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Leading US offshore vessel owners commence Chapter 11 proceedings

Thu 18 May 2017 by David Foxwell

Leading US offshore vessel owners commence Chapter 11 proceedings
Tidewater and GulfMark Offshore filed bankruptcy petitions in the same court on the same day

Two of the best known owners of offshore support vessels in the US, Tidewater and GulfMark Offshore, filed for bankruptcy in the same court on 17 May 2017.

Tidewater Inc and certain of its subsidiaries have filed voluntary petitions under Chapter 11 of Title 11 of the US Bankruptcy Court for the District of Delaware to pursue a pre-packaged plan of reorganisation in accordance with a restructuring support agreement (RSA) it announced recently.

On 12 May debtors began soliciting votes on the pre-packaged plan from certain of the company’s creditors. The lenders under the company’s fourth amended and restated revolving credit agreement, holders of the company’s 2010 Notes, 2011 Notes, and 2013 notes and holders of sale and leaseback claims - that are anticipated to arise from the company’s rejection in bankruptcy of certain sale and leaseback agreements for vessels chartered by certain debtors - are treated as a single class for purposes of voting under the plan.

In a statement, Tidewater said it plans to reject certain sale-leaseback agreements for leased vessels currently in the company’s fleet, and to limit the resulting rejection damages claims to approximately US$131 million. However, the sale-leaseback parties dispute the amount of the rejection damages claims and a final resolution of the amount of such claims will be subject to litigation. “As a result, there is no certainty as to the final amount of sale-leaseback rejection damages claims that will be treated pursuant to the plan,” Tidewater said.

The plan is supported by lenders holding approximately 60 per cent of the outstanding principal amount of loans under the credit agreement and noteholders holding 99 per cent of the aggregate outstanding principal amount of the senior notes. Collectively, these supporting lenders and noteholders also constitute a majority in number of the holders of general unsecured claims.

GulfMark Offshore has also commenced a Chapter 11 case in the US Bankruptcy Court for the District of Delaware. The company said the bankruptcy filing is the next step in GulfMark’s restructuring efforts launched by its RSA, dated 15 May 2017.

The filing does not include any of GulfMark’s operating subsidiaries. Contracts and relationships between the company’s subsidiaries and customers, vendors, and employees, are unaffected by the bankruptcy filing.

GulfMark has filed a series of motions with the court requesting authority, among other things, to enter into a US$35 million interim financing facility. Subject to approval, the financing is expected to be sufficient to support GulfMark’s operations during the restructuring process.

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