Case 20-34114 Document 212 Filed in TXSB on 09/15/20 Page 1 of 64 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION ) In re: ) Chapter 11 ) VALARIS PLC, et al.,1 ) Case No. 20-34114 (MI) ) Debtors. ) (Jointly Administered) ) DEBTORS’ APPLICATION FOR ENTRY OF AN ORDER AUTHORIZING THE RETENTION AND EMPLOYMENT OF SLAUGHTER AND MAY AS SPECIAL CORPORATE COUNSEL EFFECTIVE AS OF AUGUST 19, 2020 THIS APPLICATION SEEKS AN ORDER THAT MAY ADVERSELY AFFECT YOU. IF YOU OPPOSE THE APPLICATION, YOU SHOULD IMMEDIATELY CONTACT THE MOVING PARTY TO RESOLVE THE DISPUTE. IF YOU AND THE MOVING PARTY CANNOT AGREE, YOU MUST FILE A RESPONSE AND SEND A COPY TO THE MOVING PARTY. YOU MUST FILE AND SERVE YOUR RESPONSE WITHIN 21 DAYS OF THE DATE THIS WAS SERVED ON YOU. YOUR RESPONSE MUST STATE WHY THE APPLICATION SHOULD NOT BE GRANTED. IF YOU DO NOT FILE A TIMELY RESPONSE, THE RELIEF MAY BE GRANTED WITHOUT FURTHER NOTICE TO YOU. IF YOU OPPOSE THE APPLICATION AND HAVE NOT REACHED AN AGREEMENT, YOU MUST ATTEND THE HEARING. UNLESS THE PARTIES AGREE OTHERWISE, THE COURT MAY CONSIDER EVIDENCE AT THE HEARING AND MAY DECIDE THE APPLICATION AT THE HEARING. REPRESENTED PARTIES SHOULD ACT THROUGH THEIR ATTORNEY The above-captioned debtors and debtors in possession (collectively, the “Debtors”) respectfully state as follows in support of this application (this “Application”):2 1 A complete list of each of the Debtors in these chapter 11 cases may be obtained on the website of the Debtors’ proposed claims and noticing agent at http://cases.stretto.com/Valaris. The location of Debtor Ensco Incorporated’s principal place of business and the Debtors’ service address in these chapter 11 cases is 5847 San Felipe Street, Suite 3300, Houston, Texas 77057. 2 Capitalized terms used but not defined herein have the meanings given to them elsewhere in this Application. Case 20-34114 Document 212 Filed in TXSB on 09/15/20 Page 2 of 64 Relief Requested 1. The Debtors seek entry of an order, substantially in the attached form (the “Order”): (a) authorizing the Debtors to employ and retain Slaughter and May, effective as of August 19, 2020, as special corporate counsel with the terms and conditions set forth in that certain engagement letter between the Debtors and Slaughter and May effective as of April 20, 2020 (the “Engagement Letter”) annexed as Exhibit 1 to the Order and incorporated herein by reference, and (b) granting related relief. In further support of this Application, the Debtors submit the declaration of Ian Stuart Johnson (the “Johnson Declaration”), attached hereto as Exhibit A, and the declaration of Michael T. McGuinty (the “McGuinty Declaration”), attached hereto as Exhibit B. Jurisdiction and Venue 2. The United States Bankruptcy Court for the Southern District of Texas (the “Court”) has jurisdiction over this matter pursuant to 28 U.S.C. § 1334. This matter is a core proceeding within the meaning of 28 U.S.C. § 157(b). The Debtors confirm their consent, pursuant to rule 7008 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), to the entry of a final order by the Court. 3. Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409. 4. The bases for the relief requested herein are §§ 327 and 330 of title 11 of the United States Code, 11 U.S.C. §§ 101-1532 (the “Bankruptcy Code”), Bankruptcy Rules 2014(a) and 2016, and rules 2014-1 and 2016-1 of the Bankruptcy Local Rules for the Southern District of Texas (the “Bankruptcy Local Rules”). 5. On August 19, 2020 (the “Petition Date”), each Debtor filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code. A detailed description surrounding the facts and circumstances of these chapter 11 cases is set forth in the Declaration of Jonathan Baksht, 2 Case 20-34114 Document 212 Filed in TXSB on 09/15/20 Page 3 of 64 Executive Vice President and Chief Financial Officer of Valaris plc, in Support of the Chapter 11 Petitions and First Day Motions (the “First Day Declaration”) [Docket No. 23]. 6. The Debtors are operating their businesses and managing their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. On August 19, 2020, the Court entered an order [Docket No. 48] authorizing procedural consolidation and joint administration of these chapter 11 cases pursuant to Bankruptcy Rule 1015(b). On September 3, 2020, the Office of the United States Trustee for the Southern District of Texas (the “U.S. Trustee”) appointed an official committee of unsecured creditors pursuant to section 1102 of the Bankruptcy Code (the “Committee”) [Docket No. 173]. No request for the appointment of a trustee or examiner has been made in these chapter 11 cases. Slaughter and May’s Services 7. Slaughter and May has advised the Debtors on issues relating to debtholder activism and potential restructuring scenarios since November 2019. In particular, Slaughter and May’s advice to the Debtors has included: advising on restructuring implementation options; advising on questions relating to English corporate and insolvency law and the duties applicable to the directors of the Debtors in the context of the restructuring; and providing legal advice as to how best to structure and achieve the aims of the restructuring insofar as they relate to English law matters including in relation to corporate law, taxation law and antitrust law. Slaughter and May has also advised the Debtors on the negotiation of the proposed restructuring of the Debtors’ existing debt and the recapitalization of the Debtors with certain holders of the Debtors’ senior notes under the terms of Restructuring Support Agreement dated as of August 18, 2020 (the “Restructuring Support Agreement”) and Backstop Commitment Agreement dated as of 3 Case 20-34114 Document 212 Filed in TXSB on 09/15/20 Page 4 of 64 August 18, 2020 (the “Backstop Agreement”).3 In addition, as part of Slaughter and May’s advice in respect of restructuring implementation options, Slaughter and May has advised the Debtors in respect of certain ancillary proceedings which may be required in order to implement the chapter 11 plan in the UK including one or more schemes of arrangement or restructuring plans under the Companies Act 2006 (UK) and potential administration proceedings under Part II of the Insolvency Act 1986 (UK). 8. Slaughter and May is uniquely positioned to provide corporate and related advice for the Debtors because it has been advising the Debtors on the matter at hand regarding the corporate, financing, and related issues described above since November 2019 and is intimately familiar with the relevant facts and potential legal issues. Moreover, Slaughter and May has a long-standing relationship with the Debtors, and Slaughter and May has gained considerable knowledge of the Debtors’ business operations to the extent necessary to effectively provide the anticipated services. In particular, Slaughter and May has advised Ensco plc (the predecessor to Valaris plc) since 2011 on a number of debt and equity issuances, various UK company law and governance matters, and mergers and acquisitions. In particular, Slaughter and May advised on Ensco plc’s acquisition of Atwood Oceanics, Inc. in 2017, and on the merger of Ensco plc with Rowan Companies plc in 2018, through which the combined company ultimately became Valaris plc. If the Debtors were required to retain different counsel to provide these services, the Debtors would incur significant expenses in transitioning to new counsel, given the complexity of the Debtors and their capital structure. Accordingly, the Debtors seek to continue to employ Slaughter and May to provide the above-referenced services during the chapter 11 cases. 3 The Restructuring Support Agreement is attached as Exhibit A to the First Day Declaration. 4 Case 20-34114 Document 212 Filed in TXSB on 09/15/20 Page 5 of 64 9. In light of the scope of services to be provided by Slaughter and May during these chapter 11 cases, Slaughter and May is properly employed pursuant to section 327(e) of the Bankruptcy Code. Slaughter and May’s Qualifications 10. The Debtors selected Slaughter and May as their corporate counsel because of Slaughter and May’s extensive experience representing the Debtors and Valaris plc’s predecessor (Ensco plc) in prior corporate matters and Slaughter and May’s track record of providing the Debtors with effective and efficient legal services. The Debtors believe that both the interruption and duplicative cost involved in obtaining substitute counsel at this juncture would be extremely harmful to the Debtors and their estates. 11. Slaughter and May is a full service, approximately 751-attorney law firm, comprising 109 partners, 465 associates, and 177 trainees, representing global clients in a wide range of matters. Slaughter and May has provided legal services to the Debtors through a core group of dedicated attorneys and staff that has developed a close working relationship with the Debtors and has become intimately familiar with the Debtors’ corporate and financing arrangements and capital structure. For these reasons, the Debtors believe that Slaughter and May has superior qualifications to provide the Debtors with the requested services and that Slaughter and May’s employment as special corporate counsel for the purposes specified herein is in the best interest of the Debtors’ estates. Services to be Provided 12. Subject to approval of the Application, pursuant to the Engagement Letter, Slaughter and May will provide legal services as Slaughter and May and