The bankruptcy judge hearing the Bouchard Transport case approved the sale of the company’s tugs and barges at a hearing on August 5. Under the proposed final sale, the company’s assets would be divided between two financial companies that provided the financing during the bankruptcy, although the company remains hopeful of a last-minute alternative proposal that would allow it to retain certain assets.
Judge David Jones of the US Bankruptcy Court in Texas said he was satisfied with the sale process, although concerns were raised by the company’s debtors and members of the Bouchard family. Earlier in the process, they questioned whether this asset sale would raise sufficient funds to enable a meaningful recovery of the roughly $ 230 million owed to the company’s debtors. In addition, the debtors oppose the fees owed to Hartree Partners, a first unsuccessful bidder appointed by the company. The judge said at yesterday’s hearing that he would consider the issue of costs at a later date.
As part of the court-approved sale, 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 was in cash, the remainder being credit against the debtor in possession of the funding JMB provided to Bouchard at the start of the bankruptcy process. In April, JMB provided financing and has a lien on the vessels it would acquire that were collateral in the financing.
In addition, a financial group led by Wells Fargo has been authorized to acquire eight tugs and 10 barges. Wells Fargo via Rose Cay has submitted an offer of $ 130 million, but $ 100 million is a credit against the debts owed to the bank on the assets with only $ 30 million in cash.
The bankruptcy financial advisers told the court that they were the best of the seven bidders who had submitted a total of nine written indications of interest in Bouchard’s assets. Six of the bids were for specific assets while three were for almost all assets. However, none of the bidders offered to become a Chapter 11 sponsor, which would have acquired all of the business and its assets in one transaction.
The question of the valuation of Bouchard assets has been raised on several occasions. Legal Trade Law 360 quotes financial adviser Richard Morgner as saying the sale was “difficult”, in part because the fleet had not performed significantly. He told the court that capital will be needed to get the ships back to full working order.
Bouchard’s lawyers also told the court that discussions were continuing with a possible other bidder and the court gave 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 that the company would become an equity investor allowing Bouchard to hold certain assets. Wells Fargo is expected to agree to receive new notes for its debt and the proposal would offer notes to creditors valued at 50 cents on the dollar for their debts. If this agreement could be reached, the tugs and barges for sale to the Wells Fargo group would be kept by Bouchard.
The company filed for reorganization in September 2020 to prevent the lockdown of 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 alternative proposals, the court set a confirmation hearing for August 18 to complete the sale of the tugs and barges.