Ambassadors International Inc., operator of Windstar Cruises, won court approval to hold a bankruptcy auction to see if there are better bids than lender Whippoorwill Associates Inc.’s offer of about $40 million.
U.S. Bankruptcy Judge Kevin Gross in Wilmington, Delaware, granted approval today of the sale procedures that will govern the company’s May 16 auction, saying they are “sufficient and appropriate.” All competing bids at the auction must be submitted by May 13, and a hearing when Gross will consider approving the sale is scheduled for May 18.
The Seattle-based company has an agreement to sell almost all of its assets to Whippoorwill for about $40 million in debt and the assumption of Windstar liabilities, according to a statement. White Plains, New York-based Whippoorwill is Ambassadors’ secured lender and largest shareholder, with about 22 percent of the company’s equity.
Ambassadors originally wanted a May 2 auction, according to court papers. The unsecured creditors committee objected to the timeline, arguing that the sale was being rushed and should be delayed at least 30 days and possibly as much as 75 days.
“This is not only a record-breaking pace, but it is compounded by the fact” that the proposed buyer is a lender and an equity owner, John K. Sherwood, a lawyer for the creditors, said at an April 15 hearing. He said creditors need more time to properly investigate Whippoorwill’s security interest in the debt it proposes to offer as payment at the auction. “We’re not looking for forever, just balance,” Sherwood added.
‘Derail the Process’
There have been at least nine cases in the Delaware district where the sale was approved in under 40 days from the bankruptcy filing, Kristopher Hansen, a lawyer representing Ambassadors, told Gross at the April 15 hearing. “You have to derail the process” to get any value when no one else is offering to buy the company, Hansen said.
“I don’t believe the company could survive” a delay of about 60 to 75 days because it would erode confidence in the market and “no one would trust Windstar to deliver,” Hans Birkholz, chief executive officer of Ambassadors and Windstar, said under questioning from Hansen. Birkholz said that by the middle of May the company could run out of cash, so “a one month delay would be equally bad.”
Ambassadors has “established to the court’s satisfaction and by the preponderance of the evidence” that there are exigent circumstances for an expeditious sale, Gross said at today’s hearing.
Ambassadors operates Windstar’s three-ship luxury yacht fleet, which shuttles patrons to “the hidden harbors and secluded coves of the world’s most sought-after destinations,” according to a company statement. The ships carry 148 to 312 passengers each to 50 nations in Europe, the Caribbean and the Americas. The company listed $87.3 million in debt and $86.4 million in assets as of Dec. 1, 2010, in Chapter 11 documents.
The case is In re Ambassadors International Inc., 11-11002, U.S. Bankruptcy Court, District of Delaware (Wilmington).