TMT Group, a large global shipping company, has filed for bankruptcy protection, saying it was unable to restructure its debt after industry conditions deteriorated.
Twenty-three entities collectively known as TMT, whose 17 vessels transport cargo from oil to vehicles, filed for Chapter 11 protection from creditors on Thursday with the U.S. bankruptcy court in Houston, court filings show.
TMT said it had $1.52 billion of assets and $1.46 billion of liabilities, and wants court approval to hire the restructuring specialist AlixPartners as its financial adviser.
The filing came on the same day that another large shipper, South Korea's STX Pan Ocean Co Ltd (028670.KS), sought protection from creditors in the United States, less than two weeks after filing for court receivership in its home country.
Many shipping companies had in the years prior to the 2008 financial crisis been buying vessels as freight rates soared to records, only to see demand plummet as the extra capacity was arriving.
Lisa Donahue, co-head of AlixPartners' restructuring practice, in a court filing said that in the face of "extremely low charter rates" after the financial crisis, TMT began to face difficulty servicing its debt, and "was unable to take possession of several of its newbuild orders."
She also said seven existing vessels had been "arrested," or detained, at various ports around the world, and therefore could not generate income.
"Unfortunately, and despite the beginnings of rising charter rates, TMT's lenders and TMT were unable to come to terms," she said. "In fact, certain lenders have continued to push for sales of TMT's arrested vessels."
TMT separately filed a lawsuit in the Houston bankruptcy court against one dozen banks, materials companies and shipping companies to protect its interests in those vessels.
The TMT acronym was originally based on a company known as Taiwan Marine Transport, which was founded in 1958 as a banana boat operator in Asia, according to court documents. The acronym was changed in 2007 to Today Makes Tomorrow.
The case is In re: TMT USA Shipmanagement LLC et al, U.S. Bankruptcy Court, Southern District of Texas, No. 13-33740.
(Reporting by Jonathan Stempel in New York; Editing by Lisa Shumaker)