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January 5, 2021 – The Debtors filed a motion to extend the periods during which they have an exclusive right to file a Plan and solicit acceptances thereof, through and including April 26, 2021 and June 25, 2021, respectively [Docket No. 373]. Absent the requested relief, the Plan filing and solicitation periods are scheduled to expire on January 26, 2021, and March 27, 2021, respectively.
For these Debtors, very little traction on their Plan is possible before they have an understanding of when (and whether) they can obtain the document of compliance certification (the “DOC Certificate” or “DOC”) that is necessary for them to function as a going concern. Simply put: "Whether a DOC can be obtained will substantially inform the Debtors’ path to exit from these chapter 11 cases—ideally as a going-concern reorganization that maximizes recoveries for all parties in interest and positions the business for long-term success." The Debtors do not provide any update as to where they stand in their current effort to obtain a DOC, noting only that they "have used their best efforts to prepare for the review and safety audits required for issuance of a DOC and requested that such audits be performed."
According to the extension motion, “The Debtors’ chapter 11 process is working as intended to give the Debtors’ access to a critical ‘breathing spell’ to raise necessary financing and address operational matters, align stakeholders, and maximize value for the Debtors’ estates. Since commencing these chapter 11 cases, the Debtors have obtained necessary first and second day relief, secured interim access to $29 million and final approval of an additional approximately $31 million (subject to certain conditions precedent) in debtor-in-possession financing, resolved, settled, or secured release of certain maritime liens, and taken affirmative steps toward earning back applicable safety and other certifications which are necessary or prudent to return to ordinary course business operations.
The Debtors have also used estate funds judiciously to address operational liabilities and obtained Court approval of important procedural and operational relief. The Debtors seek an extension of their exclusive periods to file and solicit a chapter 11 plan to protect the progress made to date and to ensure that the Debtors stay on track to emerge from chapter 11 on a timeline that is in the best interests of the Debtors’ estates.
Notwithstanding the substantial progress made to date, certain key operational matters must be resolved before the Debtors can emerge from chapter 11. Most critically, the Debtors are working towards timely obtaining a document of compliance (‘DOC’) that will enable them to return to ordinary course operations. Whether a DOC can be obtained will substantially inform the Debtors’ path to exit from these chapter 11 cases—ideally as a going-concern reorganization that maximizes recoveries for all parties in interest and positions the business for long-term success. The Debtors’ goal continues to be to pay all unsecured creditors in full on account of allowed claims.
The Debtors request a ninety day extension of their exclusive periods to file and solicit acceptance of a chapter 11 plan. The requested extension would ensure continued runway to address key operational items, including the pending DOC and safety certification process, facilitate negotiations with stakeholders on remaining issues, and maximize the value of the business and creditor recoveries, all while avoiding the disruptive effects of competing chapter 11 plans.
To effectuate a successful reorganization and continue operating as an independent going concern as they have for the past century, the Debtors must obtain a DOC. The Debtors’ crew, customers, lenders, and insurers rely on the DOC as certification that the vessels are operated and maintained pursuant to a safety management system that satisfies the ISM Code standards for shipping companies. The Debtors’ have used their best efforts to prepare for the review and safety audits required for issuance of a DOC and requested that such audits be performed. The Debtors are continually working to address this immediate operational need.
Due to the circumstances surrounding the Debtors’ chapter11 cases—including the pendency of the DOC and related safety certification process—these discussions are still in early stages. An extension of the Exclusivity Periods will provide the Debtors with the necessary time and breathing room required to efficiently negotiate a plan and take the necessary steps toward emergence.”
It took the Debtors a month to line up DIP financing (and to schedule a "first day" hearing), the obtaining of which was the primary driver for filing Chapter 11 in the first place, financing having become unavailable outside of the Chapter 11 context after the United States Coast Guard lifted Bouchard’s DOC. Without the DOC, Bouchard effectively cannot operate. The Debtors' have unencumbered assets, in the form of vessels now pledged to the DIP Lenders, but were struggling to find lenders who were willing to count on that collateral while some of the Debtors' vessels were subject to foreclosure sales (at foreclosure sale prices) and "various vendor parties…asserted maritime lien claims against the Debtors’ assets." The Debtors sum up: "No party was willing to provide new money on an out-of-court basis. Accordingly, the Company commenced these chapter 11 cases, in part, to access necessary near-term liquidity through potential DIP financing—liquidity that the Company otherwise would have been unable to attain."
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 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.
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