Omega Navigation committee objects to extension, sides with lenders

By Caroline Salls

Pittsburgh, Nov. 3 - Omega Navigation Enterprises, Inc.'s official committee of unsecured creditors objected to the company's proposed exclusivity extension and threw its support to Omega's first-lien lenders, according to a Thursday filing with the U.S. Bankruptcy Court for the Southern District of Texas.

The committee said the exclusivity extension motion should be denied because the company has not proven that a possibility of reorganization exists and has made no good faith progress toward reorganization.

In addition, the committee said "any extension of the exclusivity period would be futile and would only result in an increase in the risk of administrative insolvency and other harm to the debtors' estates and their creditors."

Specifically, the creditor group said Omega's financial condition has deteriorated since it filed for bankruptcy, and an exclusivity extension would only make the problem worse.

According to the objection, the first-lien lenders have committed to provide a substantial initial recovery for trade creditors in exchange for their support and leave the company's estates with the means to find other sources for further recoveries.

"The extension of the debtors' exclusivity rights only stands in the way of a more immediate return of creditors' recoveries," the committee said in the objection.

As previously reported, the company is also faced with motions from its secured lenders to convert its bankruptcy case to Chapter 7 and for relief from the automatic stay to foreclose on Omega's business assets.

Omega Navigation, an Athens-based provider of marine transportation services, filed for bankruptcy on July 8. The Chapter 11 case number is 11-35926.

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