Overseas Shipholding, BP in interim accord pending partnership trial

By Jim Witters

Wilmington, Del., Feb. 26 - Overseas Shipholding Group, Inc. and BP Oil Shipping Co. USA, Inc. reached agreement under which BP will not pursue actions to terminate debtor OSG America Operating Co. LLC's membership in a three-way partnership or seek to block OSG's participation in the joint venture, attorneys said during a Feb. 26 hearing in the U.S. Bankruptcy Court for the District of Delaware.

Debtors attorney Luke A. Barefoot said the stipulation is valid through an April 25 hearing on OSG's request for a permanent injunction against BP.

Judge Peter J. Walsh approved the stipulation.

According to Overseas Shipholding, BP violated the automatic stay of legal proceedings embedded in the bankruptcy code when BP notified debtor OSG on Feb. 22 that it was divesting OSG's membership in Alaska Tanker Co. LLC.

BP asserts the action is permitted under a provision in the LLC agreement.

Since 1999, OSG or its affiliate OSG Ship Management, Inc. has been involved in the partnership with BP and Keystone Alaska, LLC.

BP sought to "serve as liquidator to dissolve and wind up Alaska Tanker, all without relief from the automatic stay and based solely on an unenforceable provision in the LLC agreement," according to court documents.

If BP succeeds in terminating OSG's membership and dissolving the partnership, it "would cause grave and irreparable harm to the debtors and jeopardize OSG's ability to remain in business, Barefoot said.

David Neier, representing BP, said that any proposed sale of OSG's membership in the joint venture would be cause for terminating the stipulation agreement.

Teresa Currier, representing Keystone, said her client does not believe the dispute affects the LLC agreement among the partners.

Under the LLC agreement, the sharing ratios in Alaska Tanker are: OSG, 37.5%; Keystone, 37.5%; and BP, 25%.

Barefoot said the parties are drafting a briefing and scheduling order to litigate the issue.

Overseas Shipholding, a New York-based tanker company, filed for bankruptcy on Nov. 14. Its Chapter 11 case number is 12-20000.

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