Off-shore driller tumbles into Chapter 11 bankruptcy

Oil driller Paragon Offshore tumbled into Chapter 11 bankruptcy Sunday, becoming the latest victim of rock-bottom oil prices in a year likely to see more energy companies face insolvency.

Paragon said it had won support from a large majority of its unsecured and secured creditors to slash $1.1 billion in debt through bankruptcy, giving the rig operator a good shot at re-emerging with a sustainable balance sheet.

But the bankruptcy reflects what analysts say is the latest in a string of energy bankruptcies. Drillers are particularly susceptible as oil companies cut back considerably on production amid a global glut of crude.

Bank stocks take investors to the cleaners

"Paragon has acted proactively to strengthen the company's balance sheet in this challenging environment," Paragon CEO Randall D. Stilley said in a statement. "We look forward to moving as quickly as possible through this process while maintaining our focus on delivering safe, reliable, and efficient operations."

The company said 77% of its unsecured bondholders had already agreed to support its restructuring plan, in addition to 96% of its secured credit line bondholders.

As part of the deal, shareholders would own 65% of the company after bankruptcy, while bondholders would own 35%.

Paragon said the bankruptcy would have "very little impact" on employees, with no effect on compensation or benefits.

The U.K.-based company filed for bankruptcy in Delaware, which is legally allowable because it has U.S.-based legal entities.

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.