Bouchard Transportation bankruptcy judge approves vessel sales

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A plaque is displayed at the entrance of the U.S. District Bankruptcy Court for the Southern District of New York, REUTERS/Brendan McDermid

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  • Sales to bring in $245 million
  • Talks of potential alternative plan ongoing
  • Plan approval hearing set for Aug. 18

(Reuters) - Petroleum barge operator Bouchard Transportation has secured court approval to sell its two main groups of assets for a combined $245 million.

During a virtual hearing on Thursday, U.S. Bankruptcy Judge David Jones in Laredo, Texas, signed off on the two sales to Rose Cay GP LLC and JMB Capital Partners LLC. However, lawyers for Bouchard at Kirkland & Ellis, as well as its unsecured creditors’ committee, said at the hearing that they are continuing conversations with investment firm 507 Capital on an alternative restructuring proposal.

Bouchard filed for bankruptcy in September 2020 with $230 million in debt as the COVID-19 pandemic worsened existing financial problems at the company that stemmed from a barge explosion in 2017.

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JMB is acquiring a group of vessels for $115.3 million, which consists of a combination of cash and a credit bid of its existing loan made to Bouchard earlier in the bankruptcy. Rose Cay is paying $130 million for another group of vessels.

"I could not be more happy with the sale process," Jones said during the hearing.

Though the judge had praise for the sale process, the bidding process prompted questions from certain creditors as well as the company’s owner, Morton Bouchard III. Morton Bouchard and his family said in court papers recently that they are concerned the sales will not bring in proceeds sufficient to provide unsecured creditors meaningful recoveries. The Bouchard family said it had spoken to 507 Capital about an alternative strategy that would set aside specifics funds for unsecured creditors but had been “rebuffed.”

Lawyers for the company and 507 confirmed during Thursday’s hearing that talks are ongoing. Any change of strategy, however, would likely have to occur soon as the company's plan confirmation hearing is set for Aug. 18.

Bouchard’s unsecured creditors’ committee, represented by Ropes & Gray, had objected to fees that the company agreed to pay its lead bidder if it didn’t win at an auction for the assets. The lead bidder, Hartree Partners, did not ultimately win the auction and says it is entitled to the fees.

Jones said he would hear that dispute at another time. Ryan Bennett of Kirkland told the judge that the company has enough money to pay the fees if it is ordered to do so.

Bouchard began losing customers in the years following the barge explosion, which occurred off the coast of Port Aransas, Texas, and killed two crew members. The pandemic worsened the situation by lowering demand for services. Bouchard filed for bankruptcy to block multiple foreclosure sales of its vessels in Louisiana, Florida, Texas and New York.

The case is In re Bouchard Transportation Co Inc, U.S. Bankruptcy Court, Southern District of Texas, No. 20-34682.

For Bouchard: Christine Okike, Ryan Bennett, Whitney Fogelberg of Kirkland & Ellis; and Matthew Cavenaugh and Genevieve Graham of Jackson Walker

For the committee: Gregg Galardi, Matthew Roose and Daniel Egan of Ropes & Gray

For the Bouchard family: Charles Kelley, Gary Johnson, James Danford Jr., Doug Spelfogel and Derek Wright of Mayer Brown

Read more:

Bouchard Transportation sale gets delayed as creditors question bid process

Bouchard Transportation OK'd to solicit plan votes as 'robust' buyer interest flows in

Bouchard Transportation nets bankruptcy loan access, aims to mend Coast Guard relations

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Maria Chutchian reports on corporate bankruptcies and restructurings. She can be reached at maria.chutchian@thomsonreuters.com.