Contract analysis

1. Thalassa Americas Inc. is a Delaware C-Corporation with its principal office located at 1400 McKinney Street, Suite 2200, Houston, Texas 77010 (EIN: 84-3291057). TAI is the wholly-owned U.S. operating subsidiary of Thalassa Shipping & Logistics Société Anonyme ("TSL"), a Greek société anonyme headquartered at 42 Akti Miaouli, Piraeus 18538, Greece. TSL is the ultimate parent company of the Thalassa group of compan

2. TAI conducts the U.S.-side operations of the Thalassa Group, including Houston terminal operations, Jones Act-exempt foreign-flag vessel scheduling, and domestic freight brokerage services. As of the date hereof, TAI employs approximately 680 individuals in the United States across its Houston headquarters, terminal facilities, and regional offices.

3. TSL, the Debtor's parent, operates a diversified fleet of fifty (50) oceangoing vessels, consisting of thirty-eight (38) dry-bulk carriers and twelve (12) container vessels, with integrated port-to-door logistics services across the Mediterranean, Black Sea, and transatlantic trade lanes. TSL and its subsidiaries collectively employ approximately 4,200 individuals globally, including shore-based staff in Piraeus,

4. The Debtor files this Motion on the first day of its Chapter 11 case (the "Petition Date"), seeking authority to continue and maintain all existing prepetition Insurance Policies, to pay all prepetition premiums, deductibles, self-insured retentions, and related obligations arising thereunder, and to honor any premium financing arrangements, in order to ensure uninterrupted insurance coverage essential to (a) the

5. A lapse in any of the Debtor's insurance coverage would be catastrophic. The Thalassa Group's operations are capital-intensive, high-risk, and heavily regulated. The fleet, valued at $623 million, is exposed to the full panoply of maritime perils, including weather, collision, grounding, cargo damage, pollution, and personal injury. The Debtor's obligations under the $685 million Senior Secured Credit Facility (as

6. This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the Standing Order of Reference from the United States District Court for the Southern District of Texas, dated August 28, 2012. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2). The Debtor confirms its consent, pursuant to Rule 9013-1 of the Bankruptcy Local Rules for the Southern District of Texas, to the entry of a

7. Venue is proper in this District pursuant to 28 U.S.C. §§ 1408 and 1409. The Debtor's principal office and executive headquarters are located at 1400 McKinney Street, Suite 2200, Houston, Texas 77010, within the Houston Division of the Southern District of Texas. A substantial portion of the Debtor's assets, including its books and records, accounts receivable, and the Houston terminal lease, are located within th

8. The statutory predicates for the relief requested herein are Sections 105(a), 363(b), and 365 of the Bankruptcy Code and Bankruptcy Rules 6003 and 6004.

III. BACKGROUND A. General Background

9. A detailed description of the Debtor's business operations, corporate and organizational structure, capital structure, and the circumstances giving rise to the commencement of this Chapter 11 case is set forth in the Declaration of Marcus Hale, President of Thalassa Americas Inc., in Support of First-Day Motions (the "Hale Declaration"), filed contemporaneously herewith and incorporated herein by reference. The fo

10. TSL was founded in 1987 by the Kostandinos family and has grown over the past thirty-five years into a prominent mid-market international shipping and logistics enterprise. Dimitrios Kostandinos serves as Chairman of the Board of Directors of TSL and holds, directly and indirectly through KFO Holdings SA, a Luxembourg-domiciled family holding company, approximately sixty-two percent (62%) of the equity interests

11. TAI was incorporated in the State of Delaware and maintains its registered agent at Capitol Registered Agents LLC, 1209 Orange Street, Wilmington, Delaware 19801. TAI serves as the Thalassa Group's principal U.S. operating entity and is responsible for, among other things, (a) managing and operating the Houston terminal, which serves as the Thalassa Group's primary North American cargo handling and distribution f

12. The current officers of TAI are Marcus Hale (President), Diana Restrepo (Vice President, Finance), and Jonathan Kurtz (Vice President, Operations). Each of these individuals has played and continues to play a critical role in the day-to-day operations of the Debtor and is essential to the successful administration of the estate during the Chapter 11 case.

13. The Thalassa Group has experienced a severe and sustained downturn in its financial performance and liquidity position over the course of 2022. TSL's consolidated revenue declined from approximately €1.42 billion in fiscal year 2021 to an estimated €987 million in fiscal year 2022, representing a decline of approximately 30.5%. TAI's standalone revenue declined from approximately $312 million in fiscal year 2021

14. As of September 30, 2022, the Debtor's capital structure consists of the following principal indebtedness:

15. Senior Secured Credit Facility. On June 15, 2019, TSL (as Borrower) and TAI (as Co-Borrower with respect to the U.S. Tranche) entered into that certain Senior Secured Credit Agreement (as amended, restated, supplemented, or otherwise modified from time to time, the "Senior Secured Credit Agreement") with Nordbank International AG, as Administrative Agent and Collateral Agent, and a syndicate of nine (9) lending i

16. The Senior Secured Credit Agreement bears interest at a rate of SOFR plus 375 basis points, with a default rate of an additional 200 basis points. The obligations under the Senior Secured Credit Agreement are secured by first-priority liens on substantially all of the assets of TSL and its subsidiaries, including (a) the thirty-eight (38) dry-bulk carriers and twelve (12) container vessels comprising the fleet, (

17. Mezzanine Notes. TSL issued mezzanine notes (the "Mezzanine Notes") to Dralvecen Mezzanine Capital LLC ("BMC") in an original principal amount of $100 million. As of September 30, 2022, the aggregate outstanding balance under the Mezzanine Notes was approximately $112.3 million, consisting of the original $100 million in principal plus approximately $12.3 million in payment-in-kind ("PIK") interest that has been

18. Senior Unsecured Notes. TAI issued senior unsecured notes in the aggregate principal amount of $50 million (the "Unsecured Notes"), bearing interest at a rate of 8.25% per annum (cash pay), with a maturity date of March 1, 2025. Garrison Trust Company serves as indenture trustee under the indenture governing the Unsecured Notes (the "Unsecured Notes Indenture"). As of September 30, 2022, the full $50 million prin

19. Intercompany Note. TAI is the obligor on an intercompany promissory note payable to TSL in the aggregate principal amount of approximately $76.4 million (the "Intercompany Note"). The Intercompany Note is subordinated to all other indebtedness of TAI and is unsecured.

20. Total Debt. As of September 30, 2022, the Debtor and its parent had total consolidated indebtedness of approximately $847.3 million, consisting of (a) $540 million under the Senior Secured Credit Agreement, (b) $112.3 million under the Mezzanine Notes, (c) $50 million under the Unsecured Notes, (d) $76.4 million under the Intercompany Note, and (e) accrued and unpaid interest and fees in amounts to be set forth i

21. The following events, among others, precipitated the commencement of this Chapter 11 case: (a) September 15, 2022 — Minimum Liquidity Covenant Breach. The Debtor's consolidated cash and cash equivalents fell to approximately $27.3 million, in breach of the $40 million minimum liquidity covenant set forth in Section 7.11(c) of the Senior Secured Credit Agreement, resulting in a shortfall of approximately $12.7 mil

22. In light of the foregoing defaults, the expiration of the Forbearance Agreement, and the Debtor's inability to refinance or otherwise address its liquidity crisis outside of a court-supervised process, the Debtor determined, in consultation with its advisors, that a filing under Chapter 11 of the Bankruptcy Code was in the best interests of the estate, its creditors, and all parties in interest.

IV. THE DEBTOR'S INSURANCE PROGRAM A. Overview of Insurance Program

23. The Debtor and its parent TSL maintain a comprehensive insurance program (the "Insurance Program") that is critical to (a) the operation of the Debtor's business, (b) the protection of the estate's assets, (c) compliance with regulatory and statutory requirements, (d) satisfaction of contractual covenants under the Senior Secured Credit Agreement and related documents, and (e) the protection of the Debtor's offic

24. All insurance policies comprising the Insurance Program are arranged through Seaward & Beckett Insurance Brokers Ltd. ("Seaward & Beckett"), headquartered at 71 Fenchurch Street, London EC3M 4BS, United Kingdom (contact: Ian Beckett, Managing Director). Seaward & Beckett has served as the insurance broker of record for the Thalassa Group since 2008 and possesses specialized expertise in the placement of marine, a

25. The Insurance Program covers, among other things, (a) the fleet of fifty (50) vessels, with an aggregate appraised value of $623 million as of November 1, 2022 (per the Drakos Appraisal), (b) the Debtor's shore-based operations, including the Houston terminal and domestic freight brokerage operations, (c) approximately 680 U.S.-based employees, and (d) the officers and directors of the Debtor and its affiliates.

26. Maintenance of the Insurance Program is not merely prudent — it is contractually mandated. The Senior Secured Credit Agreement dated June 15, 2019 contains detailed affirmative covenants (set forth in Article VI thereof) requiring the Borrower and its subsidiaries to maintain insurance on the collateral, including, without limitation, hull and machinery insurance, protection and indemnity insurance, and loss of h

27. In addition, the Intercreditor Agreement dated June 15, 2019 between Nordbank International AG (as first-lien agent) and BMC (as second-lien holder) requires the maintenance of insurance on the shared collateral package as a condition of the intercreditor arrangements. Nordbank International AG is named as loss payee and additional insured on certain of the Insurance Policies in its capacity as Collateral Agent f

28. The Debtor's Insurance Program consists of the following principal categories of coverage:

1. Directors' and Officers' Liability Insurance ("D&O Policy").

29. The Debtor and TSL maintain a directors' and officers' liability insurance policy (the "D&O Policy") with Promontory Indemnity Insurance Co. (Bermuda) ("Promontory"), bearing Policy Number PII-DO-2022-08847. The D&O Policy provides an aggregate limit of liability of $25,000,000 and covers the liability of directors and officers of TAI and its affiliates (including TSL) for claims arising from wrongful acts commit

30. The named insureds under the D&O Policy are TAI and TSL. The insured persons include, without limitation, the following current and former directors and officers: Dimitrios Kostandinos (Chairman, TSL), Elena Kostandinos-Pavlou (Vice Chairwoman, TSL), Georgios Andreadis (Chief Executive Officer, TSL), Irini Dalakoura (Chief Financial Officer, TSL), Stavros Papageorgiou (General Counsel, TSL, Piraeus), Marcus Hale

31. Maintaining the D&O Policy is of paramount importance to the Debtor and the estate. The D&O Policy provides the primary source of recovery for any claims that may be asserted against the Debtor's fiduciaries arising from conduct in the period leading up to, during, and following the Chapter 11 filing — a period commonly referred to as the "zone of insolvency." Without the protection afforded by the D&O Policy, cu

2. Hull and Machinery Insurance ("H&M").

32. The Debtor and TSL maintain hull and machinery insurance (the "H&M Policy") covering physical damage to, and total or constructive total loss of, the fleet of fifty (50) vessels comprising thirty-eight (38) dry-bulk carriers and twelve (12) container vessels. The insured values under the H&M Policy reflect the November 1, 2022 Drakos Appraisal and are broken down by vessel class as follows:

33. Maintenance of the H&M Policy is expressly required under Article VI of the Senior Secured Credit Agreement. The thirty-eight dry-bulk carriers and twelve container vessels constitute a substantial portion of the collateral securing the $540 million in outstanding obligations under the Senior Secured Credit Agreement, and any lapse in H&M coverage would constitute an immediate Event of Default thereunder, wholly

34. The H&M Policy is customarily placed on the London and international marine insurance markets through Seaward & Beckett, with coverage written by one or more leading marine insurance underwriters on terms consistent with the Institute Time Clauses — Hulls (ITC Hulls) or comparable international hull clauses. Given the aggregate insured value of $623 million, the H&M Policy represents one of the most significant a

3. Protection & Indemnity Insurance ("P&I").

35. The Debtor and TSL maintain protection and indemnity insurance (the "P&I Coverage") providing third-party liability coverage for the fleet. P&I Coverage is the maritime industry's equivalent of comprehensive general liability insurance and encompasses, without limitation, coverage for: (a) Bodily injury to and illness or death of crew members, passengers, stevedores, and other third parties; (b) Loss of or damage

36. P&I Coverage is essential for the operation of any commercial vessel. Without P&I Coverage, the Debtor's and TSL's vessels would be unable to legally call at ports in most jurisdictions worldwide, as port-state authorities in virtually all major trading nations require vessels to carry valid P&I certification as a condition of entry. Furthermore, P&I Coverage is required under numerous international conventions,

37. The Debtor and TSL maintain loss of hire insurance (the "Loss of Hire Policy") covering loss of income when a vessel is unable to trade due to an insured peril, such as hull damage, machinery breakdown, or other casualties covered under the H&M Policy. Loss of hire insurance is analogous to business interruption insurance in the shore-based context and provides the Debtor with a critical financial backstop during

38. Given the severe revenue pressures facing the Thalassa Group and the critical importance of maximizing fleet utilization during the Chapter 11 case, the Loss of Hire Policy is essential to the Debtor's cash flow and to the preservation of estate value. Maintenance of loss of hire insurance is also expressly required under the Senior Secured Credit Agreement.

5. General Liability Insurance.

39. The Debtor maintains commercial general liability insurance (the "General Liability Policy") covering the Debtor's shore-based operations, including the Houston terminal at 1400 McKinney Street and the Debtor's domestic freight brokerage operations conducted throughout the United States. The General Liability Policy covers third-party bodily injury claims, property damage claims, personal and advertising injury c

6. Workers' Compensation and Employer's Liability Insurance.

40. The Debtor maintains workers' compensation and employer's liability insurance (the "Workers' Compensation Policy") covering the Debtor's approximately 680 U.S.-based employees. The Workers' Compensation Policy provides statutory workers' compensation benefits as required by the laws of the State of Texas and the laws of each other state in which the Debtor operates or has employees, as well as employer's liabilit

41. Maintenance of workers' compensation insurance is mandatory under Texas law and under the workers' compensation statutes of other states in which the Debtor operates. A lapse in workers' compensation coverage would expose the estate to direct, unlimited liability for workplace injuries, occupational illnesses, and related claims, and would subject the Debtor to significant regulatory penalties, including potentia

42. The Debtor maintains property insurance (the "Property Policy") covering the Debtor's shore-based physical assets, including the Houston terminal facility, equipment, inventory, leasehold improvements, and other tangible property. The Houston terminal lease is a component of the collateral package securing the Senior Secured Credit Agreement, and accordingly, the Property Policy names Nordbank International AG as

8. Cargo / Freight Liability Insurance.

43. The Debtor maintains cargo and freight liability insurance (the "Cargo Policy") covering loss of or damage to cargo in the Debtor's care, custody, or control in connection with its domestic freight brokerage operations. As a freight broker, the Debtor regularly takes responsibility for the arrangement of transportation services for shipper customers and may be held liable for cargo loss or damage under applicable

9. Excess / Umbrella Liability Insurance.

44. The Debtor maintains excess and umbrella liability insurance (the "Excess Policy") providing additional liability coverage above the limits of the primary General Liability Policy, the employer's liability portion of the Workers' Compensation Policy, and certain other underlying policies. Given the scale and risk profile of the Debtor's maritime and logistics operations — which involve heavy industrial activities

45. The Debtor's Insurance Program requires the payment of substantial annual premiums to the various insurers and underwriters providing coverage. The estimated annual aggregate premiums across all Insurance Policies will be set forth in detail in Exhibit B upon confirmation of final premium schedules from Seaward & Beckett Insurance Brokers Ltd. At this time, the Debtor estimates that the aggregate annual premiums

46. Certain of the Insurance Policies may have prepetition premium arrearages — that is, premiums that were due and payable prior to the Petition Date but remain unpaid. To the extent any such arrearages exist, the Debtor seeks authority to pay all such arrearages in full to prevent the cancellation, lapse, or non-renewal of the applicable Insurance Policies. The insurers and underwriters providing coverage under the

47. In addition to premiums, the Debtor may be required to pay deductibles, self-insured retentions, and administrative charges in connection with claims made under the Insurance Policies. The Debtor seeks authority to pay all such amounts in the ordinary course of business to ensure the efficient administration and processing of insurance claims. D. Premium Financing Arrangements