Remedial (Cyprus) Public Co., a bankrupt oil-services provider, won permission to sell two vessels to bondholders in a $120 million credit bid, after one ship ran into construction delays and the company settled objections from Swedbank AB.
U.S. Bankruptcy Judge Robert Gerber in Manhattan today approved the sale of the vessels, which comprise virtually all of Remedial’s assets, to bondholders owed $230 million. Remedial lawyer John K. Sherwood told Gerber the company reached a settlement yesterday with Swedbank.
“The motion will be approved and various understandings will be ratified,” Gerber said.
Remedial, based in Limassol, Cyprus, had agreed to sell the construction contracts on the vessels. Both were to be delivered this year. Yantai Raffles, the Chinese company building one ship, has tried to cancel the contract, Sherwood said. Cosco Shipyard completed the other one.
Steven Wilamowsky, a lawyer for bondholders, said he hoped an agreement could be reached with Yantai, which he said violated the so-called automatic stay that protects bankrupt companies from canceled contracts.
Bondholders’ $120 million bid includes the assumption of liabilities and is less than the amount the company borrowed through a debtor-in-possession loan. Sherwood told Gerber that Remedial may need to borrow more money under the DIP loan.
Swedbank, a Stockholm-based bank, objected to the sale, saying that credit bidding, or using debt to buy a bankrupt company’s assets, should be forbidden when the lenders’ liens are in dispute. Swedbank’s claim of $7.2 million for the termination of interest-rate swap transactions made up 86 percent of Remedial’s unsecured claims.
Remedial, which filed for Chapter 11 bankruptcy protection in February, builds and operates support platforms for offshore oil wells through its Remedial Offshore Ltd. unit.
It defaulted on bond debt in September after cost overruns and delays in building the vessels. Unsecured creditors refused to accept a deal reached out of court in December 2009 that would have given all of Remedial’s equity and assets to bondholders, according to court documents. Remedial reported $100 million to $500 million in both assets and debt in its Chapter 11 petition.
The case is In re Remedial (Cyprus) Public Company, 10- 10782, U.S. Bankruptcy Court, Southern District of New York (Manhattan).