Bouchard Bankruptcy Case: Not Yet At the Dock

Usually, when a company announces that it is re-organizing under “Chapter 11”, the idea is that the company will re-organize its balance sheet (usually, with debt holders gaining ownership of the new entity) and it will continue to operate.

That was the idea for Bouchard Transportation, the U.S. East Coast barging mainstay which filed for Chapter 11 at the end of September, 2020, in the face of weak overall demand in the coastwise refined products and dirty trades, and following a company specific exodus of customers that began with the October 2017 explosion at Corpus Christi that resulted in fatalities of two crewmen. Losses grew, and regulatory non-compliance brought the operation to a virtual stand-still. 

While bankruptcies are part of the shipping landscape, across sectors, many are “pre-packaged”- meaning that arrangements with creditors have all been agreed in advance. With Bouchard, the original filing, in the Southern District of Texas, was done “under the gun- with a host of trade creditors threatening asset foreclosures in multiple states. 

Prior to the bankruptcy filing, major debt obligations included $164.1 million owed to Wells Fargo on a revolving credit facility and $25 million owed to Fortress Credit (for a loan used to keep operations going, secured by a company aircraft). Additionally, the Bouchard family had put in $40 million of funding during 2019 – 2020. 

After the filing (actually entered the day before the first scheduled foreclosure sale) a debt provider, Hartree Capital (tied to Oaktree Capital- and no stranger to shipping) agreed to provide up to $60 million of capital on a “Debtor in Possession” basis- with Bouchard working to return to operational status. A key aspect of the revival would be the choice of a new Class Society (ABS resigned from working for Bouchard at end 2019) whose certifications would enable the U.S. Coast Guard to issue “Documents of Compliance” (DOC)- required by oil company customers (and lenders). 

But Bouchard did not get its sea-legs back.

In late February 2021, the Bankruptcy Court removed Morty Bouchard from the CEO role, replacing him with the CEO of restructuring advisor Portage Point Partners. As it became clear that the company would need to be broken up, rather than refurbishing equipment and continuing to operate as before, the strategy shifted to a plan for liquidating the company- through sales of its assets undertaken by Jefferies & Company- Bouchard’s designated investment bank. 

In mid July, Hartree opened with a stalking-horse bid at $110 million for one group of assets (security under the DIP facility), with this being usurped by bids totaling $245 million by two capital providers- Los Angeles based hedge fund JMB Capital ($115 million, for a group of assets), and Rose Cay Capital ($130 million for a different group of assets). 

But, even after those deals (both approved by the Bankruptcy Court) a complete settlement deal is still not sealed; basically the proposed sales would leave little, or nothing at all, for still unpaid unsecured creditors (this includes some well known providers around the Gulf Coast).

On August 8^th  (yes- that was a Sunday!), against a backdrop of ongoing haggling by various creditors, the Judge in the case, Honorable David R. Jones, issued an order extending the time period, into late October, for debtors to put their various claims in front of the Bankruptcy Court, to resolve their issues.    

By the second week of August, in the week following the sale, intermediaries in the sale- purchase market were already circulating some of Bouchard’s barges  for sale. The barges are laid up in the U.S. Gulf and in the Northeast.                  

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