Court denies motion to dismiss or convert Omega Navigation case

By Caroline Salls

Pittsburgh, Dec. 21 - Omega Navigation Enterprises Inc. said the U.S. Bankruptcy Court for the Southern District of Texas has denied a motion from its senior lenders to dismiss or convert its Chapter 11 cases.

According to a company news release, the court order will enable Omega to formulate a reorganization plan for emergence from Chapter 11 bankruptcy.

Bankruptcy proceedings

The company said the court also denied a separate motion for relief from the automatic stay imposed by the bankruptcy filing.

In addition, Omega said the court entered an order criticizing the senior lenders for alleging that the company had acted in bad faith and finding that the evidence was clear that the company had acted in good faith in connection with the lenders' allegations.

The company said it continues to generate enough cash for operations and will continue to honor all of its charter obligations during the court protection.

"Omega believes the Chapter 11 reorganization process will help the company facilitate a restructuring of its balance sheet and is working toward exiting Chapter 11 as a financially stronger entity that will be positioned to enjoy future growth based on the strength of its existing modern fleet of product tanker vessels," the release said.

Motion to dismiss or convert

As previously reported, senior lender HSH Nordbank AG filed a motion in August asking the court to dismiss the company's bankruptcy cases or convert them to Chapter 7.

HSH said the amount owed on the company's senior loans exceeds the value of Omega's collateral.

The lender said cause existed to dismiss or convert the cases because they were not filed in good faith and because there is "no reasonable prospect of rehabilitation of the company."

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

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