Bonds backing Transocean Ltd. surged across the stack today after the offshore drilling company said it had moved to resolve allegations that its efforts to stave off a bankruptcy filing had led it to default on $543 million of senior notes.

The company's 11.5% senior guaranteed notes due 2027 advanced 8 points to a fresh high of 59.75, according to MarketAxess, before settling back at a weighted average of 57.25. Issued as part of a distressed exchange, the bonds have climbed steadily from late-October lows around the 30 mark amid a recovery in oil prices and optimism regarding a coronavirus vaccine that could lead to a rebound in consumer demand. Gains were more modest in the more active RIG 7.5% senior notes due 2023, which nevertheless hit a six-month high at 29.5, before shedding a point on the day.

Transocean had until today to resolve the default allegations made in September and October by funds managed by Whitebox Advisors and Pacific Investment Management Co., among others. The managers claim that three subsidiaries created as "structurally senior guarantors" in an August reorganization should also have guaranteed the RIG 7.25% senior notes due 2025 and the 8% senior notes due 2027, as they did for the aforementioned 11.5% 2027 bonds.

While continuing to deny the allegations, Transocean said in a court filing today that it has eliminated the Transocean Mid Holdings entities and moved the equity interests in question back into the Transocean Holdings entities that housed them before the reorganization.

"As a result, any claim of an alleged breach under any of the Company's existing financing documents in respect of a transfer of the assets of the Transocean Holdings Entities resulting from the Prior Transactions has been rendered moot and cured (to the extent it ever existed, which the Company continues to unequivocally reject)," the filing states.

Transocean is still waiting for a final ruling on the dismissal of the claims.