December 9, 2020 – The Debtors filed a motion seeking Court approval for extending the periods during which the Company has an exclusive right to file a Chapter 11 Plan, and solicit acceptances thereof, through and including March 9, 2021 and May 8, 2021, respectively [Docket No. 197]. Absent the requested relief, the Plan filing and solicitation dates expire on December 9, 2020 and February 7, 2021, respectively.

The extension motion explains, “The Debtors commenced these chapter 11 cases in order to preserve their remaining liquidity and facilitate an orderly disposition of their assets following an unprecedented collapse in the oil industry, exacerbated by the coronavirus pandemic. At the outset of these chapter 11 cases, the Debtors, in consultation with their prepetition lenders, DNB Bank ASA and Skandinaviska Enskilda Banken AB (publ) (collectively, the ‘Lenders’), determined that the best and only way to maximize the value of their estates was to effectuate a sale of substantially all of their assets. Accordingly, the Debtors solicited offers for their OSVs pursuant to a Court-approved marketing and sale process.

As a result of this sale process, the Debtors determined that the Lenders’ $80 million credit bid for all of their PSVs, and VTG Ships Limited’s $5.3 million cash bid for all of their Crew Boats were the successful bids for the OSVs. The Lenders subsequently increased their credit bid to $100 million. On October 13, 2020, the Court entered the Sale Order approving the sale of the Crew Boats to VTG Ships Limited [Docket No. 151] and, on October 15, 2020, the Court entered the Sale Order approving the sale of the PSVs to the Lenders [Docket No. 162]. The Sales closed in October 2020. The Debtors intend to wind down their remaining assets and operations pursuant to a chapter 11 plan.

Having consummated the Sales and made substantial progress so far, the Debtors are now focused on negotiating a chapter 11 plan with their major stakeholders. While the Debtors have efficiently utilized their time in chapter 11 thus far, the Debtors require additional time to propose and confirm a plan.”

The Debtors do not provide any further insight into the status of stakeholder negotiations or potential gating issues.

A hearing on the motion is scheduled for January 6, 2021, with objections due by December 30, 2020.

Background

On August 11, 2020, Hermitage Offshore Services Ltd. and 28 affiliated Debtors (NYSE: PSV; “Hermitage” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Southern District of New York, lead case number 20-11850. The Debtors, a Bermuda-based offshore support vessel company operating primarily in the North Sea and off the West Coast of Africa, are 67.5% owned by entities affiliated with Scorpio Offshore Investments ("Scorpio"), a closely held company owned and controlled by Italian shipowners, the Lolli-Ghetti family.

In their 20-F for the year ended December 31, 2019, the Debtors noted assets of $201,909,000 and liabilities of $149,781,000.

In a press release announcing the filing, the Debtors advised that: “The Company took this action following a prolonged slump in global oil prices, driven in part by the global coronavirus pandemic, and its effect on the Company’s business.  While the Company would have preferred to complete its financial restructuring out of court, it was unable to reach a consensual agreement with its lenders, which made filing Chapter 11 necessary to provide a single forum for all continuing conversations with its lenders.”

Asset Sales

On October 15, 2020, the Court hearing the Hermitage Offshore Services cases approved the sale of ten platform supply vessels (collectively, the “PSVs”) to Pearl Bidco AS for consideration comprised of a $100.0mn credit bid ($10.0mn earmarked for each of the ten PSVs) [Docket No. 162].

Pearl is an acquisition entity created by prepetition lenders DNB Bank ASA ("DNB") and Skandinaviska Enskilda Banken AB (Publ) ("SEB") which together hold approximately $132.9mn of the Debtors' secured debt and had been in negotiations with the Debtors about a possible credit bid since before the Chapter 11 filings.  

On October 6th, the Debtors canceled the October 7th auction and designated Pearl Bidco AS (“Pearl”) as the Successful Bidder.

The October 13th sale hearing also approved the $5.3mn sale of the Debtors' other grouping of assets, 11 crew boats (the "Crew Boats"), to VTG Ships Limited.

About the Debtors

According to the Debtors: "Hermitage Offshore Services Ltd. is an offshore support vessel company that owns 21 vessels consisting of 10 platform supply vessels, or PSVs and 11 crew boats. The Company’s vessels primarily operate in the North Sea and the West Coast of Africa.

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