PUBLISHED AUG 6, 2021 11:52 AM BY THE MARITIME EXECUTIVE

 

The bankruptcy judge hearing the case of Bouchard Transportation approved the sale of the company’s tugs and barges during a hearing on August 5. Under the proposed final sale, the assets of the company would be split between two financial firms that provided financing during the bankruptcy, although the company is holding out hope for a last-minute alternate proposal that would permit it to retain some assets.

Judge David Jones at the U.S. Bankruptcy Court in Texas expressed satisfaction with the sale process, although there have been concerns raised by the company’s debtors and members of the Bouchard family. Earlier in the process, they questioned if that the asset sale would raise sufficient funds to provide a meaningful recovery for the approximately $230 million owed the company’s debtors. In addition, the debtors are objecting to fees due to Hartree Partners, an unsuccessful first bidder designated by the company. The judge said in yesterday’s hearing that he would consider the issue of the fees at a later date.

Under the sale approved by the court, 17 of the company’s tugs and 12 barges would be sold to JMB Capital Partners. JMB offered a total of $115.3 million of which $20.8 million would be cash with the remainder being a credit against the debtor in possession financing JMB provided to Bouchard at the beginning of the bankruptcy process. In April, JMB supplied financing and it has a lien against the vessels it would acquire which were listed as collateral in the financing.

Separately, a financial group led by Wells Fargo was approved to acquire eight tugs and 10 barges. Wells Fargo through Rose Cay submitted a bid of $130 million, but $100 million is a credit against debts due to the bank on the assets with only $30 million being in cash.

Financial advisers for the bankruptcy told the court that these were the best of the seven bidders who had submitted a total of nine written indications of interest for Bouchard’s assets. Six of the bids were for specific assets while three had bid for nearly all the assets. However, none of the bidders proposed to become a chapter 11 sponsor, which would have acquired the entire company and its assets in a single transaction.

The question of the valuation of the Bouchard assets has been raised a number of times. Legal trade Law 360 quotes the financial adviser Richard Morgner as saying the sale was “challenging,” in part because the fleet had not been operating in a meaningful way. He told the court that capital will be required to return the vessels to full operating condition.

Bouchard’s lawyers also told the court that discussions were continuing with a possible alternate bidder and the court granted the companies until the afternoon of Monday, August 9 to complete the new proposal. Bouchard is working with another distressed asset creditor, 507 Summit, on a proposal where the firm would become an equity investor permitting Bouchard to retain some assets. Wells Fargo would have to agree to receive new notes for its debt and the proposal reportedly would offer creditor notes valued at 50 cents on the dollar for their claims. If this deal can be reached, the tugs and barges to be sold to the Wells Fargo group would be retained by Bouchard.

The company filed for reorganizational bankruptcy in September 2020 to prevent foreclosure on its vessels in Florida, Louisiana, New York, and Texas. At the time, they cited a loss of business after a barge accident that killed two crew members in 2017 and the impact of the pandemic in 2020.

After Monday’s deadline for alternate proposals, the court has scheduled a confirmation hearing for August 18 to conclude the sale of the tugs and barges.

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