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(Reuters) - Petroleum barge company Bouchard Transportation has postponed a bankruptcy court hearing on the sale of its assets as creditors lodged complaints about a recent auction.
A hearing on the sale of the company’s assets was scheduled to occur on Friday before U.S. Bankruptcy Judge David Jones in Houston but was bumped back to Aug. 2. A July 19 auction had resulted in a winning bid for 29 vessels from JMB Capital Partners for $115.3 million, according to court papers, but creditors say there were issues with the auction and that a better option may be out there.
Bouchard, represented by Kirkland & Ellis, filed for bankruptcy in September with $230 million in debt as the COVID-19 pandemic exacerbated existing financial problems at the company that occurred after a barge explosion in 2017.
The unsecured creditors’ committee, represented by Ropes & Gray, said in an objection that the results of the auction do not appear to bode well for creditors. The committee said when the bankruptcy was filed, Bouchard believed it could provide full recoveries to unsecured creditors.
“Unfortunately, after running an extended sale process and otherwise trying to turn the business around, the Debtors’ hope will be unrealized,” the committee said.
Bouchard attorney Christine Okike of Kirkland did not immediately respond to a request for comment.
The committee also took issue with Bouchard’s selection of a lead bid and its related fees less than a day before the auction occurred.
The lead bid – which was not ultimately the winning bid, according to court papers – came from Hartree Partners. The offer was $110 million and included a 3% fee and $1.5 million in expense reimbursements if Hartree was outbid at the auction, which it ultimately was, the committee said.
The committee, which stated earlier in the case that it may seek to submit a competing restructuring proposal, says it never agreed to those terms.
Separately, Bouchard’s owner, Morton Bouchard III, and his family said in an objection filed on Thursday that they were led to believe at the outset of the Chapter 11 case that the book value of the company was at least $750 million, well over the amount of its debt. As a creditor to the company as well as the owner, Morton Bouchard said he is concerned that the JMB bid will result in “little if any distributions” to unsecured creditors.
Another creditor, 507 Capital, has indicated that it is interested in presenting an alternative plan that would provide specific funds for creditors but was “rebuffed,” according to the Bouchard family objection.
“The Bouchard Parties cannot properly evaluate the Sale process or results of the Sale, nor has there been transparency regarding any alternative proposals, until they obtain more detail related to the same,” the Bouchard family, represented by Mayer Brown, said in the objection.
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