Maritime - Restructuring

Overview

“Clients praise Blank Rome ‘for the depth and quality of its business restructuring and bankruptcy practice, which is renowned on a national scale.’”    
Chambers USA

The downturn in the fortunes of some segments of the shipping industry has led many maritime businesses to use Chapter 11 or Chapter 15 of the U.S. Bankruptcy Code to deleverage and reorganize.  In these cases and in workout matters, it is vital to have the advice of a proven maritime restructuring team to assist at every stage of the process.

Our leading national bankruptcy and restructuring group represents debtors, creditors, creditors’ committees and other stakeholders in bankruptcy and insolvency cases and out-of-court negotiated restructurings and reorganizations in the United States and abroad.  Likewise, our maritime transactions and finance lawyers are often engaged to provide advice on the maritime law issues that arise in bankruptcy cases and restructurings involving maritime businesses.  

Our cross-disciplinary teams of maritime attorneys and bankruptcy and restructuring practitioners allow us to provide comprehensive service to our clients.  Bankruptcies and restructurings in the maritime industry frequently raise unique business and legal issues with respect to what are usually the principal assets at issue:  the debtor’s vessels and their earnings.  In this respect, bankruptcies and restructurings of maritime businesses are unlike those of other types of businesses, so this collaborative approach is critical.  

The pre-petition arrest or seizure of the debtor’s vessels, maritime lien rights of certain maritime creditors, the foreclosure and sale of the vessels, U.S. government approvals for certain actions if the vessels are involved in certain U.S. government programs or regulated industry segments, and the interplay between the admiralty and bankruptcy rules are just some of the challenges that we deal with on behalf of our clients.

With Blank Rome there is no need to hire separate counsel to address these maritime issues.  We routinely advise borrowers and lenders in ship finance transactions, including mortgage-secured and lease financing transactions. We provide the maritime advice our clients need regarding ship purchases and sales, preferred ship mortgages, marine insurance, regulatory, security, and environmental matters, and vessel arrests and foreclosures worldwide, and we can draw upon this knowledge and experience in the context of bankruptcy cases and out-of-court restructurings.

In particular, although our experience in vessel finance encompasses both U.S. and foreign law transactions, we have extensive knowledge and experience with U.S.-flag vessels operating in the U.S. domestic trade, also known as the Jones Act trade or the coastwise trade.  In that specific niche of the larger maritime industry, we have advised debtors and creditors on debt-for-equity swaps in bankruptcies and restructurings of Jones Act companies where it is critical that the debtor remain a U.S. citizen within the meaning of the Jones Act after the case or matter is closed.

In addition, we have a distinguished record representing debtors and creditors in Chapter 15 cases, which is frequently used in the maritime industry by international companies whose vessels call on U.S. ports to foster cooperation between foreign and U.S. courts dealing with cross-border insolvencies.  In Chapter 15 cases, our maritime litigators are able to assist our bankruptcy and restructuring practitioners with respect to vessel arrests, seizures and sales in admiralty courts in multiple jurisdictions. 

How We Can Help

We guide clients in maritime bankruptcy and restructurings by providing risk assessment, advising on alternatives, structuring and completing transactions, and litigating issues where appropriate or necessary.  We maximize successful outcomes for our clients by taking a pragmatic approach, combining practical experience and creative strategies that address the nuances of each representation.  

We also recognize that distressed business environments can provide tremendous opportunities for strategic transactions, and we assist our clients in evaluating whether they should pursue them.

We help clients in the maritime industry tackle complex issues, including:

  • Advise financially distressed companies and assist them in evaluating their options, including Chapter 11 reorganization and out-of-court restructuring.
  • Advise with respect to U.S. government approvals where the debtor’s assets are subject to specialized regulation, such as liner shipping and related contracts (including customer service contracts, vessel sharing and alliance agreements, and terminal agreements), which fall within the jurisdiction of the Federal Maritime Commission.
  • Provide maritime law advice with respect to debtor-in-possession or exit financing in a Chapter 11 case or an out-of-court restructuring, particularly with respect to preferred mortgages on the vessels, marine insurance issues, and appropriate loan covenants for a ship financing.  
  • Due diligence review of the debtor’s vessel registration and mortgage documents and its marine operations to confirm that there are no undisclosed liabilities or other issues.
  • Assist with evaluation of debtor’s requests to reflag a vessel and monitor reflaggings to ensure that creditors will receive a preferred mortgage or other security interest comparable to what they had prior to the reflagging.
  • Arrests, seizures, attachments, and foreclosures and sales of a debtor’s vessels and other maritime assets. 
  • Address maritime liens on the debtor’s vessels held by maritime suppliers and other creditors. 
  • Assist with sales disposing of the debtor’s vessels and other maritime assets located in or outside of the territorial jurisdiction of the United States, whether pursuant to a sale under Section 363 of the U.S. Bankruptcy Code or a judicial sale by an admiralty court sitting in rem.
  • Advise potential purchasers interested in purchasing vessels and other maritime assets from Chapter 11 and Chapter 7 debtors.

What Sets Us Apart 

  • With nearly 40 shipping lawyers in New York, Washington, DC, Houston, and Philadelphia, Blank Rome has the largest and most comprehensive maritime practice in the United States. 
  • Chambers USA ranks Blank Rome Band 1 for Nationwide Transportation: Shipping/Maritime: Regulatory and Transportation: Shipping/Maritime: Litigation (New York) – Nationwide. 
    • “It fields one of the most highly regarded regulatory teams in the USA alongside stellar litigation and transactional practices, and is also home to one of the premier governmental affairs groups…The firm has excellent resources to handle large, complex cases with serious consequences.”
    • “The firm has a fantastic reputation in the international shipping community.” (Chambers Global)
    • “Clients praise ‘the lawyers’ willingness to assist quickly and proffer reliable off-the-cuff advice.’” (Chambers Asia)
  • The Legal 500 United States 2017 ranked Blank Rome Tier 1 in Transport: Shipping.
  • Recipient of the Lloyd’s List North American Maritime Legal Services Award 2015 and 2016.
  • U.S. News & World Report—Best Lawyers recognized us as the “2013 Law Firm of the Year” for Maritime & Admiralty Law.
  • Who’s Who Legal recognized us as a leading maritime law firm.
  • Several of our maritime attorneys lecture at the Massachusetts Maritime Academy’s OPA 90 Qualified Individual Training Program on legal issues related to pollution incidents, and are often asked to serve as arbitrators and expert witnesses in foreign litigation and courts on issues of U.S. maritime law. 
  • Our attorneys include former U.S. Coast Guard and Navy officers, representatives and senior staff from Congressional committees, and high-level officials of government agencies, including the Department of Justice, Maritime Administration, U.S. Securities and Exchange Commission, and the National Oceanic and Atmospheric Administration.
  • Among our attorneys, we have a professor of maritime law at the New York University School of Law, an adjunct professor at Drexel University’s School of Law teaching admiralty law, and an adjunct professor at the Stevens Institute of Technology where she teaches Information Security & Law. Additionally we have several authors and editors of leading maritime treatises and textbooks, including Time Charters, Voyage Charters, The International Law of the Shipmaster, Maritime Security Handbook, the chapter “Maritime Cyber Security: The Unavoidable Wave of Change,” in Issues in Maritime Cyber Security and the Benedict on Admiralty volume relating to salvage.

 

Experience

Below are some of our recent cases and matters that are representative our maritime restructuring engagements.

Chapter 11 Cases

  • Tidewater—maritime counsel to group of holders of $500 million senior notes in international offshore support vessel operator’s Chapter 11 case, addressing maritime law issues under the plan, including Jones Act citizenship issues in debt-for-equity swap and maritime transactional issues with respect to new notes secured by preferred mortgages on Tidewater’s vessels (Wilmington, DE).
  • GulfMark Offshore—maritime counsel to international offshore support vessel operator in restructuring $565 million debt stack in its successful Chapter 11 case, addressing maritime law issues under the plan, including Jones Act citizenship issues in debt-for-equity swap and maritime transactional issues with respect to closing of the plan (Wilmington, DE).
  • Cashman Equipment Corporation—counsel to largest secured lender and collateral agent and security trustee for certain collateral held by it and other lenders in respect of $142 million secured debt stack in the context of a complex sale process settlement in international barge company’s Chapter 11 case (Boston, MA).
  • CalDive—co-counsel to $100 million in second lien debt in Chapter 11 restructuring of underwater diving service provider with an 18 vessel fleet of dive support vessels (Wilmington, DE).
  • OW Bunker—international coordinating litigation counsel to senior maritime lien creditor and counterparty in complex series of actions and seizures relating to fuel shipper Chapter 11 (Bridgeport, CT, New York, NY, and various international jurisdictions).
  • EMAS Chiyoda Subsea—maritime counsel to platform support vessel operator in all aspects of complex international vessel sale transaction under Chapter 11 plan (Houston, TX).
  • TOISA—special corporate counsel to platform support and tanker fleet operator in respect of complex tax issues in the operator’s Chapter 11 case (Wilmington, DE).
  • Overseas Shipping Group et al.—counsel to numerous creditors and other project-related stakeholders in shipping line’s Chapter 11 reorganization (Wilmington, DE).
  • Trico Marine Services—maritime counsel to lender with respect to debtor-in-possession financing secured by the debtor’s U.S.-flag and foreign-flag vessels in liquidating Chapter 11 case (Wilmington, DE).
  • Golden Ocean Group Ltd.—counsel to official unsecured creditors committee in Chapter 11 case of international bulk carrier (Wilmington, DE).
  • Genco Shipping &Trading—counsel to vessel charterer in international shipping line’s Chapter 11 reorganization (New York, NY).
  • Today Makes Tomorrow (TMT) Group–counsel to salvageman in international shipping line’s Chapter 11 case (Houston, TX).
  • Marco Polo Seatrade, B.V. et al.—counsel to unsecured creditors’ committee in international shipping line’s Chapter 11 case (New York, NY).
  • lnterbulk—counsel to creditors’ committee of international shipping operation in its Chapter 11 case (New York, NY) .
  • Global Maritime Investments (GMI)—counsel to shipyard as counterparty to two shipbuilding contracts with Global Maritime Investments Cyprus, a debtor in GMl’s Chapter 11 case (New York, NY).
  • Hawaii Superferry, Inc., et al. —counsel to ferry operator in its Chapter 11 case (Wilmington, DE).
  • Ocean Trade Corporation—maritime counsel to creditors’ committee of vessel operator in its Chapter 11 case (New York, NY). 
  • PetroRig—counsel to ship/rig builder in successful dismissal litigation with oil drilling business in Chapter 11 case (New York, NY).
  • Sea Launch—counsel to major creditor in Chapter 11 case of satellite launch business (Wilmington, DE).
  • Millennium Seacarriers—counsel to various trade and lien creditors in international shipping line’s Chapter 11 case (New York, NY).
  • Hvide Marine Incorporated—maritime counsel to international marine support and transportation services company in its successful Chapter 11 reorganization (Wilmington, DE).
  • Amer Reefer Co. Limited—counsel to refrigerated cargo shipping line in its successful Chapter 11 reorganization, which returned recoveries to equity (New York, NY). 
  • First Mesa Tankships, LLC/AHL Shipping—counsel to shipyard creditor in start-up Jones Act shipping line’s Chapter 11 case and in related complex litigation (New Orleans, LA).

Chapter 15 Cases

  • Daebo International Shipping—counsel to foreign representative of Korean bulk product shipping line in its Chapter 15 case (New York, NY).
  • Daehan—counsel to foreign representative of Korean shipyard in its Chapter 15 case, including in respect of rehabilitation plan implementation (New York, NY).
  • STX PAN OCEAN—counsel to joint administrators/foreign representatives of Korean shipping line in its Chapter 15 case, successfully obtaining provisional and final recognition orders, which protected all U.S. assets, including time-chartered vessels (New York, NY).
  • Daewoo Logistics Corporation—counsel to rehabilitator/foreign representative in Korean shipping company’s Chapter 15 case (New York, NY).
  • The Containership Company (TCC) A/S—counsel to reconstructor/foreign representative of Danish shipping company in its Chapter 15 case and against numerous turnover and collection adversaries in the U.S. (New York, NY).
  • Cogent Fibre—counsel to Japanese shipping line and largest unsecured creditor in successfully resisting recognition of Turkish/Canadian/U.S. wood chip wholesaler in its Chapter 15 case (New York, NY).

Out-of-Court Restructurings

  • Odebrecht—co-counsel to group of holders of senior secured notes issued by an affiliate of Odebrecht Oleo e Gas and secured by preferred mortgages on the debtors’ vessels and security interests in charter revenue (New York, NY, and Sao Paulo, Brazil).
  • Horizon Lines—maritime counsel to Jones Act vessel owner and operator in out-of-court $652.8 million restructuring of its capital structure, including Jones Act citizenship issues in a partial debt-for-equity swap (New York, NY, Washington, D.C., and Charlotte, NC).
  • Delba—counsel to Inter-American Development Bank as lead lender in out-of-court restructuring of $488 million syndicated loan to finance construction and delivery of semi-submersible offshore mobile drill ship (New York, NY, and Washington, D.C.).
  • Schahin—counsel to HSBC Brasil prosecuting credit insurance claims arising from trade finance loans on behalf of Brazilian shipping company Schahin Engenharia, S.A. (New York, NY, and Sao Paulo, Brazil).