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August 26, 2021 – The Court hearing the Bouchard Transportation cases confirmed the Debtors’ Amended Plan of Reorganization [Docket No. 1319].
On September 28, 2020, privately held Bouchard Transportation Co., Inc. and four affiliated Debtors (“Bouchard” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Southern District of Texas, lead case number 20-34682. At filing, the Debtors, “the nation’s largest independently-owned ocean-going petroleum barge company” with 26 tugs and 25 barges, noted estimated assets between $500.0mn and $1.0bn; and estimated liabilities between $100.0mn and $500.0mn. In a subsequently filed Schedule A/B, the lead Debtor noted "Undetermined" assets and $270.8mn of liabilities [Docket No. 496].
The Debtors' memorandum in support of Plan confirmation (the "Memorandum') [Docket No. 1304] provides: "…when the Debtors commenced these chapter 11 cases, they were unable to sustain even idle operations. Certain of their ships had been arrested by creditors and were close to being sold in pending admiralty sales. The Debtors had no revenue, their remaining crews had not been paid for a substantial period of time, and their 49-vessel fleet was at risk, with the lead underwriter on critical insurance having threatened cancellation leading into hurricane season.
With the benefit of the automatic stay, the Debtors and their advisors swiftly righted the ship. Through a series of transactions, the Debtors obtained court approval for over $100 million of new capital, which they utilized to pay crew members, hire and rehire employees, release vessels from arrest, maintain required insurance coverage, and fund necessary repairs and maintenance. The Debtors went on to consummate two value-maximizing sale transactions that allowed their state-of-the-art fleet to remain part of the Jones Act market and preserve jobs.
Consummation of the sale transactions brought the Debtors closer to the end of these chapter 11 cases; however, significant negotiations with various stakeholders were still needed to confirm the Plan. Over the weeks following the hearing on the sale transactions, the Debtors, Wells Fargo Bank, N.A. (‘Wells Fargo’), and the Committee (as defined below) negotiated tirelessly in an effort to resolve remaining open issues. These negotiations were successful and the Debtors are moving forward with confirmation of the Plan supported by both Wells Fargo and the Committee. Under the global settlement embodied in the revised Plan, in return for a release of any all claims against Wells Fargo, including but not limited to claims under Section 506(c), Section 552, and claims for carveout obligations, along with an agreement by the Post-Effective Date Debtor to diligently prosecute the asserted Other Secured Claims with respect to Wells Fargo’s collateral, Wells Fargo has agreed to contribute $15 million to the Debtors’ Estates, waive any adequate protection claims, subordinate its deficiency claim to the first $20 million of recoveries to other general unsecured creditors, and vote in favor of the Plan. With Wells Fargo’s and the Committee’s support, the Debtors stand ready to confirm the Plan and proceed toward consummation and an orderly, cost-effective wind-down of their affairs."
The Disclosure Statement adds: "Subsequent to the contemplated sale for some or all of the Debtors’ assets being consummated, subject to Bankruptcy Court approval, the Debtors will make certain distributions to creditors from the sale proceeds and then propose to either (i) liquidate remaining unpurchased assets, if any, and otherwise wind down the Debtors’ businesses and/or (ii) be managed by the Purchaser in the event of an All Asset Sale.
Generally speaking, the Plan:
- provides for the full and final resolution of funded debt obligations;
- provides for certain transactions, including the disposition of the Debtors’ assets and certain distributions of proceeds, following or in connection with the consummation of one or more sale transactions;
- designates a Plan Administrator to wind down the Debtors’ affairs, pay and reconcile
- Claims, and administer the Plan in an efficacious manner subsequent to a sale transaction;
- provides for the vesting of the Post-Effective Date Debtor Assets (other than the Litigation Trust Assets and the Managed Assets, as applicable) in the Post-Effective Date Debtor for the primary purpose of liquidating the Post-Effective Date Debtor Assets and winding
- down the Debtors’ Estates;
- contemplates recoveries to Holders of Administrative Claims, Priority Tax Claims, Other Priority Claims, and Other Secured Claims as is necessary to satisfy section 1129 of the Bankruptcy Code;
- contemplates recoveries to Holders of Claims in Class 3, Class 4A, Class 4B, Class 6, and Class 9 and Holders of Interests in Class 7 from the remaining proceeds of the Sale Transaction, if any, as more fully set forth in the Plan; and
- provides for the creation of a Litigation Trust for the purpose of (a) holding the Litigation Trust Assets, consisting of various Causes of Action of the Debtors or the Estates, for the benefit of the Holders of General Unsecured Claims and the Prepetition Revolving Credit Facility Deficiency Claim, if any, as Litigation Trust Beneficiaries, (b) making distributions of proceeds of the Litigation Trust Assets as provided in the Litigation Trust Agreement, (c) taking all actions and executing all agreements, instruments, and other documents necessary to perform the Litigation Trust’s respective duties under the Plan and pursuant to the Litigation Trust Agreement, and (d) otherwise exercising such other powers as may be vested in the Litigation Trustee in accordance with the Plan and pursuant to the Litigation Trust Agreement, or as may be deemed by the Litigation Trustee to be necessary and proper to implement the applicable provisions of the Plan and the Litigation Trust Agreement."
On objections, the Memorandum added: “Seven parties filed Objections to the Plan. The Debtors have been able to consensually resolve every Objection but that of the Bouchard Interested Parties, which the Debtors were able to narrow to only issues surrounding the Plan’s release and exculpation provisions and the allocation of value to their since-sold vessels. To the extent not resolved, the Bouchard Interested Parties’ Objection should be overruled."
The following is a summary of classes, claims, voting rights and expected recoveries (defined terms are as defined in the Plan and/or the Disclosure Statement Supplement filed at Docket No. 1256):
- Class 1 (“Other Secured Claims”) is unimpaired, presumed to accept and not entitled to vote on the Plan. The aggregate amount of claims is $8.7mn and expected recovery is 100%.
- Class 2 (“Other Priority Claims”) is unimpaired, presumed to accept and not entitled to vote on the Plan. The aggregate amount of claims is $465k and expected recovery is 100%.
- Class 3 (“Prepetition Revolving Credit Facility Secured Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $130.0mn and expected recovery is Contingent/Unknown. Each Holder shall receive its Pro Rata share of (not to exceed the amount of such Holder’s Prepetition Revolving Credit Facility Secured Claim) the Sale Proceeds Recovery attributable to the Prepetition Revolving Credit Facility Collateral (ie the proceeds of the sale of the Wells Fargo Collateral).
- Class 4A (“General Unsecured Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $42.9mn and expected recovery is Contingent/Unknown. Each Holder shall receive: (i) the Sale Proceeds Recovery; and (ii) all Cash of the Post-Effective Date Debtor, after taking into account the WindDown Budget then in effect; provided that any recovery to Holders of Allowed General Unsecured Claims after the first $20 million of such recovery shall be shared Pro Rata between Holders of Allowed Claims in Class 4A and Class 4B as if such Claims comprised a single Class.
- Class 4B (“Prepetition Revolving Credit Facility Deficiency Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $39.0mn and recovery is Contingent/Unknown. Each Holder shall receive: (i) the Sale Proceeds Recovery; and (ii) all Cash of the Post-Effective Date Debtor, after taking into account the WindDown Budget then in effect; provided that Holders of Allowed Prepetition Revolving Credit Facility Deficiency Claims shall receive no recovery until Holders of Allowed General Unsecured Claims shall have received a total of $20 million (in the aggregate); provided, further, that any recovery thereafter shall be shared Pro Rata between Holders of Allowed Claims in Class 4A and Class 4B as if such Claims comprised a single Class.
- Class 5 (“Intercompany Claims”) is unimpaired/impaired, presumed to accept or reject and not entitled to vote on the Plan. The aggregate amount of claims is N/A and expected recovery is 100%/0%.
- Class 6 (“Section 510(c) Claims”) is impaired, deemed to reject and not entitled to vote on the Plan. The aggregate amount of claims is $40.4mn and expected recovery is Contingent / Unknown.
- Class 7 (“Existing Equity Interests”) is impaired, deemed to reject and not entitled to vote on the Plan. The aggregate amount of claims is N/A and expected recovery is Contingent / Unknown.
- Class 8 (“Intercompany Interests”) is unimpaired/impaired, presumed to accept or reject and not entitled to vote on the Plan. The aggregate amount of claim is N/A and expected recovery is 100% / 0%.
- Class 9 (“Section 510(b) Claims”) is impaired, deemed to reject and not entitled to vote on the Plan. The aggregate amount of claims is $0 and expected recovery is Contingent / Unknown.
On August 16th, the debtors filed a Disclosure Statement Supplement which updated on projected recoveries [see Docket No. 1256 for footnotes]:
On August 23, the Debtors also filed Plan Supplement to their Amended Plan of Reorganization [Docket No. 1294] and attached the following exhibits:
- Exhibit A (i): Schedule of Retained Causes of Action
- Exhibit A(ii): Redline to Exhibit A of the Initial Plan Supplement
- Exhibit B(i): [Reserved]
- Exhibit B(ii): Redline to Exhibit B of the Initial Plan Supplement
- Exhibit C(i): Rejected Executory Contracts and Unexpired Leases List
- Exhibit C(ii): Redline to Exhibit C of the Initial Plan Supplement
- Exhibit D(i): Assumed Executory Contracts and Unexpired Leases Schedule
- Exhibit D(ii): Redline to Exhibit D of the Initial Plan Supplement
- Exhibit E: Wind Down Budget
- Exhibit F: Identity and Compensation of Plan Administrator
On August 5, 2021, the Court issued a pair of orders approving (i) the sale of the Debtors’ “Wells Fargo Collateral” (vessels encumbered by the prepetition Wells Fargo loans) to Pennantia LLC (a consortium comprised of Wells Fargo, “real asset special situations investment platform” Rose Cay GP, LLC and distressed debt specialist Contrarian Capital Management LLC) for an aggregate purchase price of $130.0mn (comprised of a $100.0mn credit bid of Wells Fargo debt and $30.0mn in cash) [Docket No. 1193] and (ii) the sale of the Debtors “DIP Collateral” assets (vessels encumbered by liens securing the Debtors’ debtor-in-possession financing) to JMB Capital Lending Partners, LLC (“JMB,” the Debtors’ DIP lender) for an aggregate purchase price of $115.3mn (including a credit bid of $90.0mn of DIP debt) [Docket No. 1194].
Wells Fargo Collateral Assets
- Successful Bidder: A consortium comprised of Wells Fargo, “real asset special situations investment platform” Rose Cay GP, LLC and distressed debt specialist Contrarian Capital Management LLC with an aggregate purchase price of $130.0mn, comprised of a $100.0mn credit bid of Wells Fargo debt and $30.0mn in cash
- Back-up Bidder(s): Keystone and Martin Operating Partnership
- Assets: The Debtors’ vessels securing the the Wells Fargo loans ($164.1mn outstanding as at Petition date)
DIP Collateral Assets
- Successful Bidder: JMB Capital Lending Partners, LLC (“JMB”), the Debtors’ DIP lender with an aggregate purchase price of $115.3mn (the DIP financing is $90.0mn before interest)
- Back-up Bidder: Hartree Partners, LP, (“Hartree”) the Debtors’ last-minute choice as stalking horse and one-time DIP lender ($110.0mn cash bid)
- Assets: The Debtors’ vessels securing the Debtors’ DIP financing (list of vessels at Annex A of Hartree stalking horse APA, with assets aka, the “DIP Collateral” or “JMB First Lien Vessel Collateral”)
Events Leading to Chapter 11 Filing
In February 2020, the US Coast Guard Captain of the Port (aka COTP) of New York and New Jersey issued the New York City-based Debtors with an order demanding the removal of vessels from local waters, citing numerous environmental, safety and operational issues. The Debtors at the time responded: "The past two years Bouchard has confronted tests the likes of which it has not faced in 100 years of history. Today’s Sector NY/NJ Captain of the Port Order on just eight of our fifty one units is a further financial hurdle….Today’s COTP Order does not change our focus. Please know that we are working everyday with clients, creditors and the authorities to put our house aright. We have a financial plan and a clear understanding of and commitment to all those who work with, support or rely upon us."
Also in February 2020, the Debtors faced similar enforcement actions in respect of vessels located in Louisiana and Texas waters, with numerous press reports citing under-staffed vessels, poor working conditions and safety/environmental issues. The Debtors' rough waters extend back to October 2017 when a 488’ oceangoing tank barge loaded with crude oil blew up and burned as it was leaving Port Aransas, Texas. Two of the barge's crewmembers were killed in that incident.
Subsequent investigations by the Coast Guard and NTSB revealed that corrosion had allowed fumes to leak and explode, and also flagged that similar deficiencies existed in other of the Debtors' vessels.
Petition Date Perspective
In a press release announcing the Chapter 11 filings, Bouchard advised that it: “intends to fund the chapter 11 process with debtor-in-possession financing, which will provide the Company with the necessary liquidity to maintain normal operations while it undertakes certain key operational restructuring initiatives, including to ensure the fleet is in full compliance with all operating regulations, and otherwise emerge as a stronger enterprise positioned for long-term success."
As of the Petition Date, Bouchard reported approximately $229.5 million in aggregate principal amount of funded debt obligations.
About the Debtors
According to the Debtors: “Founded in 1918, the Company's first cargo was a shipment of coal. By 1931, Bouchard acquired its first oil barge. Over the past 100 years and five generations later, Bouchard has expanded its fleet, which now consists of 25 barges and 26 tugs of various sizes, capacities and capabilities, with services operating in the United States, Canada, and the Caribbean. Bouchard remains dedicated to continuing the rich heritage of barging expertise and family pride well into the future.
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