Paul, Weiss achieved a significant victory for Wilmington Trust Company in a lawsuit concerning $300 million in notes issued by Global Marine, Inc. As indenture trustee for the noteholders, Wilmington claims that Global Marine breached a key covenant in the indenture governing the notes. Justice Barry Ostrager of the Commercial Division of New York Supreme Court, New York County, denied Global Marine’s motion to dismiss Wilmington’s complaint following oral argument on the motion.
Global Marine was formerly one of the world’s leading offshore gas and oil drilling companies, with a fleet of more than 30 rigs, but has since sold virtually the entire fleet. In its lawsuit, Wilmington alleges that the rig sales violated a covenant prohibiting Global Marine from selling “all or substantially all of its assets” in a transaction or series of transactions unless the purchaser assumes Global Marine’s obligations under the indenture and the notes.
Global Marine moved to dismiss Wilmington’s complaint as barred by New York’s six-year statute of limitations because Wilmington’s case supposedly relies in part on rig sales that occurred in 2003 and 2004. Wilmington responded that its cause of action did not accrue until 2016, when Global Marine completed the series of transactions by which it sold its rigs. In proving its case, Wilmington argued, it could include initial sales that occurred more than six years before the complaint was filed.
Global Marine also argued that in any event, Wilmington’s claims accrued no later than 2008, when Global Marine’s parent company, Transocean Inc., announced an “asset strategy” centered on divesting the types of rigs owned by Global Marine. Wilmington responded, among other things, that Transocean’s announcement of the asset strategy alone could not constitute a breach of the indenture.
The Paul, Weiss team includes bankruptcy partner Andrew Rosenberg (Picture); and litigation partner Walter Rieman, who argued the motion.
Law Firms: Paul Weiss Rifkind Wharton & Garrison;
Clients: Wilmington Trust;