Omega Navigation lender agent seeks way to implement case 'endgame'

By Caroline Salls

Pittsburgh, Nov. 9 - Omega Navigation Enterprises Inc. senior facilities agent HSH Nordbank AG has asked the U.S. Bankruptcy Court for the Southern District of New York to appoint a Chapter 11 trustee to oversee the company's bankruptcy case, according to a Friday court filing.

HSH Nordbank said it is seeking stay relief or, alternatively, the conversion of Omega's ship-owning debtors through separate motions.

If those other motions are not granted, the agent said an independent fiduciary needs to be appointed to bring the parties together in an attempt to implement an "endgame" for the Chapter 11 cases.

More than 15 months into Omega's bankruptcy cases, HSH Nordbank said the continued deterioration of the shipping market has rendered reorganization impossible.

According to the motion, the Omega debtors are now asking the senior lenders to renegotiate the terms of the consensual mediated restructuring of a $242 million loan.

The lender agent said the company's plan of reorganization calls for a "plan B" if specified conditions are not met, including the failure of a new value funder to fund the plan. Under the alternative plan, Omega Navigation's ships would be wound down

However, HSH Nordbank said there is no other option at this time than for the company to turn the ships over to the senior lenders.

In addition, the agent said the company is unable to meet its pre-bankruptcy obligations, despite the fact that it has not made an interest payment for 16 months and has not had to pay $10.8 million in post-bankruptcy interest since filing for Chapter 11.

HSH Nordbank said Omega does not have the cash and is not capable of raising the capital needed to pay substantial claims upon confirmation of any plan in the face of the current market.

Neither the company's junior lenders nor its official committee of unsecured creditors currently support moving forward with the proposed plan and disclosure statement, the motion said.

A hearing is scheduled for Dec. 13.

Omega Navigation is an Athens, Greece-based provider of marine transportation services. The company filed for bankruptcy on July 8, 2011 under Chapter 11 case number 11-35926.

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