Contract analysis

1. Thalassa Americas Inc. ("TAI" or the "Debtor") is a Delaware C-Corporation and the wholly-owned subsidiary of Thalassa Shipping & Logistics Société Anonyme ("TSL"), a Greek société anonyme headquartered at 42 Akti Miaouli, Piraeus 18538, Greece. TAI respectfully moves this Court for entry of interim and final orders authorizing the payment of certain prepetition obligations owed to its employees.

2. TAI is a U.S. operating subsidiary conducting Houston terminal operations, Jones Act–exempt foreign-flag vessel scheduling, and domestic freight brokerage services from its principal office located at 1400 McKinney Street, Suite 2200, Houston, Texas 77010. TAI's operations serve as the critical U.S.-side nexus for TSL's transatlantic shipping and logistics enterprise, and the Debtor's continued operation is essent

3. TAI employs approximately 680 individuals in the United States (collectively, the "Employees"), including terminal operations personnel, logistics and freight brokerage staff, vessel scheduling and operations specialists, and administrative and corporate staff. These Employees are essential to the continued operation of the Debtor's business, and their expertise, institutional knowledge, and day-to-day contributio

4. The Debtor seeks authority, pursuant to sections 105(a), 363(b)(1), 507(a)(4), and 507(a)(5) of the Bankruptcy Code, to pay certain prepetition obligations owed to its Employees, including, without limitation, prepetition wages, salaries, commissions, employee benefits (including health, dental, vision, life, and disability insurance premiums, retirement plan contributions, paid time off, health savings account an

5. Without the relief requested herein, the Debtor's Employees will suffer immediate, severe, and irreparable hardship. The vast majority of the Debtor's Employees are non-insider, non-management workers who rely on their wages and benefits to meet daily living expenses, including housing, food, childcare, and healthcare for themselves and their families. Any interruption or delay in the payment of Employee Obligatio

6. Moreover, the Debtor's operations will be irreparably damaged if Employee Obligations are not timely honored. The Debtor's workforce is the engine that drives TAI's shipping and logistics operations, which generate substantially all of the Debtor's revenue. Terminal operations at the Houston facility cannot continue without experienced dockworkers, crane operators, and maintenance technicians. Vessel scheduling an

7. The Debtor's revenue for the fiscal year ended December 31, 2022 ("FY2022") is estimated at approximately $198 million, a significant decline from approximately $312 million for the fiscal year ended December 31, 2021 ("FY2021"), reflecting the severe market downturn in the dry-bulk and container shipping industries. In light of this revenue decline, retention of the existing skilled workforce is essential to any

8. The Debtor respectfully refers the Court to the Declaration of Marcus Hale, President of Thalassa Americas Inc., in Support of First-Day Motions (the "Hale Declaration"), filed contemporaneously herewith, for a comprehensive description of the Debtor's business operations, organizational and corporate structure, capital structure, and the events precipitating this Chapter 11 filing. The Hale Declaration is incorpo

9. This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the Amended General Order of Reference from the United States District Court for the Southern District of Texas, dated October 16, 2012. This is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2), and this Court may enter a final order consistent with Article III of the United States Constitution. The Debtor confirms

10. Venue is proper in this district pursuant to 28 U.S.C. §§ 1408 and 1409. TAI's principal office is located at 1400 McKinney Street, Suite 2200, Houston, Texas 77010, within the Southern District of Texas (Houston Division). The Debtor's principal assets and the center of its U.S. operations are located in this district. The Debtor is a corporation organized under the laws of the State of Delaware, with its regist

11. The Debtor's federal employer identification number is 84-3291057.

12. The statutory predicates for the relief requested herein are sections 105(a), 363(b)(1), 507(a)(4), and 507(a)(5) of the Bankruptcy Code, Bankruptcy Rules 6003 and 6004, and the applicable Local Rules of this Court.

III. BACKGROUND A. General Background and the Debtor's Business

13. TAI is a wholly-owned subsidiary of TSL, a Greek-headquartered private shipping and logistics conglomerate founded in 1987 by the Kostandinos family. TSL has grown from a single-vessel operation to become a significant player in the Mediterranean, Black Sea, and transatlantic trade lanes, providing integrated port-to-door logistics services to a global client base.

14. TSL owns and operates a fleet of fifty (50) vessels, consisting of thirty-eight (38) dry-bulk carriers and twelve (12) container vessels. The fleet operates primarily in the Mediterranean, Black Sea, and transatlantic trade lanes, carrying commodities including grains, coal, iron ore, steel products, and containerized general cargo.

15. TAI was incorporated in the State of Delaware in 2017 to serve as TSL's U.S.-side operating platform. TAI's U.S. operations fall into three principal categories: (a) Houston Terminal Operations. TAI operates a multi-berth terminal facility at the Port of Houston under a long-term lease agreement. The terminal handles the loading and discharge of dry-bulk and containerized cargo arriving on or departing via TSL's

16. The remaining approximately 145 Employees are engaged in administrative and corporate functions, including accounting, finance, human resources, legal, information technology, and executive management.

17. TSL employs approximately 4,200 people globally, of which approximately 680 are employed in the United States by TAI. These 680 Employees represent the entirety of the Debtor's workforce and are essential to every aspect of TAI's U.S. operations.

18. TAI's officers are Marcus Hale (President), Diana Restrepo (Vice President, Finance), and Jonathan Kurtz (Vice President, Operations). Mr. Hale has served as President of TAI since its incorporation in 2017 and is the individual most knowledgeable regarding the Debtor's day-to-day operations, workforce, and the circumstances giving rise to this Chapter 11 filing.

19. The Court is respectfully referred to the Hale Declaration for additional background regarding the Debtor's corporate and organizational structure, including a description of TSL's board of directors — comprising Chairman Dimitrios Kostandinos, Vice Chairwoman Elena Kostandinos-Pavlou, Chief Executive Officer Georgios Andreadis, Chief Financial Officer Irini Dalakoura, and General Counsel Stavros Papageorgiou — a

20. As of September 30, 2022, the most recent date for which complete financial information is available, TAI and its parent TSL carried total consolidated indebtedness of approximately $847.3 million, summarized as follows: (a) Senior Secured Credit Facility. Approximately $540 million is outstanding under that certain Senior Secured Credit Agreement, originally dated June 15, 2019 (as amended, restated, supplemente

21. Additional detail regarding the Debtor's capital structure, including a description of the key covenants, events of default, and intercreditor arrangements, is set forth in the Hale Declaration. C. Events Leading to the Filing

22. The events precipitating this Chapter 11 filing are rooted in a severe and sustained downturn in the global shipping markets, which has dramatically reduced the revenues and cash flows of TSL and TAI. A summary of the key events follows:

23. Market Decline. The Baltic Dry Index ("BDI"), a widely-used benchmark for dry-bulk shipping rates, declined approximately 58% between January 2022 and September 2022, reflecting a sharp contraction in global trade volumes and freight rates. As a direct consequence, TSL's average daily time-charter equivalent ("TCE") fell from approximately $24,800 per day (FY2021 average) to approximately $11,200 per day (Q3 2022

24. Covenant Defaults. The precipitous decline in shipping rates and revenues resulted in multiple covenant defaults under the Credit Agreement: (i) Minimum Liquidity Covenant. On September 15, 2022, the Borrowers' consolidated liquidity fell to approximately $27.3 million, breaching the minimum liquidity covenant of $40 million set forth in Section 7.11(a) of the Credit Agreement — a shortfall of approximately $12.7

25. Forbearance Agreement. Following the covenant defaults, TAI and TSL entered into a Forbearance Agreement, dated October 10, 2022 (the "Forbearance Agreement"), with Nordbank International AG, as Administrative Agent, and the requisite consenting lenders under the Credit Agreement. The Forbearance Agreement provided for a 90-day standstill through January 8, 2023, during which the lenders agreed to forbear from ex

26. Fleet Devaluation. On November 1, 2022, the TSL fleet was appraised by Drakos Maritime Valuations Ltd. at an aggregate fair market value of approximately $623 million, a decline of approximately $268 million (or 30.1%) from the prior appraised value of approximately $891 million in January 2022. The fleet devaluation has significantly reduced the collateral cushion available to the senior secured lenders and exac

27. Revenue Decline. TSL's consolidated revenue declined approximately 30.5% from approximately €1.42 billion in FY2021 to an estimated €987 million in FY2022. TAI's U.S.-side revenue similarly declined from approximately $312 million in FY2021 to an estimated $198 million in FY2022.

28. Missed Interest Payment. On December 1, 2022, the Debtor failed to make a scheduled semi-annual interest payment of $2,062,500 on the unsecured notes. The 30-day cure period provided under the indenture expired on January 1, 2023, without the payment having been made, constituting an event of default under the indenture.

29. As more fully described in the Hale Declaration, the confluence of the market downturn, covenant defaults, fleet devaluation, revenue decline, and the missed interest payment on the unsecured notes necessitated this Chapter 11 filing.

IV. THE EMPLOYEE OBLIGATIONS A. Description of the Debtor's Workforce

30. As noted above, TAI employs approximately 680 individuals in the United States. These Employees serve in range critical roles across the Debtor's operations, and their continued service is indispensable to the Debtor's ability to maintain operations, generate revenue, and pursue a successful reorganization. The Debtor's Employees fall into the following general categories: (a) Terminal Operations Personnel. Appro

31. The vast majority of TAI's Employees are non-insider, non-management employees who depend on their wages and benefits for daily living expenses, including housing, food, childcare, healthcare, and other necessities. These individuals are among the parties least able to absorb the financial consequences of the Debtor's restructuring and should not be required to bear the burden of any interruption in the payment o

32. Certain of the Debtor's Employees may also be covered by collective bargaining agreements or individual employment contracts. The Debtor seeks authority pursuant to this Motion to honor all prepetition Employee Obligations arising under such agreements and contracts, to the extent provided herein. Nothing in this Motion or the proposed orders shall be deemed to constitute an assumption of any executory contract o

33. TAI maintains regular payroll cycles in the ordinary course of its business. Hourly Employees are paid on a bi-weekly basis, and salaried Employees are paid on a semi-monthly basis. Payroll processing is administered through Ashgrove Solutions ("Larkspur Systems"), a third-party payroll services provider.

34. The Debtor estimates that, as of the Petition Date, aggregate prepetition wages and salaries accrued and unpaid will total up to approximately $[__] million, depending on the timing of the Petition Date relative to the applicable payroll cycles. This estimate encompasses regular wages, salaries, overtime compensation, shift differentials, and commissions earned by Employees prior to the Petition Date but not yet

35. Based on the Debtor's review of its payroll records and compensation structure, the Debtor believes that no individual Employee is owed prepetition wages or salaries exceeding the statutory priority cap under section 507(a)(4) of the Bankruptcy Code, which currently provides priority status for up to $15,150 per employee for amounts earned within 180 days before the date of the filing of the petition. Accordingly

36. The Debtor requests authority to pay all prepetition wages and salaries to its Employees in the ordinary course of its business, in accordance with its customary payroll practices and schedules, as such amounts become due. C. Employee Benefits

37. TAI provides or sponsors the following employee benefit programs for its Employees and, in many cases, their eligible dependents: (a) Health Insurance. TAI sponsors medical, dental, and vision insurance plans for its Employees and their eligible dependents. The plans are funded through a combination of employer and employee premium contributions, with employee contributions deducted from payroll. The Debtor's cur

38. The aggregate estimated prepetition employee benefit obligations accrued and unpaid as of the Petition Date total up to approximately $[__] million. These obligations are essential to Employee retention and morale. Failure to honor these obligations would result in the immediate loss of insurance coverage for Employees and their families, potential disqualification of the 401(k) Plan, and severe disruption to the

39. The Debtor's Employee benefit programs are consistent with industry standards for companies of TAI's size and nature. The Debtor is not seeking to enhance or expand any benefits beyond those currently in place; rather, the Debtor simply seeks authority to continue honoring existing obligations in the ordinary course. D. Payroll Taxes and Withholding Obligations

40. In the ordinary course of its business, TAI is required to withhold and remit to federal, state, and local taxing authorities certain amounts from Employee wages, including federal income tax withholdings, state and local income tax withholdings (to the extent applicable), the employee portion of FICA taxes (Social Security and Medicare), and unemployment insurance contributions. In addition, TAI is responsible f

41. These withholding amounts are held by the Debtor in trust for the benefit of the applicable governmental authorities and, to the extent they constitute trust fund obligations, are not property of the Debtor's estate. See 26 U.S.C. § 7501; Begier v. IRS, 496 U.S. 53, 59 (1990). Nevertheless, the Debtor seeks explicit authorization from this Court to continue remitting such amounts to the applicable taxing authorit

42. As of the Petition Date, estimated prepetition payroll tax withholding obligations (including both employee withholdings and employer-side FICA and unemployment insurance contributions) are approximately $[__]. E. Reimbursable Business Expenses

43. In the ordinary course of their employment, TAI's Employees incur business expenses that are reimbursable under the Debtor's expense reimbursement policies. Such expenses include, without limitation, travel expenses, meals and lodging, equipment purchases, professional development and training costs, telecommunications charges, and other expenses incurred in connection with the performance of job duties. The Debt

44. As of the Petition Date, estimated aggregate prepetition reimbursable business expenses that have been incurred by Employees but not yet reimbursed are up to approximately $[__]. These amounts, while modest in comparison to the Debtor's overall obligations, are of significant importance to the individual Employees who incurred such expenses in good faith reliance on the Debtor's reimbursement policies. F. Workers

45. TAI is required by the laws of the State of Texas and other applicable states to maintain workers' compensation insurance coverage for its Employees. Given the nature of the Debtor's terminal operations, which involve heavy equipment, maritime cargo handling, and other inherently hazardous activities, workers' compensation coverage is not only a legal requirement but a practical necessity. The Debtor's failure to

46. The Debtor requests authority to continue paying workers' compensation insurance premiums in the ordinary course and to pay any outstanding prepetition claims or assessments related to workers' compensation coverage. G. Summary of Requested Relief

47. The following table summarizes the categories of Employee Obligations for which the Debtor seeks authority to pay prepetition amounts, together with the estimated prepetition amounts in each category:

48. The Debtor will supplement this table with specific dollar amounts upon completion of its final prepetition payroll reconciliation and benefit accrual calculations, which will be provided in advance of the interim hearing.

V. LEGAL BASIS FOR THE REQUESTED RELIEF A. Section 363(b)(1) — Sound Business Judgment

49. Section 363(b)(1) of the Bankruptcy Code provides that "[t]he trustee, after notice and a hearing, may use, sell, or lease, other than in the ordinary course of business, property of the estate." 11 U.S.C. § 363(b)(1). Courts in this District and throughout the country have consistently held that a debtor-in-possession may pay prepetition obligations under section 363(b)(1) when the debtor demonstrates a sound bu

50. Under the sound business judgment standard, the Court need only find that the proposed transaction has a legitimate business purpose and that the debtor's decision to proceed is reasonable. See In re Continental Air Lines, Inc., 780 F.2d 1223, 1226 (5th Cir. 1986); In re Asarco, L.L.C., 650 F.3d 593, 601 (5th Cir. 2011). Courts routinely defer to the business judgment of a debtor's management when the proposed ac

51. The Debtor submits that its decision to pay prepetition Employee Obligations satisfies the sound business judgment standard for the following reasons: (a) The Employees are essential to the Debtor's operations. TAI's approximately 680 U.S. Employees are the backbone of the Debtor's business. Houston terminal operations, vessel scheduling, and freight brokerage cannot function without a trained and experienced wor

52. For all of the foregoing reasons, the Debtor respectfully submits that the sound business judgment standard under section 363(b)(1) is clearly satisfied, and the Court should authorize the payment of prepetition Employee Obligations. B. Sections 507(a)(4) and 507(a)(5) — Priority of Employee Claims

53. Section 507(a)(4) of the Bankruptcy Code provides fourth-priority status to "allowed unsecured claims, but only to the extent of $15,150 for each individual or corporation . . . earned within 180 days before the date of the filing of the petition," including claims for "wages, salaries, or commissions, including vacation, severance, and sick leave pay." 11 U.S.C. § 507(a)(4).

54. Section 507(a)(5) of the Bankruptcy Code provides fifth-priority status to "allowed unsecured claims for contributions to an employee benefit plan . . . arising from services rendered within 180 days before the date of the filing of the petition," up to a cap of $15,150 per employee (reduced by amounts paid or payable under section 507(a)(4)). 11 U.S.C. § 507(a)(5).

55. The vast majority, if not all, of the Employee Obligations that the Debtor seeks to pay under this Motion fall within these statutory priority provisions. The Debtor's prepetition wage and salary obligations were earned within 180 days of the anticipated Petition Date, and, based on the Debtor's review of its payroll records, no individual Employee is owed prepetition wages or salaries exceeding the $15,150 prior