................................ 30 Cancellation of Existing Class 4 Equity Interests ................................ 31 Issuance of New Equity .......................................................................... 31 Conversion of Allowed Class 3 General Unsecured Claims into Beneficial Interests in the Offshore Equity Trust ................................ 31 Findings by the Bankruptcy Court ....................................................... 31
MODIFICATIONS AND AMENDMENTS ..................................................... 32 RETENTION OF JURISDICTION .................................................................. 32 MISCELLANEOUS PROVISIONS.................................................................. 34 A. Severability of Plan Provisions .............................................................. 34
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B. C. D. E. F. G. H. I. J. K. L.
Successors and Assigns ........................................................................... 34 Notices ...................................................................................................... 34 Compromise and Settlement .................................................................. 35 Section 1146 Exemption ......................................................................... 35 Post-Confirmation Reporting Requirements. ...................................... 35 Modification of the Plan ......................................................................... 35 Reservation of Rights .............................................................................. 36 Governing Law ........................................................................................ 36 No Admission or Waivers ....................................................................... 36 Continuing Viability of Other Orders/Agreements ............................. 36 Limitations on Liability. ......................................................................... 36
XIII. DISCHARGE OF OFFSHORE, INJUNCTION AND RELATED PROVISIONS...................................................................................................... 37 A. B. C. D. E. F. G. H. I. J. K. Discharge of Debtor ................................................................................ 37 Injunction................................................................................................. 37 Exculpations ............................................................................................ 37 Indemnification Obligations .................................................................. 38 Limited Release ....................................................................................... 38 Releases by Consenting Parties.............................................................. 38 Subordination .......................................................................................... 39 Binding Effect .......................................................................................... 39 Revocation, Withdrawal, or Non-Consummation ............................... 39 Section 1129(b) ........................................................................................ 40 Section 1125(e) ......................................................................................... 40
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INTRODUCTION AND OVERVIEW Gerald H. Schiff, Chapter 11 Trustee for the Bankruptcy Estate of Virgin Offshore U.S.A., Inc., proposes this amended Plan of Reorganization dated March 28, 2013 pursuant to Chapter 11 of Title 11 of the United States Bankruptcy Code for the resolution of outstanding Claims against and interest in the Debtor, Virgin Offshore U.S.A., Inc. Reference is made to the amended Disclosure Statement for this Plan for a discussion of the Debtors history, businesses, assets, results of operations, projections for future operations, risk factors, and a summary and analysis of this Plan and certain related matters, including procedures for voting on this Plan and Distributions to be made under this Plan. The Trustee is the proponent of this Plan within the meaning of section 1129 of the Bankruptcy Code. As more particularly described in the Disclosure Statement, the primary purpose of this Plan is to provide for the sale of the Debtors Assets, provide for the disallowance and/or modification of certain Secured and Unsecured Claims, pay the Allowed Claims of the Creditors of the Debtor, provide for the settlement and compromise of Claims and Causes of Action against the Debtor, and provide for a liquidation of the Debtors Assets. ALL CREDITORS AND PARTIES IN INTEREST ARE ENCOURAGED TO CONSULT THE DISCLOSURE STATEMENT BEFORE VOTING TO ACCEPT OR REJECT THIS PLAN. Subject to certain restrictions and requirements set forth in section 1127 of the Bankruptcy Code, Rule 3019 of the Bankruptcy Rules and Article XII of this Plan, the Trustee reserves the right to alter, amend, modify, revoke or withdraw this Plan prior to its substantial consummation. I. DEFINITIONS, RULES OF INTERPRETATION, COMPUTATION OF TIME, AND GOVERNING LAW A. Rules of Interpretation, Computation of Time, and Governing Law
For purposes herein: (a) whenever from the context it is appropriate, each term, whether stated in the singular or the plural, shall include both the singular and the plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, feminine and the neuter gender; (b) any reference herein to a contract, instrument, release, indenture or other agreement or document being in a particular form or on particular terms and conditions means that such document shall be substantially in such form or substantially on such terms and conditions; (c) any reference herein to an existing document or exhibit Filed, or to be Filed, shall mean such document or exhibit, as it may have been or may be amended, modified or supplemented; (d) unless otherwise specified, all references herein to Sections, Articles and Exhibits are references to Sections, Articles and Exhibits hereof or hereto; (e) the words herein, hereof and hereto refer to the Plan in its entirety rather than to a particular portion of this Plan; (f) captions and headings to Articles and Sections are inserted for convenience of reference only and are not intended to be a part of or to affect the interpretation hereof; (g) the rules of construction set forth in section 102 of the Bankruptcy Code shall apply; and (h) any term used in capitalized form herein that is not otherwise defined but that is used in
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the Bankruptcy Code or the Bankruptcy Rules shall have the meaning assigned to such term in the Bankruptcy Code or the Bankruptcy Rules, as the case may be. In computing any period of time prescribed or allowed hereby, the provisions of Bankruptcy Rule 9006(a) shall apply as though the Plan is an order of the Bankruptcy Court. Except to the extent that the Bankruptcy Code or Bankruptcy Rules are applicable, and subject to the provisions of any contract, instrument, release, indenture or other agreement or document entered into in connection herewith, the rights and obligations arising hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of Louisiana, without giving effect to the principles of conflict of laws thereof. All references in the Plan to monetary figures shall refer to United States of America currency, unless otherwise expressly provided. B. Defined Terms
Unless the context otherwise requires, the following terms shall have the following meanings when used in capitalized form herein: Administrative Claim means (a) any Professional Compensation Claim, (b) any Claim constituting a cost or expense of administration of the Bankruptcy Case asserted or authorized to be asserted in accordance with sections 503(b) and 507(a)(2) of the Bankruptcy Code during the period up to and including the Effective Date, and (c) any fees or charges assessed against the Estate pursuant to section 1930 of chapter 123 of title 28 of the United States Code. Administrative Claim Bar Date means (a) the 60th day after the Effective Date or (b) such other date established by Final Order of the Bankruptcy Court. Administrative Claim Objection Deadline means (a) the earlier of the 28th day after the filing of an Administrative Claim or the 28th day after the Administrative Claim Bar Date or (b) such other date established by Final Order of the Bankruptcy Court. Affiliate means any Person or Entity described under section 101(2) of the Bankruptcy Code. Allowed means that, with respect to a Claim, (i) such Claim has been listed by Offshore in the Schedules, as such Schedules may be amended by Offshore from time to time in accordance with Bankruptcy Rule 1009, as liquidated in amount and not disputed or contingent and no contrary Proof of Claim has been filed, (ii) a Proof of Claim with respect to such Claim has been timely filed and no objection thereto has been interposed within the time period set forth in this Plan or such other applicable period of limitation fixed by the Bankruptcy Code, the Bankruptcy Rules, or the Bankruptcy Court, or an objection thereto has been interposed and such Claim has been allowed in whole or in part by a Final Order, (iii) such Claim has been expressly allowed by a Final Order or under this Plan, or (iv) such Claim has been compromised, settled, or otherwise resolved pursuant to the authority granted to the Trustee or Debtor pursuant to a Final Order of the Bankruptcy Court or under this Plan; provided, however, that Claims allowed solely
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for the purpose of voting to accept or reject this Plan pursuant to an order of the Bankruptcy Court shall not be considered Allowed Claims under this Plan. Allowed Claim means an Allowed Claim in the particular Class described. Asset means any property of the Debtor and the Estate as defined in section 541(a) of the Bankruptcy Code. Assumed Executory Contracts and Unexpired Leases means any Executory Contracts and Unexpired Leases assumed by the Debtor or by the Trustee on behalf of the Debtor. Avoidance Claims means any and all Causes of Action which a trustee, debtor-inpossession, an estate, or other legal representative or appropriate party-in-interest may assert, including Causes of Action under sections 502, 510, 541, 542, 543, 544, 545, 547, 548 through 551, and 553 of the Bankruptcy Code, or under similar or related state or federal statutes, civil law, and common law, including fraudulent transfer laws, and also including Offshores rights of setoff, recoupment, contribution, or indemnity in connection with the foregoing (as those terms are defined by the non-bankruptcy law of any relevant jurisdiction) whether or not litigation has been commenced as of the Confirmation Date to prosecute such Avoidance Claims. Ballot means the ballot form accompanying the Disclosure Statement upon which Holders of Impaired Claims and Equity Interests who are entitled to vote under this Plan shall indicate acceptance or rejection of the Plan in accordance with the Voting Instructions. Bankruptcy Case means the involuntary bankruptcy case filed against Offshore by Precision Drilling Company, LP, Dynamic Energy Services, LLC and Tanner Services, LLC, and styled and numbered as follows: In re Virgin Offshore, USA, Inc., Case No. 11-13028 (Bankr. E.D. La). Bankruptcy Code means Title 11 of the United States Code, 11 U.S.C. 101 et seq., as now in effect or hereafter amended. Bankruptcy Court means the United States Bankruptcy Court for the Eastern District of Louisiana. Bankruptcy Rules means the Federal Rules of Bankruptcy Procedure, FED. R. BANKR. P. 1001 et seq., as promulgated under 28 U.S.C. 2075, and the Federal Rules of Civil Procedure, FED. R. CIV. P. 1 et seq., and the Local Rules of the Bankruptcy Court, as applicable to the Bankruptcy Cases, and as now in effect or hereafter amended. BP Claim means that certain claim for economic loss filed by Offshore pursuant to the Deepwater Horizon Economic and Property Damages Settlement Agreement. Business Day means any day other than a Saturday, a Sunday, legal holidays (as defined under Bankruptcy Rule 9006(a)), or any other day on which banking institutions in Baton Rouge, LA are required or authorized to close by law or executive order.
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Cash means legal tender of the United States of America, cash equivalents, and readily marketable securities or instruments, including, but not limited to, bank deposits, accounts, certified or cashiers checks, timed certificates of deposit issued by any bank, commercial paper, and readily marketable direct obligations of the United States of America or agencies or instrumentalities thereof. CIT means CIT Capital USA, Inc. Causes of Action means any and all actions, proceedings, causes of action, suits, accounts, controversies, agreements, promises, rights to legal remedies, rights to equitable remedies, rights to payment and claims, whether known, unknown, reduced to judgment, not reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured and whether asserted or assertable directly or derivatively, in law, equity, or otherwise including, but not limited to, (i) Avoidance Claims unless otherwise waived or released by Offshore or Reorganized Offshore, (ii) any and all rights under applicable state and/or non-bankruptcy law to assert, pursue, prosecute, and/or commence actions to enforce and/or collect the BP Claim, (iii) the D&O Litigation and Paxton Intervention, and (iv) all rights to assert, pursue, prosecute and/or commence action, to enforce the rights of Offshore in any way related to the P&A Work and related liabilities. Claim means a claim, as defined in section 101(5) of the Bankruptcy Code, against Offshore, including, but not limited to: (a) any right to payment from Offshore whether in rem or in personam or whether or not such right is reduced to judgment, liquidated, unliquidated, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured; or (b) any right to an equitable remedy for breach of performance if such performance gives rises to a right of payment from Offshore, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured. Claim Holder or Claimant means a holder of a Claim. Claims Objection Bar Date means, for all Claims, the latest of (a) 180 days after the Effective Date, or (b) such other period of limitation as may be specifically fixed by a Final Order of the Bankruptcy Court for objecting to such Claim. Class means a category of Holders of Claims or Equity Interests. Clerk means the clerk of the Bankruptcy Court. Collateral means any property or interest in property of the Estate subject to a Lien, charge, or other encumbrance to secure the payment or performance of a Claim, which Lien, charge, or other encumbrance is not subject to avoidance under the Bankruptcy Code. Confirmation means the Entry of the Confirmation Order, subject to all conditions specified in Article VIII hereof having be (i) satisfied or (ii) waived pursuant to Article VIII. Confirmation Date means the date of Entry by the Clerk of the Confirmation Order. Confirmation Hearing means the hearing to consider Confirmation of the Plan.
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Confirmation Order means the order Entered by the Bankruptcy Court confirming the Plan pursuant to section 1129 of the Bankruptcy Code. Consenting Parties means, collectively, each Holder of a Claim or Equity Interest who has affirmatively voted to accept the Plan and is a Holder in a Class that has, as a Class, voted to accept the Plan. Creditor means any Person who holds a Claim against Offshore. Cure means the distribution by the Trustee on behalf of the Debtor, on or within a reasonable period of time following the Effective Date, of Cash, or such other property as may be agreed upon by the parties or ordered by the Bankruptcy Court, with respect to the assumption of an Executory Contract or Unexpired Lease, pursuant to Section 365(b) of the Bankruptcy Code, in an amount equal to all unpaid monetary obligations, without interest, or such other amount as may be agreed upon by the parties, under such Executory Contract or Unexpired Lease, to the extent such obligations are enforceable under the Bankruptcy Code and applicable non-bankruptcy law. Cure Claim means the Claim of any party for monetary damages arising out of the assumption of an Executory Contract by the Debtor pursuant to Section 365 of the Bankruptcy Code. Debtor means Virgin Offshore, USA, Inc. D&O Litigation means those certain proceedings commenced on August 19, 2011 styled The Official Committee of Unsecured Creditors of Virgin Oil Company, Inc., et al v. Robert Fulton Smith, Jr., et al, Civil Action No. 2011-8906 pending before the Civil District Court for the Parish of Orleans, State of Louisiana. Disallowed Claims means a Claim or any portion thereof (a) that has been disallowed by Final Order, (b) to which a party in interest has filed an objection and no Final Order of allowance has been entered, (c) proof of which was untimely filed, or (d) listed as disputed, contingent, or unliquidated on the Bankruptcy Schedules. Disclosure Statement means the FIRST AMENDED DISCLOSURE STATEMENT IN SUPPORT OF CHAPTER 11 PLAN OF REORGANIZATION DATED MARCH 28, 2013 SUBMITTED BY GERALD H. SCHIFF, CHAPTER 11 TRUSTEE FOR THE ESTATE OF VIRGIN OFFSHORE, USA, INC., as amended, supplemented, or modified from time to time, describing this Plan, that is prepared and distributed in accordance with sections 1125, 1126(b) and/or 1145 of the Bankruptcy Code and Bankruptcy Rule 3018 and/or other applicable law. Disputed Claims means all Claims: (a) which are listed in the Schedules as disputed, contingent, or unliquidated, (b) all Investor Claims, or (c) as to which (i) a Proof of Claim has been filed, (ii) an objection, or request for estimation, has been timely filed (and not withdrawn) by any party in interest, and (iii) no Final Order has been entered thereon. In the event that any part of a Claim is disputed, such Claim in its entirety shall be deemed to constitute a Disputed Claim for purposes of Distribution under this Plan unless a Final Order has been Entered
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allowing such Claim or portion thereof. Without limiting the above, a Claim that is the subject of a pending objection, or any other proceeding seeking to disallow, subordinate, or estimate such Claim, shall be deemed to constitute a Disputed Claim. Distribution means any transfer, payment under or in accordance with the Plan, the corporate documents of Reorganized Offshore, or the Offshore Equity Trust Agreement of Cash or other property. Effective Date means the first Business Day that is at least one (1) full Business Day after the Confirmation Order becomes a Final Order and all conditions precedent to the Effective Date have been consummated or waived pursuant to Article VIII, hereof. Empire Lease means the Louisiana State Oil and Gas Lease referred to as SL 18165, Empire Field, Plaquemines Parish Louisiana. Empire Lien Compromise means the December 3, 2012 Order of the Bankruptcy Court approving the Joint Motion to Approve Settlement and Compromise filed by the Trustee and lien claimant Dynamic Energy Services, LLC and the settlement related thereto between the Lien Adversary parties. Empire Secured Claims means the Lien Claimants set forth in the Empire Lien Compromise with Allowed Claims secured by Liens filed against the Empire Lease and payable pursuant to the terms of the Empire Lien Compromise and this Plan in the total amount of $3,983,954.02. The Empire Secured Claims consists of three tiers with each tier only receiving payment upon satisfaction of all Claims within the preceding tier. A schedule of the Empire Lien Claimants and the amount of each Empire Secured Lien Claim is attached as Exhibit A. For avoidance of any doubt, Holders of Empire Secured Claims in each tier are as follows: Tier 1 - Dynamic Energy Services, LLC, Industrial & Oilfield Services, Inc., Tanner Services, LLC, Global Vessel & Tank, LLC, Ranger Specialty Supply & Control Systems, LLC, Newpark Mats & Integrated Services, LLC, Newpark Environmental Services, LLC, Weatherford International, Inc., GE Oil & Gas Pressure Control, LP as successor in interest to Wood Group Pressure Control, LP, Quality Energy Services, Inc., and Stokes & Spiehler Offshore, Inc. Tier 2 - Workover Specialties, LLC Tier 3 - Precision Drilling Company, LP Entity means an entity defined in section 101(15) of the Bankruptcy Code. Entry or Entered means entry or entered by the Clerk into the records and dockets of the Bankruptcy Case within the meaning of Bankruptcy Rules 5003 and 9021. Equity Interest or Interest means any equity security as defined under section 101(16) of the Bankruptcy Code.
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Estate means the bankruptcy estate created upon the commencement of the Bankruptcy Case pursuant to section 541 of the Bankruptcy Code, or thereafter acquired as provided in section 541 or any other applicable section of the Bankruptcy Code. Excess Cash means, in the sole discretion of the Offshore Equity Trustee, available excess Cash in an amount sufficient to render feasible a Distribution of Cash to the Offshore Equity Trust Beneficiaries. Executory Contracts and Unexpired Leases means executory contracts and unexpired leases as such terms are used in section 365 of the Bankruptcy Code. Existing Oil and Gas Assets means and includes the Empire Lease, Ship Shoal, the Federal Oil and Gas Lease referred to as East Cameron Area, Block 2 bearing serial number OCS-G 32124, the Federal Oil and Gas Lease referred to as East Cameron Area, Block 219 bearing serial number OCS-G 33580, and the Federal Oil and Gas Lease referred to as West Cameron Area, Block 78 bearing serial number OCS-G 33043. Expired Leases means Federal Oil and Gas Leases operated by the Debtor pre-petition which have expired and require abandonment. Attached as Exhibit D is a schedule of Expired Leases and Existing Oil and Gas Assets as reflected by record title. Fees means any reasonable and necessary fees, charges, or expenses, including Professional Compensation Claims and Claims arising under any contract, Executory Contract, or any other form of agreement. File, Filing, or Filed means file, filing or filed with the Clerk into the record of the Bankruptcy Case in accordance with the applicable Bankruptcy Rules. Final Decree means the decree contemplated under Bankruptcy Rule 3022. Final Order means an order of the Bankruptcy Court or court of competent jurisdiction which, not having been stayed by order of a court of competent jurisdiction, has become conclusive of all matters adjudicated thereby and is in full force and effect. General Unsecured Claim means any Claim that is not an Administrative Claim, Priority Tax Claim, Secured Claim, or Priority Non-Tax Claim. Gordon Arata means the law firm of Gordon, Arata, McCollam, Duplantis & Eagan, LLC, attorneys for the Trustee. Governmental Unit means United States; State; Commonwealth; District; Territory; municipality; foreign state; department, agency, or instrumentality of the United States (but not a United States trustee while serving as a trustee in a case under this title), a State, a Commonwealth, a District, a Territory, a municipality, or a foreign state; or other foreign or domestic government. Gros Firm means Patrick Gros, APAC, accountant for the Estate.
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Holder means a Person or Entity holding an Equity Interest or Claim. Impaired means a Claim or Equity Interest that is impaired within the meaning of section 1124 of the Bankruptcy Code and applicable case law. Insider means any Person or Entity described under section 101(31) of the Bankruptcy Code. Interest Holder means Holder of an Equity Interest. Internal Revenue Code means title 26 of the United States Code, 26 U.S.C. 1 et seq., as now in effect or hereafter amended. Investors means third party investors granted certain unrecorded contractual working interests in the Virgin Oil and Offshore properties. Investor Claims means any Claim evidenced by a Proof of Claim filed by any Person or Entity in the Bankruptcy Case that assert an ownership, economic or revenue interest and/or claim for damages for loss thereof based upon certain contractual investment agreements with the Debtor. The Investor Claims are Disputed by the Debtor. A schedule of the Investor Claims and Claimants is attached as Exhibit B. Lien or Liens means mortgages, security interests, privileges, conditional sale or other title retention agreements, pledges, liens, judgments, demands, encumbrances, taxes, including without limitation, property taxes, sales, use and ad valorem taxes, easements, restrictions or charges of any kind or nature, if any, including, but not limited to, any restriction on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership, debts arising in any way in connection with any acts of Offshore, Claims, obligations, demands, guaranties, options, rights, contractual commitments, executory contracts, unexpired leases, employment agreements, restrictions, rights of lesion beyond moiety, tort claims, product liability claims, interests and matters of any kind and nature, whether arising prior to or subsequent to the commencement of the Bankruptcy Cases, and whether imposed by agreement, understanding, law, equity or otherwise. Lien Adversary means the Adversary Proceeding No. 11-01111 filed in the U.S. Bankruptcy Court for the Eastern District of Louisiana by Dynamic Energy Services, LLC, Precision Drilling Company, LP, Tanner Services, LLC and Industrial & Oilfield Services, Inc. against Offshore and assorted parties claiming liens against the Empire Lease. Lien Compromise means the compromise between the Trustee, the Debtor and various lien claimants involved in the Lien Adversary, which was approved by order entered by the Bankruptcy Court in the Bankruptcy Case on December 3, 2012. The Lien Compromise includes all agreements executed pursuant to the agreement of the parties including the settlement agreement and mutual release. The terms and conditions of the Lien Compromise are incorporated into this Plan as if fully set forth herein. Offshore means the Debtor, Virgin Offshore, USA, Inc.
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Offshore Claims Bar Date means the last date for filing Claims against Offshore, which was December 7, 2012. Offshore Governmental Claims Bar Date means the last date for filing Governmental Unit Claims, which was January 7, 2013. Offshore Equity Trust means the trust to be established as of the Effective Date pursuant to the terms of the Offshore Equity Trust Agreement which shall be the owner of the new Equity Interests in Reorganized Offshore which shall be held for the benefit of Holders of Allowed Unsecured Class 3 Claims. Offshore Equity Trust Agreement means that certain agreement to be filed by the Plan Proponent prior to the Confirmation Hearing and approved in connection with the Confirmation Order, which contains provisions customary to trust agreements utilized in comparable circumstances, including but not limited to, any and all provisions necessary to govern the rights, powers, obligations and appointment and removal of the Offshore Equity Trustee or any successor Offshore Equity Trustee. Offshore Equity Trust Assets means all Equity Interests in the Reorganized Debtor which shall be issued upon the Effective Date to the Offshore Equity Trustee for the benefit of the Holders of Allowed Unsecured Claims who shall be become Offshore Equity Trust Beneficiaries. Offshore Equity Trust Beneficiaries means the Holders of Allowed Unsecured Claims that shall receive a beneficial interest in the Offshore Plan Trust created pursuant to this Plan. Offshore Equity Trustee means Gerald H. Schiff, or his successor as provided in the Offshore Equity Trust Agreement. Oil/Offshore Settlement means the compromise between the Virgin Oil bankruptcy estate and Offshore Estate approved by order entered by the Bankruptcy Court in the Bankruptcy Case on January 5, 2012 and the terms and conditions thereof that are incorporated into this Plan by reference to the agreement. The Oil/Offshore Settlement includes all agreements executed pursuant to the agreement of the parties including the joint operating agreements, contract operator agreement, and decommissioning term sheet. Furthermore, the releases and obligations set forth in the Oil/Offshore Settlement are incorporated into this Plan as if fully set forth herein. Order for Relief means the order for relief entered by the Bankruptcy Court in the Bankruptcy Case. P&A Work means the requisite plug and abandonment work relating to Offshores expired oil and gas leases. A schedule of the P&A Work is attached hereto as Exhibit B. P&A Properties means the Expired Leases and non-producing Existing Oil and Gas Assets subject to abandonment as part of the P&A Work.
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Paxton Intervention means those certain proceedings commenced on December 5, 2011 (Trustees intervention filed on May 17, 2011 and Granted on May 21, 2011) styled Montecito Offshore LLC v. Paxton Energy Inc. and PaxAcq, Inc., Civil Action No. 2011-12640 pending before the Civil District Court for the Parish of Orleans, State of Louisiana. Per Annum means for a calendar year of 365 or 366 days, as the case may be. Person means any natural person or juridical entity to the broadest extent the term person is defined under the laws of the State of Louisiana. Person also includes any Governmental Unit. Petition Date means September 16, 2011. Phelps Dunbar means the law firm of Phelps Dunbar, LLP, special litigation counsel for the Estate and Reorganized Debtor in the D&O Litigation and Paxton Intervention. Plan means this FIRST AMENDED CHAPTER 11 PLAN OF REORGANIZATION DATED MARCH 28, 2013 SUBMITTED BY GERALD H. SCHIFF, CHAPTER 11 TRUSTEE FOR THE ESTATE OF VIRGIN OFFSHORE, USA, INC., either in its present form or as it may be altered, amended, modified or supplemented from time to time in accordance with the Plan, the Bankruptcy Code and the Bankruptcy Rules. Plan Proponent means the Trustee. Plan Supplement means the compilation of documents and form of documents, schedules and exhibits to be filed prior to the Voting Deadline, as modified or supplemented prior to the Confirmation Hearing. Post-Petition means any date on or after the Petition Date. Pre-Petition means any date before the Petition Date. Priority Non-Tax Claim means any Claim given priority in payment pursuant to section 507 of the Bankruptcy Code, but not including Priority Tax Claim and Administrative Claims. Priority Tax Claim means any Claim (or portion of a Claim) of a Governmental Unit entitled to priority under section 507(a)(8) of the Bankruptcy Code. Pro Rata Share means, at any time, the proportion that the amount of a Claim in a particular Class or Classes (or portions thereof, as applicable) bears to the aggregate amount of all Claims (including Disputed Claims) in such Class or Classes, unless the Plan provides otherwise. Producing Wells means and includes wells producing on the Ship Shoal and the Empire Leases, and shall also include any wells in which Offshore holds an interest that begin producing after the Confirmation Date.
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Professional Compensation Claim means a Claim for compensation or reimbursement of expenses of a Professional retained in the Bankruptcy Cases, and requested in accordance with sections 326, 327, 328, 330, 331, 503(b), and 1103. Professional means a professional person, as that term in used in section 327 and 1103 of the Bankruptcy Code. Proof of Claim means a Claimants written statement that is filed with the Clerk in accordance with applicable provisions of the Bankruptcy Code and Bankruptcy Rules in the record of the Bankruptcy Case to show the basis and amount of such Claimants Claim. Property of the Estate means all property or interests in property of Offshore and the Estate of every type and nature pursuant to section 541 of the Bankruptcy Code and applicable case law. RLI means RLI Insurance Company. RLI Insurance Claim means the Class 2 Claim of RLI Insurance Company. Recovery Allocation Agreement means the compromise between Virgin Oil Co., Inc. Plan Trust and collectively, Cahaba Partnership, Ltd., Lagniappe Productions of Louisiana, LLC, Ann Broome Priske, Horizon Energy, LLC, B.A. Adams Oil and Gas Investments, LLC, Kathy Roberts, The Carlton Capital Group LLC, ADM Properties, Inc., W.D. Mounger, Delta Royalty Company, Inc., Silver Sands Offshore, LLC, Silver Sands High Island 198, LLC, Silver Sands Ship Shoal, LLC, Paul McMullan, Jr., in his capacity as Executor for the Estate of Dr. Paul McMullan and Mrs. Georgie McMullan and Offshore approved by order entered by the Bankruptcy Court in the Bankruptcy Case on May 3, 2012 and the terms and conditions thereof that are incorporated into this Plan by reference to the agreement. Rejection Claim means any Claim arising out of the rejection of an Unexpired Lease or Executory Contract pursuant to Section 365 of the Bankruptcy Code. Allowed Rejection Claims are classified as General Unsecured Claims and treated in Class 3. Reorganized Debtor means Offshore as of and after the Effective Date. Reorganized Offshore means Offshore as of and after the Effective Date. Schedules mean the schedules of assets and liabilities, schedules of executory contracts, and the statement of financial affairs as the Bankruptcy Court requires a debtor to file pursuant to section 521 of the Bankruptcy Code, the Official Bankruptcy Forms and the Bankruptcy Rules, which have been filed by Offshore, as they may be amended and supplemented from time to time. Secondary Offshore Equity Trust Beneficiaries means the Class 4 Equity Interest Holder(s) that shall receive a subordinated beneficial interest in the Offshore Equity Trust created pursuant to this Plan.
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Secured Claim means a Claim against Offshore (a) secured by a valid, perfected, and unavoidable Lien on Collateral or (b) subject to setoff under sections 553, 555, 556, 559, 560, and 561 of the Bankruptcy Code, in each case to the extent of the value of the Collateral or to the extent of the amount subject to setoff, as applicable, as determined in accordance with section 506(a) of the Bankruptcy Code or as otherwise agreed to, in writing, by the Trustee, Offshore or Reorganized Offshore, as the case may be, and the holder of such Claim; provided, however, that, to the extent that the value of such interest is less than the amount of the Claim which has the benefit of such security, the unsecured portion of such Claim shall be treated as an Unsecured Claim unless, in any such case, the Class of which such Claim is a part makes a valid and timely election in accordance with section 1111(b) of the Bankruptcy Code to have such Claim treated as a Secured Claim to the extent Allowed. Securities Act means the Securities Act of 1933, 15 U.S.C. 77a et seq., as now in effect or hereafter amended. Security shall have the meaning ascribed to it in section 101(49) of the Bankruptcy Code. Security Interest means a Lien created by agreement. Seismic Material means certain geophysical and geological data covered by the TGSN License resulting from seismic surveys performed by or on behalf of TGSN, together with the results of all processing, reprocessing, and re-display thereof. Ship Shoal means the Federal Oil and Gas Lease referred to as Block 153, Ship Shoal, bearing Serial Number OCS-G18011. Treasury Regulations means title 26 of the Code of Federal Regulations, 26 C.F.R. 1.0-1 et seq., as now in effect or hereafter amended. Trustee means Gerald H. Schiff, Chapter 11 Trustee for the Estate of Virgin Offshore, USA, Inc. Trustee Discharge Date means the date of Entry of the Final Decree. Unimpaired means a Claim or Interest that is not Impaired within the meaning of section 1124 of the Bankruptcy Code and applicable case law. United States Trustee means the United States trustee appointed under section 581(a)(3) of title 28 of the United States Code, as now in effect or hereafter amended, to serve in the Eastern District of Louisiana. Unsecured Creditor means the Holder of a General Unsecured Claim. Virgin Oil means Virgin Oil Company, Inc., a corporation incorporated under the laws of the State of Louisiana and formerly the sole shareholder of Offshore.
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Virgin Oil Bankruptcy Case means the Chapter 11 case of Virgin Oil styled and numbered as follows: In re Virgin Company, Inc., Case No. 09-11899 (Bankr. E.D. La). Virgin Oil Committee means the Official Committee of Unsecured Creditors of the Virgin Oil bankruptcy estate. Virgin Oil Plan Trust means the trust formed pursuant to the Virgin Oil Chapter 11 Plan of Reorganization, as modified and amended. Voting Classes shall mean those Classes of Claims or Equity Interests entitled to vote to accept or reject the Plan. Voting Deadline means the date stated in the Voting Instructions by which all Ballots must be received by the Trustee. Voting Instructions mean the instructions for voting on the Plan contained in the section of the Disclosure Statement entitled VOTING PROCEDURES AND REQUIREMENTS and in the Ballots. II. UNCLASSIFIED CLAIMS A. Unclassified Claims
As provided in section 1123(a)(a) of the Bankruptcy Code, Administrative Claims, Priority Tax Claims, and Professional Compensation Claims are not classified for purposes of voting on, or receiving distributions under this Plan. Holders of Administrative Claims, Priority Tax Claims, and Professional Compensation Claims are not entitled to vote on the Plan but, rather, are treated separately in accordance with Article II of this Plan and under section 1129(a)(9)(A) of the Bankruptcy Code. B. Time for Filing Administrative Claims and Professional Compensation Claims
On or as soon as practicable after the later of (i) the Effective Date or (ii) the date that an Administrative Claim, becomes an Allowed Administrative Claim, each Administrative Claim that is an Allowed Claim shall be paid in full, in Cash; provided, however, that Administrative Claims, the payment of which are not expressly provided for elsewhere in this Plan and that represent indebtedness incurred in the ordinary course of business by the Debtor, shall be paid by the Trustee either (i) in the ordinary course of business in accordance with the terms and conditions of any agreements related thereto or (ii) as otherwise agreed among the Trustee and the Holder of such Administrative Claim. Additionally, any fees due to the U.S. Trustees Office pursuant to 28 U.S.C. 1930 will be paid as they become due by the Debtor or the Trustee. All Professionals seeking payment of an Administrative Claim pursuant to an award by the Bankruptcy Court of compensation for services rendered or reimbursement of expenses incurred through and including the Effective Date under Sections 503(b)(2), 503(b)(3) or 503(b)(4) of the Bankruptcy Code shall file their respective final applications for allowances of
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compensation for services rendered and reimbursement of expenses incurred through the Effective Date within thirty (30) days of the occurrence of the Effective Date. If granted, such Professional Compensation Claim shall be paid by Reorganized Offshore in full in such amounts as are Allowed by the Bankruptcy Court (i) on the date such Administrative Claim becomes an Allowed Administrative Claim, or as soon thereafter as is practicable or (ii) upon such other terms as may be mutually agreed upon between the Holder of an Administrative Claim and the Trustee or, on and after the Effective Date. C. Allowance of Administrative Claims
An Administrative Claim with respect to which notice has been properly filed and served shall become an Allowed Administrative Claim if no objection is filed on or prior to the Administrative Claim Objection Deadline. If an objection is timely filed, the Administrative Claim shall become an Allowed Administrative Claim only to the extent Allowed by Final Order or as such Claim is settled, compromised, or otherwise resolved by the Trustee. D. Allowed Priority Tax Claims
Each Holder of an Allowed Priority Tax Claim shall receive Cash in an amount equal to the amount of such Allowed Priority Tax Claim on the latest of (a) the Effective Date or (b) the 30th day after such Priority Tax Claim is Allowed pursuant to (i) any agreement between the Trustee and the Holder of such Priority Tax Claim or (ii) a Final Order. The Trustee retains the right to prepay any Allowed Priority Tax Claim, or any remaining balance of such a Claim, in full or in part, at any time on or after the Effective Date without premium or penalty. E. United States Trustee Fees
All fees payable under 28 U.S.C. 1930 shall be paid in Cash in full as they become due by the Debtor and/or Reorganized Offshore, as applicable, up until issuance of the Final Decree. III. CLASSIFICATION AND TREATMENT OF CLASSIFIED CLAIMS AND EQUITY INTERESTS A. SUMMARY
The categories of Claims and Equity Interests listed below classify Claims and Equity Interests for all purposes, including voting, confirmation, and distribution pursuant hereto and pursuant to sections 1122 and 1123(a)(1) of the Bankruptcy Code. A Claim or Equity Interest shall be deemed classified in a particular Class only to the extent that the Claim or Equity Interest qualifies within the description of that Class and shall be deemed classified in a different Class to the extent that any remainder of such Claim or Equity Interest qualifies within the description of such different Class. A Claim or Equity Interest is in a particular Class only to the extent that such Claim or Equity Interest is Allowed in that Class and has not been paid or otherwise settled prior to the Effective Date.
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Class Number Class 1 Class 2 Class 3 Class 4 B.
Claim Empire Secured Claims RLI Insurance Claim General Unsecured Claims Debtor Equity Interests
Status Impaired Impaired Impaired Impaired
Voting Rights Entitled to Vote Entitled to Vote Entitled to Vote Entitled to Vote
CLASSIFIED CLAIMS AND TREATMENT 1. CLASS 1 EMPIRE SECURED CLAIMS (1) Claim.
Class 1 consists of the Empire Secured Claims. As of the Effective Date, the Empire Secured Claims shall be reduced by all payments made by the Estate to Holders of Empire Secured Claims after the Petition Date. As of the Petition Date, the Empire Secured Claims totaled $3,983,954.02. A schedule of the Empire Secured Claims is attached as Exhibit A. As of the date of the filing of this Plan, the Empire Secured Claims have been reduced by $864,595.28. (2) Treatment.
The Holder of an Allowed Empire Secured Claim shall receive in full and final satisfaction of any and all Class 1 Secured Claims against the Debtor payments from the Empire Lease production proceeds in accordance with the Oil/Offshore Compromise and the Empire Lien Compromise, or, in the event of sale of interest of the Debtor or Reorganized Debtor in the Empire Lease (i) 80% of the proceeds attributable to such interest plus (ii) an amount equal to 80% of the interest of the Virgin Oil Plan Trust in the Empire Lease if such interest is sold or if such interest is not sold a continuation of the share of the payments by the Virgin Oil Plan Trust to be made to the Reorganized Debtor under the Empire Lease Compromise and the Oil/Offshore Settlement as called for under the Oil/Offshore Settlement and the Empire Lease Compromise (80% of such payments). In the event that proceeds from the Empire Lease and the Empire Lease Collateral discontinue and are insufficient to satisfy the full amount of the Empire Secured Claims any unsecured portion of an Empire Secured Claims shall be treated as a Class 3 General Unsecured Claim. Confirmation of the Plan shall constitute the reaffirmation of all Liens in favor of the Holders of Allowed Empire Secured Claims as of the Petition Date and all Liens granted under the Empire Lien Compromise. Further, Confirmation shall constitute the granting to Holders of Allowed Empire Secured Claims a Lien on eighty percent (80%) of the proceeds received by the
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Debtor and/or Reorganized Debtor from the Empire Lease production and/or the proceeds allocated to the value of the Empire Lease in connection with a transfer of the Empire Lease approved by Final Order of the Bankruptcy Court in the amount of the Empire Secured Claims. At all times the terms, conditions, and obligations of Offshore and the Holders of Allowed Empire Secured Claims under the Empire Lien Compromise shall remain in full force and effect until the Empire Secured Claims are paid, in full. To the extent that additional documentation is necessary, Reorganized Offshore shall be authorized and directed to execute such documentation. The Holders of Allowed Empire Secured Claims shall not take any affirmative action to foreclose on or otherwise attempt to affirmatively enforce the Liens of the Holder(s) of Empire Secured Claims against the Empire Lien collateral. (3) Voting.
The Holders of Class 1 Empire Secured Claims are IMPAIRED and shall be entitled to vote to accept or reject the Plan. 2. CLASS 2 RLI INSURANCE CLAIM (1) Claim.
Class 2 consists of the RLI Insurance Claim. RLI Insurance Company is the Holder of the RLI Insurance Claim. (2) Treatment.
On the Effective Date, the Debtor shall pay its portion of the outstanding bond premiums on Existing Oil and Gas Assets. In connection with this Plan, those certain indemnity agreements and assignments of P&A escrow accounts (the P&A Escrow Accounts) executed by the Debtor and/or Virgin Oil in favor of RLI (collectively the Bond Documents) will be assumed and the Debtors obligations under the Bond Documents shall continue. As to oil and gas leases that expired prior to the Petition Date (Expired Leases) for which Bonds were issued, the Reorganized Debtor shall honor its obligations to continue the plug and abandonment work on the Expired Leases (the P&A Work) as specifically set forth in the Oil/Offshore Settlement and approved by the Bankruptcy Court. To satisfy the P&A Work obligations, the Reorganized Debtor shall utilize funds provided by RLI, arising out of and limited to the appropriate bonds, in conjunction with and with the prior approval of BOEM, to pay for the initial expense of any such P&A Work. Thereafter, RLI shall (i) draw down on any applicable P&A Escrow Account(s) to reimburse itself for any draws under any Bond, and (ii) receive a General Unsecured Claim to be treated as a Class 3 Claim under this Plan, to the extent RLI is not reimbursed out of the P&A Escrow Account. For the avoidance of doubt, RLI shall receive upon the completion of the P&A Work, a Class 3 General Unsecured Claim in the amount of the total draws under all Bonds less the funds drawn down by RLI on the P&A Escrow Accounts. (3) Voting.
Class 2 is IMPAIRED. Class 2 will be entitled to vote to accept or reject the Plan.
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3. CLASS 3 UNSECURED CLAIMS (1) Claim.
Class 3 consists of all Allowed General Unsecured Claims. (2) Treatment.
On the Effective Date, each Holder of Allowed Class 3 General Unsecured Claims shall contribute the Allowed amount of such Class 3 Claim in exchange for a beneficial interest in the Offshore Equity Trust, which shall be the owner of the new Equity Interest in Reorganized Offshore, to be issued as of the Effective Date. Each Holder of an Allowed Unsecured Claim shall receive a beneficial interest equal to such Holders pro rata share of the Allowed Class 3 Unsecured Claims (the Offshore Equity Trust Beneficiaries).. Each Holders pro rata share of the Beneficial Interest in the Offshore Equity Trust shall be determined as of the date on which all Allowed Unsecured Claims have been determined by final and unappealable Order pursuant to the Claims Objection process described in Article V of this Plan. Additionally, due to the treatment of the Class 2 RLI Insurance Claim and the uncertainty of Reorganized Offshores P&A liability, no Distributions shall be made to Holders of Class 3 Claims until completion of the P&A Work and determination of all Allowed Claims. Based on the uncertainty of the timing and cost of the P&A Work and subsequent determination of the final RLI General Unsecured Claim, the Trustee cannot determine the amount, if any, of Distributions that shall be made to Holders of Class 3 Claims at this time. Upon completion and determination of Allowed Claims, including the RLI General Unsecured Claim, and the liquidation of Reorganized Offshores assets as set forth in Article VI of the Plan, Reorganized Offshore shall be able to report to the Offshore Equity Trust the identities of the Offshore Equity Trust Beneficiaries and pro-rata share of Distributions to be made to each Offshore Equity Trust Beneficiaries. Due to the material uncertainties related to the P&A Work and liquidation of Offshores remaining assets, Distributions to Allowed Unsecured Claims may not occur. Furthermore, the timing of a final determination of all Allowed Claims is dependent solely upon completion of the P&A Work. As of the filing of the Plan, the anticipated completion of the P&A Work is October 2013. It is expected that within 30-60 days of the P&A Work completion, Reorganized Offshore should have a final determination of the Allowed Claims. At that time, Distributions will only be deliverable from a successful outcome of the D&O Litigation and/or a successful liquidation of Reorganized Offshores assets. Presently, it is too speculative for the Trustee to estimate any amount of Distributions. Furthermore, because all revenue from the Producing Wells is being utilized by Offshore and/or Reorganized Offshore for cost and expenses, the Trustee does not anticipate making any partial Distributions. Within thirty (30) days after the later of the determination of Allowed Unsecured Claims or completion of the P&A Work, Reorganized Offshore shall provide to the Offshore Equity Trustee a final list of Allowed Class 3 Claims that shall identify the Offshore Equity Trust Beneficiaries. The Offshore Equity Trust Beneficiaries shall receive pro-rata shares of periodic Distributions as set forth in Article VI of this Plan. A current schedule of the General Unsecured Claims that have been filed by Creditors and/or scheduled by the Debtor is attached as Exhibit
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C, but Exhibit C does not, in the estimation of the Plan Proponent, represent the relative interests that shall become the interests of the Offshore Equity Trust Beneficiaries. To the extent that (i) any Holder of an Allowed Class 3 Claim receives a payment in partial or complete satisfaction of such Allowed Class 3 Claim from a source other than the Reorganized Debtor, including without limitation, recovery from the Virgin Oil Plan Trust; or, (ii) RLI and/or Holders of Allowed Empire Secured Claims become entitled to an Allowed Class 3 claim pursuant to Section III(B)(2) of this Plan, the pro rata calculation for future Distributions and division beneficial interests in the Offshore Equity Trust Assets shall be adjusted retroactively to the Effective Date and future Distributions to Holders of Allowed Class 3 Claims shall be adjusted accordingly. (3) Voting.
Class 3 is IMPAIRED. Class 3 will be entitled to vote to accept or reject the Plan. 4. CLASS 4 EQUITY INTERESTS (1) Classification
Class 4 consists of existing Equity Interests. The Virgin Oil Plan Trust is the only Holder of an Equity Interest in the Debtor. (2) Treatment.
On the Effective Date, all existing Equity Interests shall be converted into a secondary subordinated beneficial interest in the Offshore Equity Trust, to be issued as of the Effective Date (the Secondary Offshore Equity Trust Beneficiary). The agreements, instruments, and other documents relating to any Equity Interests, shall be cancelled, and any rights, obligations, and Claims under all such agreements, instruments, and other documents will be deemed fully and finally waived, released, cancelled, extinguished, and forever discharged. The rights of the Secondary Offshore Equity Trust Beneficiary to receive Distributions shall be subordinate to the rights of the Offshore Equity Trust Beneficiaries and the Secondary Offshore Equity Trust Beneficiary shall only receive Distributions from the Offshore Equity Trust in the event that and after all expenses of the Offshore Equity Trust are paid in full, all Allowed Claims in Classes 1 and 2 are paid in full, and Distributions in the aggregate amount of the Allowed Class 3 Claims have been made to the Offshore Equity Trust Beneficiaries, including Distributions to the Holders of Class 2 Claims on account and in the amount of any such Holders Class 3 Claim. (3) Voting.
Class 4 is IMPAIRED. Class 4 will be entitled to vote to accept or reject the Plan. IV. ACCEPTANCE OR REJECTION OF THE PLAN A. Voting Classes
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There are four (4) voting Classes under this Plan. Holders of Allowed Claims in Classes 1, 2, 3 and 4 are IMPAIRED, and therefore are entitled to vote to accept or reject the Plan. B. Voting Rights as to Confirmation of the Plan; Necessity of Allowance of Claims
If a Claim is a Disputed Claim prior to the Confirmation Date, such Disputed Claim shall not be entitled to vote with respect to the Plan unless such Claim is estimated, for voting purposes, by Final Order of the Bankruptcy Court. C. Acceptance by Impaired Classes
An Impaired Class of Claims shall have accepted the Plan if (a) the Holders (other than any Holder designated under section 1126(e) of the Bankruptcy Code) of at least two-thirds in amount of the Allowed Claims actually voting in such Class have voted to accept the Plan, and (b) the Holders (other than any Holder designated under section 1126(e) of the Bankruptcy Code) of more than one-half in number of the Allowed Claims actually voting in such Class have voted to accept the Plan. D. Non-Consensual Confirmation
The Trustee reserves the right to seek Confirmation of the Plan under section 1129(b) of the Bankruptcy Code, to the extent applicable, in the event of a rejection by any of the Voting Classes. V. PROCEDURES FOR RESOLUTION OF DISPUTED, CONTINGENT AND UNLIQUIDATED CLAIMS OR EQUITY INTERESTS A. Prosecution of Objections to Claims
As of the Effective Date, Reorganized Offshore shall have the exclusive authority on or before the Claims Objection Bar Date to file objections, settle, compromise, withdraw or litigate to judgment objections to Claims. Hearings on any such objections shall be fixed for hearing at least twenty-eight (28) days after the filing of the objections or at such other time as may be fixed by the Bankruptcy Court or agreed to by the parties (subject to the authority of the Bankruptcy Court). Reorganized Offshore shall litigate to judgment, settle or withdraw objections to Disputed Claims, and with regard to objections, if any, pending as of Confirmation, Reorganized Offshore shall be deemed, without further action of the Bankruptcy Court, to be the judicial substitute as the party in interest with Bankruptcy Court approved standing in Bankruptcy Case, under the Plan, or in any judicial proceeding or appeal to which the Trustee is a party, and shall be entitled to litigate to judgment, settle or withdraw objections to Disputed Claims without the necessity of notice or hearing. From and after the Effective Date, Reorganized Offshore may settle or compromise any Disputed Claim without approval of the Bankruptcy Court. B. Allowance of Claims
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Except as to Claims allowed by this Plan or as otherwise expressly provided herein or in any Final Order by the Bankruptcy Court prior to the Effective Date (including the Confirmation Order), no Claim shall be deemed Allowed, unless and until such Claim is deemed Allowed under the Bankruptcy Code or the Bankruptcy Court enters a Final Order in the Chapter 11 Case allowing such Claim. Except as to Claims Allowed by the or any order entered by the Bankruptcy Court prior to the Effective Date (including the Confirmation Order), the Reorganized Debtor, after confirmation, will have and retain any and all rights and defenses the Debtor or the Trustee had with respect to any Claim as of the Petition Date or thereafter. To the extent that Reorganized Offshore objects to any filed Claims and there has been no final determination regarding allowance of such Disputed Claims prior to any Distribution, Reorganized Offshore shall escrow such claimants pro-rata share of any Distribution and retain such amount until the Bankruptcy Court enters a Final Order in the Chapter 11 Case allowing or denying such Claim. C. Controversy Concerning Impairment
If a controversy arises as to whether any Claims or any Class of Claims are Impaired under this Plan, the Bankruptcy Court shall, after notice and a hearing, determine such controversy before the Confirmation Date. D. Payments and Distributions on Disputed Claims and Class 3 Claims
Notwithstanding any provision herein to the contrary, except as otherwise agreed by the Debtor and/or Reorganized Debtor, in its sole discretion, no payments, partial payments, Distributions, partial Distributions, treatment or Plan classification will be made with respect to a Holder of a Disputed Claim and Holders of Class 3 General Unsecured Claim until the resolution of all Disputed Claims by settlement or Final Order. Upon resolution of all Disputed Claim, by settlement or Final Order and the providing by the Reorganized Debtor of the final list of allowed Class 3 Claims to the Offshore Equity Trustee, the beneficial interests in the Offshore Equity Trust shall be deemed to have been issued to the Offshore Equity Trust Beneficiaries. Thereafter, distributions to the Offshore Equity Trust and to Offshore Trust Beneficiaries shall be made in conformity with Article VI of this Plan. No distributions to Holder(s) of Class 4 Claims shall be made unless and until all Allowed Claims in Classes 1, 2 and 3 have been paid in full and there are remaining assets to be liquidated and/or funds available for Distribution. VI. MEANS OF IMPLEMENTATION OF THE PLAN A. Operation of Reorganized Offshore Post-Effective Date
Reorganized Offshore will exist after the Effective Date as a separate entity, with all the powers of a corporation under the applicable law, without prejudice to any right to terminate such existence (whether by merger or otherwise) under applicable law after the Effective Date. Except as otherwise provided in the Plan, on the Effective Date, all property, including appurtenant rights and privileges, comprising the Offshore Estate will vest in Reorganized Offshore, free and clear of all Claims, Liens, charges, encumbrances and interests of Creditors and Holders of Equity Interests (except as otherwise expressly provided in the Plan). As of the Effective Date, Reorganized Offshore may operate its business and use, acquire and settle and
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compromise Claims without supervision of the Bankruptcy Court free of any restrictions of the Bankruptcy Code or Bankruptcy Rules, other than those restrictions expressly imposed by the Plan and Confirmation Order. Reorganized Offshore may also pay the charges it incurs for Professional fees, disbursements, expenses or related support services after the Effective Date without any application to the Bankruptcy Court. The Confirmation Order shall also provide that Reorganized Offshore will be responsible for the timely payment of all statutory fees under 28 U.S.C. 1930 relating to the Bankruptcy Case. In conformity with applicable non-bankruptcy law, Reorganized Offshore shall cause to be filed with all appropriate governmental agencies appropriate Restated Articles of Incorporation and/or By-Laws, to the extent necessary under the Bankruptcy Code and as necessary to conform to the terms of this Plan. A form of the Restated Articles of Incorporation and the Restated By-Laws, if any, shall be contained in the Plan Supplement. The articles of organization of Offshore shall be amended and restated to the extent necessary: (i) to prohibit the issuance of nonvoting equity securities as required by section 1123(a)(6) of the Bankruptcy Code, subject to further amendment as permitted by applicable law; and (ii) to effectuate the provisions of the Plan, without the need for any further approval action by Offshore or its shareholders, officers, or directors, or Reorganized Offshore or its shareholders, officers, or directors. After the Effective Date, the Equity Interest in Reorganized Offshore shall be held by the Offshore Equity Trust for the beneficial interest of Holders of Allowed Claims. On the Effective Date, all matters provided for under the Plan that would otherwise require approval of Offshore and/or Reorganized Offshore or its shareholders, officers, or directors, including, without limitation, the adoption and effectiveness of the Restated Articles of Incorporation and/or By-Laws, and the election or appointment, as the case may be, of officers of Reorganized Offshore as provided for under this Plan, shall be deemed to have occurred and shall be in effect from and after the Effective Date without any requirement of further action by Offshore or Reorganized Offshore or its shareholders, officers, or directors. As of the Effective Date, the officers of Reorganized Offshore shall be authorized and directed to issue, execute and deliver, through authorized representatives, the agreements, documents, securities and instruments contemplated by the Plan in the name of and on behalf of Reorganized Offshore. By means of Confirmation, the Trustee, Gerald H. Schiff, shall be deemed and appointed (and shall have all past acts ratified) as President and sole Director of Reorganized Offshore, and Lori Montecino shall be deemed and appointed as Secretary of Reorganized Offshore. Gerald Schiff shall compensation as a director and president of Reorganized Offshore equal to 3% of payments to creditors of Reorganized Offshore (which shall not be inclusive of distributions to the Offshore Equity Trust) and Lori Montecino shall continue to receive her contract rate of $3,500 per month as compensation. Reorganized Offshore shall be entitled to retain professionals of its choosing. Reorganized Offshore shall make periodic Distributions to the Offshore Equity Trust as follows: (i) Distributions of the net proceeds, if any, from the sale and/or transfer of Existing Oil and Gas Assets by Reorganized Offshore within sixty (60) days of receipt of the proceeds, subject to payment of the Class 1 Empire Secured Claims from any proceeds allocated to the Empire Lease; (ii) Distributions of the net proceeds from currently Producing Wells, less the Distributions due to the Class 1 Empire Secured Claims and after payment of reasonable and
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ordinary expenses; (iii) Distributions of the net proceeds, if any, from the prosecution and/or settlement of the D&O Litigation by Reorganized Offshore within sixty (60) days of receipt and after payment of all fees and expenses; (iv) Distributions of the net proceeds, if any, derived from the BP Claim by Reorganized Offshore within sixty (60) days of receipt of the net proceeds; and (v) if, in the sole discretion of the management of Reorganized Offshore, available Excess Cash exists in an amount sufficient to render feasible a Distribution of Excess Cash to the Offshore Equity Trust for the benefit of the Offshore Equity Trust Beneficiaries, Reorganized Offshore shall make such a Distribution. B. The Offshore Equity Trust and Appointment, Powers and Removal of the Offshore Equity Trustee i. Establishment of the Offshore Equity Trust
On the Effective Date, the Debtor, by and through the Trustee, shall execute the Offshore Equity Trust Agreement, a form of which will be filed by the Plan Proponent as part of the Plan Supplement at least twenty (20) days prior to the Confirmation Hearing, and shall take all other steps necessary to establish the Offshore Equity Trust. The Confirmation Order shall specifically include and constitute approval of the Offshore Equity Trust Agreement and authorization of the Trustee to execute the Offshore Equity Trust Agreement on behalf of the Debtor. ii. Purpose of the Offshore Equity Trust
After the Effective Date, the Offshore Equity Trust will make Distributions to Offshore Equity Trust Beneficiaries according to the terms of this Plan and the Offshore Equity Trust Agreement. The Offshore Equity Trust shall be established for the sole purpose of holding the Equity Interest of Reorganized Offshore and distributing the Distributions made by Reorganized Offshore to the Offshore Equity Trust, which shall hold such Distributions as necessary to pay expenses of the Trust and thereafter for the benefit of Offshore Equity Trust Beneficiaries in accordance with Treasury Regulation section 301.7701-4(d). The Offshore Equity Trust shall not have as its objective the conduct of a trade or business for profit but shall own the new Equity Interests in Reorganized Offshore for the purpose of directing the liquidation the assets of Reorganizing Offshore by virtue of the sole membership interest of the Trust and the officer and director status as regards Reorganized Offshore of the Offshore Equity Trustee. Interests in the Offshore Equity Trust shall not be certificated or transferable, except with respect to a transfer by will or under the laws of descent and distribution, as set forth in the Offshore Equity Trust Agreement. iii. Issuance of Equity by the Debtor to the Offshore Equity Trust
Upon the Effective Date, all Class 4 Equity Interests shall be cancelled and the Debtor shall issue new equity interests to the Offshore Equity Trust for the benefit of the Offshore Equity Trust Beneficiaries and Secondary Offshore Equity Trust Beneficiary, free and clear of any and all Claims, Interests, debts, Liens, Security Interests, and encumbrances but subject to the Liens specifically provided for under the Plan or in the Confirmation Order. Under section 1145 of the Bankruptcy Code, the interest of the Offshore Equity Trust Beneficiaries and
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Secondary Offshore Equity Trust Beneficiary in Distributions, if any, from the Offshore Equity Trust shall be exempt from registration under the Securities Act of 1933, as amended, and applicable state and local laws requiring registration of securities. The interests of the Offshore Equity Trust Beneficiaries and Secondary Offshore Equity Trust Beneficiary in Distributions from the Offshore Equity Trust shall be exempt from registration under the Securities Exchange Act of 1934 and the Investment Company Act of 1940 because: (i) the interests in the Offshore Equity Trust will not be represented by certificates; (ii) the Offshore Equity Trust exists for the sole purpose of directing the liquidation and distribution the Reorganized Offshore Assets; (iii) the Offshore Equity Trust shall only exist for the period of time necessary to accomplish this stated objective; (iv) the Offshore Equity Trust and Reorganized Offshore will issue annual unaudited financial statements to Offshore Equity Trust Beneficiaries and Secondary Offshore Equity Trust Beneficiary; (v) the Bankruptcy Court shall have continuing jurisdiction over all matters related to the Offshore Equity Trust; and (vi) the interests in the Offshore Equity Trust will not be transferable, except with respect to a transfer by will or under the laws of descent and distribution, as set forth in the Offshore Equity Trust Agreement. If, however, the Offshore Equity Trustee determines, with advice of counsel, that the Offshore Equity Trust is required to comply with the registration and reporting requirements of the Securities Exchange Act of 1934, as amended, the Investment Company Act of 1940, as amended or any state or local laws, then the Offshore Equity Trustee shall take any and all action to comply with such registration and reporting requirements. iv. Appointment of and Compensation for the Offshore Equity Trustee
The Trustee shall serve as the Offshore Equity Trustee following Confirmation of this Plan. On the Effective Date, the Trustee shall be appointed as the Offshore Equity Trustee. Any successor Offshore Equity Trustee shall be appointed as provided for in the Offshore Equity Trust Agreement. The Offshore Equity Trustees powers and duties are described below, and are further explained in the Offshore Equity Trust Agreement. The Offshore Equity Trustee, and any successor Offshore Equity Trustee, shall receive, without Bankruptcy Court approval, reasonable compensation for services rendered equivalent to three (3%) percent of (1) all Distributions made by the Offshore Equity Trustee, including but not limited to all payments made by the Offshore Equity Trustee in the ordinary course to maintain the Offshore Equity Trust, all Distributions, if any, made to Offshore Equity Trust Beneficiaries and the Secondary Offshore Equity Trust Beneficiary according to the terms of this Plan and the Offshore Equity Trust Agreement, and (2) reimbursement of out-of-pocket expenses of the Offshore Equity Trustee in handling his duties as Trustee of the Trust. Further, the Offshore Equity Trustee shall be entitled to retain counsel of his choosing, including counsel for the Trustee and Reorganized Offshore (i.e. Gordon Arata) and such entitlement shall be recognized by the Offshore Equity Trust Agreement, Reorganized Offshore By-Laws and Confirmation Order. No Offshore Equity Trustee shall be required to give any bond or surety or other security for the performance of its duties. Procedures for selection of a successor Offshore Equity Trustee shall be as set forth in the Offshore Equity Trust Agreement. v. Powers and Duties of the Offshore Equity Trustee
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The rights, powers and privileges of the Offshore Equity Trustee (to act on behalf of the Offshore Equity Trust) will be specified in the Offshore Equity Trust Agreement and will include, among others, the authority and responsibility to: (i) accept, preserve, receive, collect, manage, invest, supervise and protect the Distributions from Reorganized Offshore, as provided in the Plan and the Offshore Equity Trust Agreement; (ii) liquidate, transfer or otherwise dispose of the Offshore Equity Trust Assets or any part thereof or any interest therein upon such terms as the Offshore Equity Trustee determines to be necessary, appropriate or desirable, pursuant to the procedures for making Distributions prescribed in the Plan, and otherwise consistent with the terms of the Plan; (iii) calculate and make Distributions, if any, made to Offshore Equity Trust Beneficiaries and the Secondary Offshore Equity Trust Beneficiary; (iv) comply with the Plan and exercise its rights and fulfill its obligations there under; (v) retain and compensate, without further Order of the Bankruptcy Court, the services of professionals or other persons or entities to represent, advise and assist the Offshore Equity Trustee in the fulfillment of its responsibilities in connection with the Plan and the Offshore Equity Trust Agreement; (vi) file appropriate tax returns on behalf of the Offshore Equity Trust and pay taxes owed by the Offshore Equity Trust, if any; and (viii) terminate the Offshore Equity Trust as provided in the terms of the Plan and the Offshore Equity Trust Agreement. vi. Indemnification of the Offshore Equity Trustee
The Offshore Equity Trust shall indemnify and hold harmless the Offshore Equity Trustee and its professionals, and any duly designated agent or representative thereof (in their capacity as such), from and against and in respect to any and all liabilities, losses, damages, claims, costs and expenses, including without limitation, attorneys fees arising out of or due to their actions or omissions, or consequences of such actions or omissions, other than as a result of their fraud, willful misconduct or gross negligence, with respect to the Offshore Equity Trust or the drafting, negotiation, implementation or administration of this Plan. vii. Tax Treatment of the Offshore Equity Trust
The Offshore Equity Trust is to be established for the primary purpose of holding newly issued equity interests in the Debtor for the benefit of the Offshore Equity Trust Beneficiaries and the Secondary Offshore Equity Trust Beneficiary. Pursuant to Treasury Regulation 301.7701-4(d), the Offshore Equity Trust is intended to be characterized as a Liquidating Trust for all purposes under the Internal Revenue Code, and all items of income, deduction, credit or loss of the Offshore Equity Trust shall be allocated pro rata for federal, state and local income tax purposes among the Offshore Equity Trust Beneficiaries. C. Offshore Equity Trust Distributions
The Offshore Equity Trustee shall make Distributions, if any, ratably to the Offshore Equity Trust Beneficiaries and the Secondary Offshore Equity Trust Beneficiary ratably to the Offshore Equity Trust Beneficiaries, after deduction of fees and expenses incurred by the Offshore Equity Trustee and any professionals employed by the Offshore Equity Trust, and after such compensation to the Offshore Equity Trustee as provided in the Offshore Equity Trust Agreement.
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Before making any Distribution, the Offshore Equity Trustee may request written notification of the Offshore Equity Trust Beneficiarys federal taxpayer identification number or social security number if the Offshore Equity Trustee determines, in his reasonable discretion, that such information is necessary to fulfill its tax reporting and withholding obligations or otherwise. The Offshore Equity Trustee, in its reasonable discretion, may suspend distributions to any Offshore Equity Trust Beneficiary that has not provided its federal taxpayer identification number or social security number, as the case may be, after a request is made of the Holder. If any distribution to Offshore Equity Trust Beneficiary is returned to the Offshore Equity Trustee as undeliverable, then unless and until the Offshore Equity Trustee is notified in writing of the Holders then current address: (A) such undeliverable Distributions will remain in the possession of the Offshore Equity Trust, and no further attempt will be made to deliver such Distribution, and (B) no attempt will be made to deliver subsequent Distributions to such Beneficiary. Any Offshore Equity Trust Beneficiary that does not assert a Claim for an undeliverable Distribution by delivering to the Offshore Equity Trustee a written notice setting forth such Holders then current address within 180 days after the later of (A) the Effective Date and (B) the last date on which a distribution was deliverable to the Holder, will have its Claim for undeliverable Distributions discharged and will be forever barred from asserting such Claim or any Claim for subsequent distributions against Offshore, Reorganized Offshore, the Offshore Equity Trust, the Offshore Equity Trustee, or their respective assets, and such undeliverable Distributions shall thereafter be redistributed to the Offshore Equity Trust Beneficiaries entitled to Distribution thereof. Nothing contained in the Plan will require the Offshore Equity Trustee to attempt to locate any Holder of an Allowed General Unsecured Claim that becomes an Offshore Equity Trust Beneficiary. No Distributions to the Offshore Equity Trust shall be made until full completion of the P&A Work and final determination of all Allowed Claims, and Reorganized Offshore has submitted a final schedule of the Holder of Allowed Class 3 General Unsecured Claims that are entitled to a beneficial interest in the Offshore Equity Trust as set forth in Article III of this Plan. Upon completion of the P&A Work and determination of all Allowed Claims, the Offshore Equity Trustee shall make pro rata Distributions to the Offshore Equity Trust Beneficiaries of the Distributions made by Reorganized Offshore to the Offshore Equity Trust as soon as practicable, but in no case later than ninety (90) days after receipt of such Distributions. For the avoidance of doubt, the pro rata Distributions by the Offshore Equity Trust to the Holders of Class 3 Claims shall be from the following types of proceeds distributed by Reorganized Offshore to the Trust, in accordance with the objectives of the Trust as owner of Reorganized Offshore to oversee the liquidation of Assets of Reorganized Offshore: (1) The net proceeds received from Reorganized Offshore from currently Producing Wells, less expenses involved in administering the Offshore Equity Trust.
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(2) (3)
The net proceeds, if any, received from Reorganized Offshore from the sale and/or transfer by Reorganized Offshore of Existing Oil and Gas Assets.1 The net proceeds received from Reorganized Offshore pursuant to the Recovery Allocation Agreement, if any, for the prosecution and/or settlement of the D&O Litigation. The net proceeds, if any, derived by Reorganized Offshore from the BP Claim. The available Excess Cash that Reorganized Offshore distributes to the Offshore Equity Trust.
(4) (5)
The rights of the Secondary Offshore Equity Trust Beneficiary to receive Distributions shall be subordinate to the rights of the Offshore Equity Trust Beneficiaries and the Secondary Offshore Equity Trust Beneficiary shall only receive Distributions from the Offshore Equity Trust in the event that funds are available for Distribution after all expenses of the Offshore Equity Trust are paid in full, all Allowed Claims in Classes 1 and 2 are paid in full, and Distributions in the aggregate amount of the Allowed Class 3 Claims have been made to the Offshore Equity Trust Beneficiaries, including Distributions to the Holders of Class 2 Claims on account and in the amount of any such Holders Class 3 Claim. Except as otherwise provided in this Plan, in the event that the Offshore Equity Trustee were to fail to make any payment or perform any obligation when due under this Plan or under any instrument issued under this Plan, the affected Claimant/Beneficiary shall give thirty-five (35) days written notice to the Offshore Equity Trustee with opportunity to cure any such failure; if cure is not timely effected, then and only then may such Claimant proceed to enforce its rights and remedies pursuant to applicable law. D. Term and Termination of the Offshore Equity Trust and Offshore Equity Trustee
The Offshore Equity Trust shall be created, effective as of the Effective Date. Thereupon, the Offshore Equity Trust shall remain and continue in full force and effect until (i) the Reorganized Debtors assets having been wholly converted to Cash or abandoned, (ii) all costs, expenses and obligations incurred in administering the Reorganized Debtors assets and the Offshore Equity Trust have been fully paid, and (iii) the P&A Work has been fully completed and approved.
Regarding the prospect of a sale or sales of the Existing Oil and Gas Assets, the Trustee has received, entertained and investigated offers. However, as of the filing of this Plan, no offers have reached the level of completeness that warranted seeking Bankruptcy Court approval. Reorganized Offshore shall continue to investigate the market and pursue prospects for the sale of the Existing Oil & Gas Assets and any proposed sale shall be subject to Bankruptcy Court approval. Further, the Reorganized Offshore shall retain all rights of the Estate and the Trustee to seek and obtain Bankruptcy Court approval of a Section 363(h) joint sale of the Existing Oil and Gas Assets to the extent such an offer would be made. In the event that the Existing Oil & Gas Assets have not been transferred pursuant to final approval by the Bankruptcy Court upon completion of the P&A Work, Reorganized Offshore shall submit a procedure for auctioning the Existing Oil & Gas Assets for final approval by the Bankruptcy Court to be commenced within one hundred eighty (180) days after completion of the P&A Work. Page 26 of 41 First Amended Plan of Reorganization Dated March 28, 2013
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The Offshore Equity Trust will terminate and cease to exist on the date that is the later of liquidation of all Assets of Reorganized Offshore and three (3) years from the Effective Date; provided, however, that upon complete liquidation of the Reorganized Debtors assets and satisfaction as far as possible of all remaining obligations, liabilities and expenses of Reorganized Offshore and the Offshore Equity Trust prior to such date, and upon conclusion of the prosecution of all Causes of Action and all Claim Objections litigated by Reorganized Offshore for purposes of establishing Holders of Allowed Class 3 Claims pro rata share of the beneficial interest in the Offshore Equity Trust, the Offshore Equity Trustee may, with approval of the Bankruptcy Court, sooner terminate the Offshore Equity Trust; and provided further, that prior to the end of three (3) years from the Effective Date, the Offshore Equity Trustee may move the Bankruptcy Court to extend the termination date of the Offshore Equity Trust after notice to interested parties and an opportunity for hearing. The Offshore Equity Trust is designed to receive the Distributions, if any, from Reorganized Offshore and to distribute same to the Offshore Equity Trust Beneficiaries and Secondary Offshore Equity Trust Beneficiary consistent with the procedures described herein. For the avoidance of doubt, the Offshore Equity Trust shall only exist for the period of time necessary to make Distributions to the Offshore Equity Trust Beneficiaries and Secondary Offshore Equity Trust Beneficiary as reflected herein. Upon termination and complete satisfaction of its duties under the Offshore Equity Trust Agreement, the Offshore Equity Trustee will be forever discharged and released from all powers, duties, responsibilities and liabilities pursuant to the Offshore Equity Trust Agreement. E. Causes of Action and Avoidance Actions
As of the Effective Date, pursuant to section 1123(b)(3) of the Bankruptcy Code, except as otherwise provided in this Plan, any and all Causes of Action shall be property of the Reorganized Debtor, and Reorganized Offshore shall be deemed, without further action of the Bankruptcy Court, to be the judicial substitute as the party in interest with Bankruptcy Court approved standing in the Offshore Chapter 11 Case, under this Plan, or in any judicial proceeding or appeal to which Offshore is a party, or in which the Offshore shall become a party, and shall have the standing as provided in this Plan, to pursue any and all Causes of Action and to commence, prosecute, collect upon, settle, compromise any and all Causes of Action. Upon the Effective Date, Reorganized Offshore shall retain the rights afforded under sections 547 and 502(d) of the Bankruptcy Code to utilize avoidance powers under the Bankruptcy Code as the basis upon which to object to and/or reduce Claims, whether or not Offshore or the Trustee has determined to waive affirmative recovery under such avoidance powers regarding the Holders of such Claims. Confirmation of the Plan will also constitute a finding that any possible Avoidance Actions against those Creditors who vote to accept the Plan and whose Claims are listed as undisputed, non-contingent, and liquidated on the Bankruptcy Schedules are waived.
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In addition to the Avoidance Actions retained by Reorganized Offshore, Reorganized Offshore specifically reserves for investigation and prosecution any and all claims or Causes of Action with regard to the following: (1) The D&O Claim. Any and all actions, Causes of Action or Claims against any present or former director or officer of the Debtor, along with any and all other Causes of Action or Claims of any kind against any present or former director or officer of the Debtor or any other Person which may be covered under Policy No. DOC 2974663 08 issued by Zurich North America Specialties or Policy No. 555-75-82 issued by National Union Fire Ins. Co. of Pittsburg or any other insurance policies to which the Debtor or its present or former officers or directors may be beneficiaries and as specifically prayed for in the D&O Litigation and the Paxton Intervention. (2) The BP Claim. Any and all claims and Causes of Action filed on behalf of Offshore in the Deepwater Horizon oil spill litigation. (3) Investor P&A Claims. Any and all claims and Causes of Action for reimbursement for any and all P&A Work liabilities, including the existence of an Allowed Class 3 Claim in favor of RLI, from the Investors based upon certain contractual investment agreements between the Investors and Offshore. Under Article VII of this Plan, Reorganized Offshore shall reject the Investors contracts in the Producing Wells and avoid any ownership interest asserted by such Investors in those properties. Portions of the revenue received from the Producing Wells shall be escrowed for P&A of said properties. Certain of the Investors asserting Claims are also Investors in the P&A Properties. Exhibit E identifies the billing deck interest of each Investor in the P&A Properties, the estimated total P&A cost for each P&A Property, and the itemized cost for each Investor. Reorganized Offshore reserves any and all rights to (1) seek reimbursement of each Investors portion of the P&A Work cost based upon such Investors contractual interest in each P&A Property as identified in Exhibit E and/or (2) assert any other Causes of Action Reorganized Offshore may have pursuant to the Investors contracts with Offshore. A current schedule of the Investors in the P&A Properties and their estimated contractual P&A amounts is attached as Exhibit E, but Exhibit E does not, in the estimation of the Plan Proponent, represent the final determinable amount of P&A liability as such amount will not be known until completion of the P&A Work. VII. EXECUTORY CONTRACTS AND UNEXPIRED LEASES
Immediately prior to the Effective Date, all executory contracts and unexpired leases of the Debtor for which assumption has not been previously approved by Final Order of the Bankruptcy Court will be deemed assumed by Reorganized Offshore except those executory contracts and unexpired leases that (1) have been rejected by order of the Bankruptcy Court, (2) are subject of a motion to reject pending on the Effective Date, (3) are identified on a list to be filed with the Bankruptcy Court on or before the Confirmation Date as contracts or leases to be rejected, or (4) are rejected pursuant to the terms of this Plan. The Trustee hereby excludes any and all settlement agreements and related contracts approved by Final Order of the Bankruptcy Court from the category of executory contracts covered by this Plan, including but not limited to the Oil/Offshore Settlement, the Empire Lien Compromise, the Contract Operator Agreement, the Recovery Allocation Agreement, and the Decommissioning Term Sheet. Entry of the
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Confirmation order by the Bankruptcy Court shall constitute approval of such assumption and rejection of executory contracts and unexpired leases pursuant to Sections 365(a) and 1123 of the Bankruptcy Code. The Investors contracts in the Producing Wells are executory contracts pursuant to Section 365 of the Bankruptcy Code. Reorganized Offshore shall reject the Investors contracts in connection with the Producing Wells.2 Furthermore, with respect to the Investors in the Producing Wells (Ship Shoal and Empire), Reorganized Offshore shall within 30 days after the Effective Date institute proceedings to avoid any contractual claim to ownership in the Producing Wells pursuant to section 544(a)(3) of the Bankruptcy Code. To the extent that the Investors in the Producing Wells assert a rejection claim, Reorganized Offshore reserves the right to offset the funds escrowed from production for P&A (which the Trustee submits is the entire amount of production remaining after payment of expenses) against the amounts the Investors claim are due as a result of the rejection of their contractual agreements. The Trustees best estimate of the Investors interests applicable to such offset is provided in the attached Exhibit F. The provisions (if any) of each Executory Contract and Unexpired Lease to be assumed and assigned under this Plan which are or may be in default, shall be satisfied solely by Cure. At least ten (10) days prior to the Confirmation Hearing, any party to an Executory Contract or Unexpired Lease that is to be assumed under this Plan shall submit in writing to the Trustee an estimate of that partys alleged Cure Claim. To the extent that the Trustee does not object to the estimated Cure Claim at or before the Confirmation Hearing, such Cure Claim shall be deemed allowed and paid as an Administrative Claim on the Effective Date. In the event of a dispute regarding (a) the nature or the amount of any Cure, (b) the ability of the Debtor to provide adequate assurance of future performance (within the meaning of section 365 of the Bankruptcy Code) under the contract or lease to be assumed, or (c) any other matter pertaining to assumption, the Bankruptcy Court shall make a determination as to the nature and amount of such Cure Claim(s) at the Confirmation Hearing, and Cure shall occur as soon as practicable following the entry of a Final Order resolving the dispute and approving the assumption and, as the case may be, assignment. Any Rejection Claim must be filed with the Bankruptcy Court and served upon the Trustee by, the earlier of, thirty (30) days after (i) notice of entry of an order approving the rejection of such Executory Contract or Unexpired Lease, or (ii) fourteen (14) days after the Confirmation Date. Any such Claim that is not filed with the Bankruptcy Court within the time provided above will be deemed discharged and not entitled to participate in Offshore Equity Trust Distributions under this Plan. Unless otherwise ordered by the Bankruptcy Court, all Claims arising from the rejection of Executory Contracts and Unexpired Leases will be treated as a Class 3 General Unsecured Claim. VIII. CONDITIONS PRECEDENT TO CONFIRMATION AND CONSUMMATION OF THE PLAN A.
2
The Effective Date
See Exhibit F identifying the Investors in the Producing Wells and their contractual investment percentage. Page 29 of 41 First Amended Plan of Reorganization Dated March 28, 2013
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The Effective Date shall be the first Business Day that is at least one (1) full Business Day after the Confirmation Order becomes a Final Order and all the conditions precedent to the Effective Date described below have been satisfied or waived. B. Conditions Precedent to Effective Date
The Effective Date shall not occur until the following conditions have been satisfied or waived: 1. Confirmation Order
The Confirmation Order, in form and substance reasonably acceptable to the Trustee, must have become a Final Order and must, among other things, provide that, except as expressly provided in this Plan, Offshore is discharged effective upon the Effective Date from any debt (as that term is defined in section 101(12) of the Bankruptcy Code), and Offshores liability in respect thereof is extinguished completely, whether reduced to judgment or not, liquidated or unliquidated, contingent or non-contingent, asserted or unasserted, fixed or unfixed, matured or unmatured, disputed or undisputed, legal or equitable, or known or unknown, or that arose from any agreement of Offshore that has either been assumed or rejected in the Bankruptcy Case or pursuant to this Plan, or obligation of Offshore incurred before the Effective Date, or from any conduct of Offshore prior to the Effective Date, or that otherwise arose before the Effective Date, including, without limitation, all interest, if any, on any such debts, whether such interest accrued before or after the Petition Date. 2. Documents
All documents, actions, and agreements necessary to implement this Plan shall have been effected or executed including the Offshore Equity Trust Agreement. 3. Authorizations
Offshore shall have received all authorizations, consents, regulatory approvals, rulings, letters, no-action letters, opinions or documents that are determined by the Trustee to be necessary to implement this Plan. C. Waiver of Conditions
The conditions precedent to the Effective Date may be waived or modified by an act of Offshore pursuant to writing signed by authorized representatives of the Trustee and filed with the Bankruptcy Court. D. Effects of Confirmation 1. Assets of the Debtor
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The property and assets of the Estate shall vest in the Reorganized Debtor on the Effective Date, subject only to the lien rights granted under and by this Plan and the Confirmation Order. From and after the Effective Date, the Reorganized Debtor may use and dispose of the Reorganized Offshore property free of any restrictions imposed under the Bankruptcy Code, except as may be specifically provided herein and the Offshore Plan Trust Agreement. As of the Effective Date, all property of the Reorganized Debtor shall be free and clear of all Liens, Claims and interests of Holders of Claims and Equity Interests, except as provided in this Plan. 2. Cancellation of Existing Class 4 Equity Interests Upon the Effective Date, all existing Equity Interests shall be converted into a secondary subordinated beneficial interest in the Offshore Equity Trust, to be issued as of the Effective Date. The agreements, instruments, and other documents relating to any existing Equity Interests, shall be cancelled, and any rights, obligations, and Claims under all such agreements, instruments, and other documents will be deemed fully and finally waived, released, cancelled, extinguished, and forever discharged. . 3. Issuance of New Equity Upon the Effective Date, Reorganized Offshore shall cause new Equity Interests to be issued to the Offshore Equity Trust for the benefit of the Offshore Equity Trust Beneficiaries and the Secondary Offshore Equity Trust Beneficiary. 4. Conversion of Allowed Class 3 General Unsecured Claims into Beneficial Interests in the Offshore Equity Trust Upon the Effective Date the Holders of Allowed Class 3 General Unsecured Claims shall contribute the Allowed amount of such Class 3 Claim in exchange for a beneficial interest in the new Equity to be issued by Reorganized Offshore and held by the Offshore Equity Trust for the benefit of the Allowed Class 3 General Unsecured Claims. The beneficial interests received by any Holder shall be in same proportion as that Holders Allowed Class 3 General Unsecured Claim bore to the total Allowed Class 3 General Unsecured Claims. 5. Findings by the Bankruptcy Court (a) Confirmation shall constitute a finding by the Bankruptcy Court that the Reorganized Debtor is entitled to cancel the Class 4 Equity Interests and Holders of Allowed Class 3 General Unsecured Claims shall contribute the Allowed amount of such Class 3 Claim in exchange for a beneficial interest in the new Equity to be issued by Reorganized Offshore and held by the Offshore Equity Trust for the benefit of the Allowed Class 3 General Unsecured Claims;
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(b)
Confirmation shall be deemed a finding by the Bankruptcy Court that the Trustee and/or Offshore Plan Trustee are authorized and directed to take all actions necessary or appropriate to enter into, implement and consummate the contracts, instruments, releases, leases, indentures and other agreements or documents created in connection with this Plan, including without limitation the Offshore Plan Trust Agreement; Confirmation shall be deemed a finding by the Bankruptcy Court that any claim, right, cause, or Cause of Action of the Debtor, or any Holder of any Claim, that is waived or deemed waived pursuant to the Plan or pursuant to the Disclosure Statement, shall have been waived and released upon the Effective Date, subject to the reservations or right and avoidance power set forth in the Plan; and Confirmation shall constitute a finding that cause exists to abrogate the stay of the effect of the Confirmation Order in accordance with Bankruptcy Rule 3020(e).
(c)
(d)
X.
MODIFICATIONS AND AMENDMENTS
The Trustee may alter, amend, or modify this Plan or any exhibits hereto under Section 1127(a) of the Bankruptcy Code at any time prior to the Confirmation Date. After the Confirmation Date and prior to substantial consummation of the Plan, as defined in section 1101(2) of the Bankruptcy Code, the Trustee may, under section 1127(b) of the Bankruptcy Code, institute proceedings in the Bankruptcy Court to remedy any defect or omission or reconcile any inconsistencies in the Plan, and related documents and agreements, the Disclosure Statement, or the Confirmation Order, and such matters as may be necessary to carry out the purposes and effects of the Plan so long as such proceedings do not materially adversely affect the treatment of Holders of Claims or Equity Interests under the Plan; provided, however, that prior notice of such proceedings shall be served in accordance with the Bankruptcy Rules or order of the Bankruptcy Court. XI. RETENTION OF JURISDICTION
Under 28 U.S.C. 157(b) and 1334, and sections 105(a) and 1142 of the Bankruptcy Code, and notwithstanding entry of the Confirmation Order and occurrence of the Effective Date, the Bankruptcy Court shall retain exclusive jurisdiction over all matters arising out of, and related to, the Bankruptcy Case and this Plan to the fullest extent permitted by law, including, among other things, jurisdiction to: (a) Allow, disallow, determine, liquidate, classify, estimate, or establish the priority or secured or unsecured status of any Claim or Equity Interest, including the resolution of any request for payment of any Administrative Claim and the resolution of any objections to the allowance or priority of Claims or Equity Interests; (b) Hear and determine all Professional Fee Claims; provided, however, that from and after the Effective Date, the payment of the fees and expenses of the retained Professionals of the Debtor and the Offshore Equity Trust shall be made in the ordinary course of business and shall not be subject to the approval of the Bankruptcy Court;
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(c)
Effectuate performance of and payments under the provisions of this Plan;
(d) Hear and determine any and all adversary proceedings, motions, applications, and contested or litigated matters arising out of, under, or related to, the Bankruptcy Case, including all controversies, suits and disputes that may arise in connection with the interpretation or enforcement of this Plan, and matters concerning state, local and federal taxes according to Sections 346, 505 and 1146 of the Bankruptcy Code; (e) Enter such orders as may be necessary or appropriate to execute, implement, or consummate the provisions of the Plan or Confirmation Order and all contracts, instruments, releases, and other agreements or documents created in connection with the Plan or the Confirmation Order; (f) Hear and determine disputes arising in connection with the interpretation, implementation, consummation, or enforcement of the Plan or the Confirmation Order, including disputes arising under agreements, documents, or instruments executed in connection with the Plan or the Confirmation Order; (g) Consider any modifications of the Plan, cure any defect or omission, or reconcile any inconsistency in any order of the Bankruptcy Court, including, without limitation, the Confirmation Order; (h) Issue injunctions, enter and implement other orders, or take such other actions as may be necessary or appropriate to restrain interference by any entity with implementation, consummation, or enforcement of the Plan or the Confirmation Order; (i) Enter and implement such orders as may be necessary or appropriate if the Confirmation Order is for any reason reversed, stayed, revoked, modified, or vacated; (j) Hear and determine any matters arising in connection with or relating to the Plan, the Disclosure Statement, the Confirmation Order, or any contract, instrument, release, or other agreement or document created in connection with the Plan, the Disclosure Statement, or the Confirmation Order; (k) Enforce all orders, judgments, injunctions, releases, indemnifications, and rulings entered in connection with the Bankruptcy Cases; (l) Recover all assets of the Debtor, wherever located; exculpations,
(m) Hear and determine matters concerning state, local, and federal taxes in accordance with section 346, 505, and 1146 of the Bankruptcy Code; (n) Hear and determine all disputes involving the existence, nature, or scope of Offshores discharge; (o) Hear and determine such other matters as may be provided in the Confirmation Order or as may be authorized under, or not inconsistent with, provisions of the Bankruptcy Code;
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(p) Enter a final decree closing the Bankruptcy Case and discharging the Trustee and/or Offshore Equity Trustee; and (q) Interpret and enforce the terms of any settlement and compromise set forth within the Plan or approved by Final Order of the Bankruptcy Court to ensure compliance with the Confirmation Order which shall be a Final Order of the Bankruptcy Court directing through the approval of compromises contained within the Plan and previously approved by the Bankruptcy Court that the parties to such compromises have resolved that all disputes arising there under are reserved for decision in the Bankruptcy Court. XII. MISCELLANEOUS PROVISIONS A. Severability of Plan Provisions
If, prior to Confirmation, any term or provision of this Plan is held by the Bankruptcy Court to be invalid, void, or unenforceable, the Bankruptcy Court, at the request of the Trustee or any other party-in-interest, shall have the power to alter and interpret such term or provision to make it valid or enforceable to the maximum extent practicable, consistent with the original purpose of the term or provision held to be invalid, void, or unenforceable, and such term or provision shall then be applicable as altered or interpreted. Notwithstanding any such holding, alteration, or interpretation, the remainder of the terms and provisions of this Plan shall remain in full force and effect and shall in no way be affected, impaired, or invalidated by such holding, alteration, or interpretation. The Confirmation Order shall constitute a judicial determination and shall provide that each term and provision of this Plan, as it may have been altered or interpreted in accordance with the foregoing, is valid and enforceable pursuant to its terms. B. Successors and Assigns
The rights, benefits, and obligations of any Person named or referred to in the Plan shall be binding on, and shall inure to the benefit of, any heir, executor, administrator, successor, or assign of such Person. C. Notices
Any pleading, notice, request, demand or any other document required or permitted to be made or provided to or upon the Trustee, Offshore, Reorganized Offshore or the Offshore Equity Trust under this Plan shall be (a) in writing, (b) served by (i) certified mail, return receipt requested, (ii) hand delivery, (iii) overnight delivery service, or (iv) first class mail, and (c) deemed to have been duly given or made when actually delivered or when actually received, addressed as follows: Virgin Offshore U.S.A., Inc. [or, as ApplicableOffshore Equity Trust] c/o Rick M. Shelby 201 St. Charles Avenue, Suite 4000 New Orleans, LA 70170-4000 Telephone: (504) 582-1111
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Offshore and/or the Offshore Equity Trust may change such address or addresses by notice to all holders of Claims and Equity Interests given in the same manner. D. Compromise and Settlement
Pursuant to Bankruptcy Rule 9019(a), Reorganized Offshore may compromise and settle various Claims against it and/or Claims it may have against other Persons. Reorganized Offshore expressly reserves the right (and except as otherwise provided herein, with Bankruptcy Court approval, following appropriate notice and opportunity for a hearing) to compromise and settle Claims against it and Claims that it may have against other Persons. After the Effective Date, no Bankruptcy Court approval of any such action, compromise or settlement shall be required; however, the Bankruptcy Court shall retain jurisdiction to approve such compromise or settlement in the event that Reorganized Offshore determines such approval is necessary. E. Section 1146 Exemption
Pursuant to section 1146(c) of the Bankruptcy Code, any transfers of property pursuant hereto, which shall by Confirmation be deemed transfers pursuant to this Plan, shall not be subject to any document recording tax, stamp tax, conveyance fee, intangibles or similar tax, mortgage tax, stamp act, real estate transfer tax, mortgage recording tax or other similar tax or governmental assessment in the United States, and the Confirmation Order shall direct the appropriate state or local governmental officials or agents to forgo the collection of any such tax or governmental assessment and to accept for filing and recordation any of the foregoing instruments or other documents without the payment of any such tax or governmental assessment. F. Post-Confirmation Reporting Requirements.
After confirmation, the Reorganized Debtor shall continue to report to the United States Trustee on or before the fifteenth (15th) day of each calendar month the total of all disbursements for the prior calendar month up to the date an order is entered granting Final Decree, converting the case to chapter 7 or dismissing the case. Prior to entry of an order of Final Decree, the Reorganized Debtor and/or Offshore Equity Trustee will report the total disbursements up to the date of the decree insofar as not previously reported. However, nothing herein shall be construed as a waiver of the right of Reorganized Offshore to request that, after the Effective Date, the Bankruptcy Cases be administratively closed. G. Modification of the Plan
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The Trustee reserves the right, in accordance with the Bankruptcy Code and the Bankruptcy Rules to (1) amend or modify this Plan prior to the entry of the Confirmation Order and (2) after the entry of the Confirmation Order, the Trustee and/or Reorganized Offshore, whichever is applicable, may, upon order of the Bankruptcy Court, amend or modify the Plan, in accordance with section 1127(b) of the Bankruptcy Code, or remedy any defect or omission or reconcile any inconsistency in this Plan in such manner as may be necessary to carry out the purpose and intent of this Plan. H. Reservation of Rights
Except as expressly set forth herein, this Plan shall have no force or effect unless the Bankruptcy Court shall enter the Confirmation Order. None of the filing of this Plan, any statement or provision contained herein, or the taking of any action by the Trustee and/or the Reorganized Debtor, with respect to this Plan shall be or shall be deemed to be an admission or waiver of any rights of Offshore, the Trustee, Reorganized Offshore or the Offshore Equity Trust, with respect to the Holders of Claims or Equity Interests prior to the Effective Date. I. Governing Law
Except to the extent that the Bankruptcy Code or Bankruptcy Rules are applicable, and subject to the provisions of any contract, instrument, release, indenture or other agreement or document entered into in connection herewith, the rights and obligations arising hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of Louisiana, without giving effect to the principles of conflict of laws thereof. J. No Admission or Waivers
Except as expressly set forth in this Plan, nothing contained in this Plan will constitute an admission or waiver by the Trustee, the Debtor, the Reorganized Debtor or the Estate with respect to any matter set forth herein, including, without limitation, liability on any Claim or Interest or the propriety of any classification of any Claim or Interest. K. Continuing Viability of Other Orders/Agreements
Except to the extent expressly modified or otherwise provided by this Plan, or as otherwise ordered by the Bankruptcy Court (i) all Final Orders previously entered by the Bankruptcy Court and (ii) any agreements between Creditors or between the Debtor or Reorganized Debtor and their Creditors will continue in full force and effect. L. Limitations on Liability.
Notwithstanding anything to the contrary contained in this Plan, on or after the Confirmation Date, and except to the extent covered by insurance, none of the Debtor, the Estate, the Chapter 11 Trustee, the Reorganized Debtor nor any of their respective employees, shareholders, partners, directors, attorneys, accountants, representatives, agents or Professionals employed by any of them, shall have or incur any liability to any Entity for actions taken or omitted to be taken in connection with or relating to the formulation or confirmation of this Plan,
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the Disclosure Statement or any contract, instrument, release or other agreement or document created in connection with this Plan, other than for gross negligence, willful misconduct or fraud. This release is limited to the matters set forth herein and in the Disclosure Statement. XIII. DISCHARGE OF OFFSHORE, INJUNCTION AND RELATED PROVISIONS A. Discharge of Debtor
The rights afforded under the Plan and the treatment of all Claims and Equity Interests under the Plan shall be in exchange for and in complete satisfaction, discharge, and release of Claims and Equity Interests of any nature whatsoever, including any interest accrued on such Claims from and after the Commencement Date, against the Debtor, the Reorganized Debtor and the Offshore Equity Trust, or any of their assets or properties. Except as otherwise provided herein, on the Effective Date, all such Claims against and Equity Interests in the Debtor, the Reorganized Debtor and the Offshore Equity Trust, shall be satisfied, discharged, and released in full, and all persons shall be precluded from asserting against the Debtor, the Reorganized Debtor or the Offshore Equity Trust, and/or any party released under this Plan, their successors and/or assigns, their assets, or their properties any other or further Claims or Equity Interests based upon any act or omission, transaction or other activity of any kind or nature that occurred prior to the Confirmation Date. B. Injunction
THERE SHALL BE AN INJUNCTION TO THE FULL EXTENT ALLOWED UNDER SECTIONS 1141 AND 524 OF THE BANKRUPTCY CODE, AND ALL HOLDERS OF CLAIMS SHALL BE ENJOINED FROM PURSUING ANY ACTION ON ACCOUNT OF OR RELATED TO ANY CLAIM THROUGH ANY CONDUCT OR PROCEEDING WHATSOEVER, WITH RESPECT TO DISCHARGED, RELEASED, ENJOINED OR EXCULPATED CLAIMS, AND AS AGAINST ANY PERSON SUBJECT TO OR DERIVING RIGHTS FROM THE DISCHARGE AND/OR ANY RELEASE OR EXCULPATION ARISING UNDER THE PLAN. C. Exculpations
The Debtor, the Reorganized Debtor and the Offshore Equity Trust and each of their respective representatives (including the Trustee and the Offshore Equity Trustee), shall have no liability to any Holder of any Claim, for any act or omission occurring during the course of this Bankruptcy Case occurring up to the Effective Date, including acts or omissions in connection with, or arising out of, the filing of the petition, the preparation of motions, memoranda, or other documents, preparation and/or negotiation of the Disclosure Statement and the Plan, the solicitation of votes for and the pursuit of Confirmation of the Plan, the consummation of the Plan, or the administration of the Plan or the property to be distributed under the Plan, except for gross negligence or willful misconduct as determined by a Final Order of the Bankruptcy Court, which shall possess exclusive jurisdiction over all such determinations, and, in all respects, shall be entitled to rely upon the advice of counsel with respect to their duties and responsibilities under the Plan. Such exculpations shall not apply to any liability for costs, if any, that may assessed or taxed against the
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Debtor, the Reorganized Debtor and the Offshore Equity Trust and each of their respective representatives (including the Trustee and the Offshore Equity Trustee)in connection with the D&O Litigation. D. Indemnification Obligations
Subject to the occurrence of the Effective Date, the obligations of the Debtor, the Reorganized Debtor and the Offshore Equity Trust to indemnify, defend, reimburse or limit the liability of directors, officers or employees who were directors, officers or employees of the Debtor against any liabilities, claims or causes of action for post Petition Date activities as provided in any of the articles of incorporation or By-laws of Offshore, or under applicable state or federal law, shall be discharged, irrespective of whether such indemnification, defense, reimbursement or limitation is owed in connection with an event occurring before or after the date of entry of the Order for Relief, except that obligations of the Debtor and the Reorganized Debtor to indemnify, defend, reimburse or limit the liability of employees against any liabilities, claims or causes of action for post Petition Date activities as provided in any of the articles of incorporation or By-laws of the Debtor or under applicable state or federal law shall survive Confirmation of the Plan only with respect to any such claims or causes of action as may be asserted against the Trustee and Lori Montecino, but no other person. The indemnification obligations of the Debtor and the Reorganized Debtor, set forth herein are limited to those authorized or permitted under state or federal law as the same is now or may become applicable at the time any claim for indemnification is made. E. Limited Release
On the Effective Date, the Debtor, the Reorganized Debtor shall release (i) those officers of the Debtor employed by Offshore as of the Confirmation Date, (ii) persons who are employed by Offshore as of the Confirmation Date, (iii) the Trustee, and (iv) each of Offshores respective officers, employees and representatives, for any act or omission occurring up to the Confirmation Date, including acts or omissions in connection with, or arising out of, the Disclosure Statement, the Plan, the solicitation of votes for and the pursuit of Confirmation of the Plan, the consummation of the Plan, or the administration of the Plan or the property to be distributed under the Plan, except for acts or omissions constituting gross negligence or willful misconduct as determined by a Final Order of the Bankruptcy Court, which shall possess exclusive jurisdiction over all such determinations, and, in all respects, shall be entitled to rely upon the advice of counsel with respect to their duties and responsibilities under the Plan. For the avoidance of doubt, the releases granted by the Debtor in this Section shall not relate to any Claims or Causes of Action specifically reserved by the Debtor pursuant to Article VII(E) of this Plan. F. Releases by Consenting Parties
On and after the Effective Date, each Consenting Party shall be deemed to have unconditionally released (i) the Debtor, the Reorganized Debtor (ii) each of their respective officers, employees, advisors, agents, affiliates, and representatives (including any attorneys, accountants, financial advisors, investment bankers and other professionals
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retained by such persons or entities), and (iii) the Trustee, from any and all Claims (as defined in section 101(5) of the Bankruptcy Code), obligations, rights, suits, damages, causes of action, remedies and liabilities whatsoever, including any derivative claims, whether known or unknown, foreseen or unforeseen, existing or hereafter arising, in law, equity or otherwise, that such Person or Entity would have been legally entitled to assert (whether individually or collectively), based in whole or in part upon any act or omission, transaction, agreement, event or other occurrence taking place on or before the Effective Date in any way relating or pertaining to (a) the Offshore Chapter 11 Case or (ii) the negotiation, formulation and preparation of the Plan, or any related agreements, instruments or other documents. G. Subordination
The classification and manner of satisfying all Claims and Equity Interests and the respective distributions and treatments hereunder take into account and/or conform to the relative priority and rights of the Claims and Equity Interests in each Class in connection with any contractual, legal, and equitable subordination rights relating thereto whether arising under general principles of equitable subordination, section 510(b) of the Bankruptcy Code or otherwise, and any and all such rights are settled, compromised and released pursuant hereto. The Confirmation Order shall permanently enjoin, effective as of the Effective Date, all Persons and Entities from enforcing or attempting to enforce any such contractual, legal, and equitable subordination rights satisfied, compromised and settled in this manner. H. Binding Effect
This Plan shall be binding upon and inure to the benefit of the Debtor, the Reorganized Debtor, all present and former holders of Claims against and Equity Interests in Offshore, their respective successors and assigns, including, but not limited to, the Offshore Equity Trust, and all other parties in interest in the Bankruptcy Case. Further, the terms of conditions of any and all settlement agreement and compromises previously approved by Final Order of the Bankruptcy Court are incorporated herein by reference thereto and shall be binding upon and inure to the benefit of the Reorganized Debtor, the Offshore Equity Trust and the corresponding parties to such agreements and compromises. I. Revocation, Withdrawal, or Non-Consummation
The Trustee reserves the right to revoke or withdraw the Plan at any time prior to the Confirmation Date and to file subsequent Amended Plans of Reorganization. If the Trustee revokes or withdraws the Plan, or if confirmation or consummation does not occur, then (a) the Plan shall be null and void in all respects, (b) any settlement or compromise embodied in the Plan (including the fixing or limiting to an amount certain any Equity Interest, Claim or Class of Claims), assumption or rejection of executory contracts or leases effected by the Plan, and any document or agreement executed pursuant to the Plan shall be deemed null and void, and (c) nothing contained in the Plan, and no acts taken in preparation for consummation of the Plan, shall (i) constitute or be deemed to constitute a waiver or release of any Claims by or against, or any Equity Interests in, the Debtor or any other Person, (ii) prejudice in any manner the rights of
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the Debtor or any Person in any further proceedings involving Offshore, or (iii) constitute an admission of any sort by the Debtor or any other Person. J. Section 1129(b)
The Trustee hereby requests confirmation of this Plan pursuant to 11 U.S.C. 1129(b). K. Section 1125(e)
The Trustee has, and upon confirmation of this Plan shall be deemed to have, solicited acceptances of this Plan in good faith and in compliance with the applicable provisions of the Bankruptcy Code, and therefore are not, and on account of such solicitation of acceptances or rejections of this Plan will not be, liable at any time for the violation of any applicable law, rule, or regulation governing the solicitation of acceptances or rejections of this Plan. Respectfully submitted, /s/ Gerald H. Schiff Gerald H. Schiff CHAPTER 11 TRUSTEE for the BANKRUPTCY ESTATE OF VIRGIN OFFSHORE U.S.A., INC. AND GORDON, ARATA, MCCOLLAM, DUPLANTIS & EAGAN, LLC By: /s/ Louis M. Phillips Louis M. Phillips (La. Bar No. 10505) One American Place 301 Main Street, Suite 1600 Baton Rouge, LA 70801-1916 Telephone: (225) 381-9643 Facsimile: (336) 336-9763 Email: lphillips@gordonarata.com And Patrick Rick M. Shelby (La. Bar. No. 31963) James D. Rhorer (La. Bar No. 34052) Place St. Charles 201 St. Charles Avenue, 40th Floor New Orleans, LA 70170-4000 Telephone: (504) 582-1111 Email: pshelby@gordonarata.com And
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Armistead M. Long (La. Bar No. 33949) 400 East Kaliste Saloom Road, Suite 4200 Lafayette, LA 70508 Phone: (337) 237-0132 Email: along@gordonarata.com Attorneys for Gerald H. Schiff, Chapter 11 Trustee

First Amended Chapter 11 Plan of Reorganization Dated March 28, 2013 of Virgin Offshore U.s.a., Inc.

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First Amended Chapter 11 Plan of Reorganization Dated March 28, 2013 of Virgin Offshore U.s.a., Inc.

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Case 11-13028

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UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF LOUISIANA

IN RE: VIRGIN OFFSHORE USA, INC., DEBTOR

CASE NO. 11-13028 CHAPTER 11 CHIEF JUDGE ELIZABETH W. MAGNER

Dated: March 28, 2013

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CLASS 1 EMPIRE SECURED CLAIMS...................................................... 15

CLASS 2 RLI INSURANCE CLAIM ............................................................ 16

CLASS 3 UNSECURED CLAIMS ................................................................. 17

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CLASS 4 EQUITY INTERESTS ................................................................... 18

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vi. vii. C. D. E. VII.

EXECUTORY CONTRACTS AND UNEXPIRED LEASES ........................ 28

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Page 3 of 41 First Amended Plan of Reorganization Dated March 28, 2013

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Page 6 of 41 First Amended Plan of Reorganization Dated March 28, 2013

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Page 9 of 41 First Amended Plan of Reorganization Dated March 28, 2013

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Page 11 of 41 First Amended Plan of Reorganization Dated March 28, 2013

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Class Number Class 1 Class 2 Class 3 Class 4 B.

Status Impaired Impaired Impaired Impaired

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3. CLASS 3 UNSECURED CLAIMS (1) Claim.

Class 3 consists of all Allowed General Unsecured Claims. (2) Treatment.

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Page 23 of 41 First Amended Plan of Reorganization Dated March 28, 2013

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Page 25 of 41 First Amended Plan of Reorganization Dated March 28, 2013

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Page 27 of 41 First Amended Plan of Reorganization Dated March 28, 2013

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The Effective Date

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Page 31 of 41 First Amended Plan of Reorganization Dated March 28, 2013

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MODIFICATIONS AND AMENDMENTS