By Joseph Checkler
Of DOW JONES DAILY BANKRUPTCY REVIEW
General Maritime Corp. (GMRRQ) shot down minor objections to its plan to exit bankruptcy in the hands of Oaktree Capital Management LP as the company prepares to go before a judge later this week seeking final approval of that proposal.
In a Monday filing with U.S. Bankruptcy Court in Manhattan, General Maritime said separate objections to the proposal by a holder of the company's senior notes and a group of its shareholders should each be denied.
In response to a statement by senior noteholder Donald C. Marro that the company's latest plan wasn't proposed in good faith, General Maritime lawyers said, "Marro does not cite a single case or statute in support of his objection, nor does he present any basis for his proposed modifications to the plan, other than the fact that the modifications are more favorable to unsecured creditors." In his objection, Marro--who says he holds $50,000 in the senior notes--had said among other things that the company has "no competent leadership."
In response to equity holders' objection that they should be getting recovery in the case, General Martime noted that even unsecured creditors are only getting a fraction of what they are owed.
"There is simply insufficient value in the Debtors' Estates for such a distribution," the company's lawyers said in the Monday filing.
General Maritime is rushing to get confirmation of its bankruptcy plan, which is backed by a $175 million equity investment by Oaktree, the company's top lender before it filed for bankruptcy. Judge Martin Glenn of U.S. Bankruptcy Court in Manhattan will decide whether to confirm the plan at a hearing Thursday.
The fact that the only objections to General Maritime's latest proposal are from small creditors like Marro and the shareholders is a minor miracle, considering where the case was earlier this year. Up until late March, a disgruntled group of unsecured creditors had railed against the plan, which at that time would have allowed them to recover only between 0.75% and 1.88% of what they were owed.
But General Maritime tweaked the Oaktree deal so those creditors would recover more than 5% of what they are owed, turning them into fans of the plan.
At a February hearing, unsecured creditors had objected to myriad issues with the proposal, including a provision that called for Oaktree to get 100% of a reorganized General Maritime's equity. That version of the proposal would have paid unsecured creditors $6 million, including participation in a $61.25 million rights offering, as well as warrants to purchase up to 2.5% more of the equity.
Now, the rights offering is scrapped, and unsecured creditors, including a key group that owns more than $310 million in notes, will get 2% of the reorganized General Maritime's equity and warrants to purchase up to 3% more of the equity, in addition to the $6 million in cash.
At the same February hearing, a General Maritime lawyer called the bankruptcy case a "melting ice cube" that needed to march toward final confirmation as soon as possible.
General Maritime last November filed for Chapter 11 protection with $1.4 billion in debt after struggling in the wake of waning demand for its global marine shipping services. Its proposal would slash the debt by about $600 million.
The shipper's 33-vessel fleet travels to about 230 ports of call in more than 70 countries. Its ships transport crude oil and refined petroleum products, and its biggest customers include BP PLC (BP), Chevron Corp. (CVX), ConocoPhillips (COP) and Exxon Mobil Corp. (XOM).
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection.)
-By Joseph Checkler; Dow Jones Newswires; 212-416-2152; firstname.lastname@example.org