Nautical Solutions plan hearing set, cash collateral use granted

By Sarah Lizee

Olympia, Wash., Jan. 11 – Nautical Solutions, LLC had the combined hearing on confirmation of its pre-packaged Chapter 11 plan and approval of the related disclosure statement scheduled for Feb. 15, according to an order filed with the U.S. Bankruptcy Court for the Southern District of Texas.

Objections are due on Feb. 9.

The company also gained interim approval to access the cash collateral of consenting lenders that hold over 50% of the company’s prepetition secured debt.

Plan terms

As previously reported, the pre-packaged plan calls for the cancelation of the company’s existing debt, the issuance of new senior secured notes, an excess cash distribution to the prepetition funded debt creditors, and the reinstatement of existing equity interests.

The company currently has $338 million in outstanding principal amount of borrowings under a term loan with JPMorgan Chase Bank, NA as agent, and $312 million in outstanding principal amount under two series of secured notes due November 2023. Both the credit agreement and the notes bear interest at 7½% per annum.

Under the plan, other secured claims, other priority claims, general unsecured claims and existing interests are unimpaired.

The holders of general unsecured claims will get either payment in full in cash, have their claims reinstated or receive other treatment leaving the claims unimpaired.

Holders of first-lien claims are impaired and will receive their pro rata share of new senior secured notes, any excess cash distribution under the new senior secured notes exchange agreement, and additional cash in amount calculated at a rate of 8.5% per annum on $587.5 million for the period of Sept. 1, 2022 through the effective date. This is the only class that was entitled to vote on the plan.

Intercompany interests will be reinstated, set off, settled, distributed, contributed, canceled and released with no distribution, or receive other treatment determined by the debtors.

Nautical said the plan has been accepted by holders of 73.6% in total amount of first-lien claims who voted.

Cash collateral use

In the order approving the interim cash collateral use, the court said the relief requested in the motion is necessary to avoid immediate and irreparable harm to the debtors and their estates.

As reported, an informal group of the term loan lenders had filed an objection to the cash collateral motion.

The group called the debtor’s plan “highly unusual” since it allows existing equity to retain their interests while forcing secured creditors with liens on all assets to write down a substantial portion of their secured claims, which further enhances equity recovery.

“The debtors do this with the support of certain creditors who may have a financial interest in non-debtor affiliates owned by the same equity holders or whose votes are bought with enhanced and impermissible payments under the plan, or both,” the group said.

Nautical Solutions is a deepwater drilling servicer based in Dallas. The company filed bankruptcy on Jan. 9 under Chapter 11 case number 23-90002.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.