PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 780 Third Avenue New York, NY 10017
INTERNAL CONFLICTS CLEARANCE MEMORANDUM
October 23, 2022
TO: Nathaniel Bower, Partner, Bankruptcy & Restructuring
FROM: Amy Chesterton, Associate, Bankruptcy & Restructuring
RE: Conflicts Clearance — Proposed Engagement of Thalassa Shipping & Logistics Société Anonyme and Thalassa Americas Inc. (Proposed Matter No. 1044-00003)
REVIEWED/APPROVED BY:
Nathaniel Bower: ________ Date: ____
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I. Purpose and Executive Summary
This memorandum documents the results of the conflicts check conducted by Calderwood & Harkness LLP ("C&H" or the "Firm") in connection with the proposed joint engagement of Thalassa Shipping & Logistics Société Anonyme ("TSL"), a Greek société anonyme headquartered at 42 Akti Miaouli, Piraeus 18538, Greece, and its wholly-owned Delaware subsidiary, Thalassa Americas Inc. ("TAI"), with its principal office at 1400 McKinney Street, Suite 2200, Houston, Texas 77010.
The proposed scope of engagement encompasses the following four principal workstreams: (i) Chapter 11 contingency planning for TAI, including the preparation of first-day motions, proposed DIP financing documentation, and related pleadings in anticipation of a potential filing in the United States Bankruptcy Court for the Southern District of Texas (Houston Division); (ii) negotiation of an out-of-court restructuring of the consolidated Thalassa group's indebtedness, including the $685 million Senior Secured Credit Facility, the $112.3 million mezzanine notes, and the $50 million Senior Unsecured Notes due 2025; (iii) cross-border coordination with Greek counsel regarding recognition proceedings, potential Regulation (EU) 2015/848 considerations, and Greek insolvency law implications; and (iv) tax structuring advice in connection with any restructuring or asset disposition transactions, including intercompany note treatment and potential cancellation-of-indebtedness income issues.
The conflicts search was initiated on October 21, 2022, upon submission of a New Matter Intake Request by the undersigned. The Firm's Conflicts Department ran the comprehensive search through the Calderwood & Harkness New Matter Intake System ("NMIS") on October 22–23, 2022. The NMIS database was current as of October 22, 2022, at 11:59 p.m. Eastern Time. The search encompassed all entity names, trade names, d/b/a designations, and the names of all identified individuals associated with the proposed clients, adverse parties, co-advisors, and other relevant persons and entities, as more fully described in Section IV below.
Conclusion: Based on the comprehensive conflicts search and analysis described in this memorandum, no disqualifying conflicts have been identified. Clearance is granted to proceed with the proposed joint engagement of TSL and TAI under proposed matter number 1044-00003, subject to the inclusion of standard conflict waiver provisions in the engagement letter, as more particularly described in Section VII below. Certain supplemental searches will be required as additional party identifications become available, including the names of the fourteen vessel-owning special purpose vehicles and the individual identities of the unsecured noteholders.
II. Proposed Client Identification
A. Thalassa Shipping & Logistics Société Anonyme (TSL)
Full Legal Name: Thalassa Shipping & Logistics Société Anonyme
Entity Type: Société Anonyme (SA) organized under the laws of the Hellenic Republic (Greece), registered with the Athens General Commercial Registry (Γ.Ε.ΜΗ.)
Headquarters: 42 Akti Miaouli, Piraeus 18538, Greece
Greek Tax Identification Number (AFM): 998214763
Year Founded: 1987, by the Kostandinos family
Description of Business: TSL owns and operates a diversified maritime fleet consisting of thirty-eight (38) dry-bulk carriers and twelve (12) container vessels, totaling fifty (50) vessels. The company provides integrated port-to-door logistics services across the Mediterranean, Northern Europe, the Americas, and Asia-Pacific trade lanes. TSL also maintains terminal operations at the ports of Piraeus, Thessaloniki, and Houston. The company's fleet is flagged across several jurisdictions, including Greece, the marshall Islands, Liberia, and Panama.
Revenue: TSL reported consolidated revenue of approximately €1.42 billion for the fiscal year ended December 31, 2021. Estimated consolidated revenue for the fiscal year ending December 31, 2022, is approximately €987 million, reflecting a significant decline attributed to softening dry-bulk charter rates, vessel deferral and drydocking costs, and reduced container throughput at its terminal operations.
Employees: Approximately 4,200 globally, of whom approximately 680 are based in the United States.
Key Principals Searched:
•  Dimitrios Kostandinos — Chairman of the Board of Directors; holder of approximately 62% of the equity of TSL (held through KFO Holdings SA and directly)
•  Elena Kostandinos-Pavlou — Vice Chairwoman of the Board of Directors; holder of approximately 18% of the equity of TSL (held through KFO Holdings SA and directly); daughter of Dimitrios Kostandinos
•  Georgios Andreadis — Chief Executive Officer
•  Irini Dalakoura — Chief Financial Officer
•  Stavros Papageorgiou — General Counsel (Greece)
All five individuals were searched through the NMIS database. No hits were returned for any individual.
B. Thalassa Americas Inc. (TAI)
Full Legal Name: Thalassa Americas Inc.
Entity Type: C-Corporation organized under the laws of the State of Delaware
Registered Agent: Capitol Registered Agents LLC, 1209 Orange Street, Wilmington, Delaware 19801
Principal Office: 1400 McKinney Street, Suite 2200, Houston, Texas 77010
Employer Identification Number (EIN): 84-3291057
Description of Business: TAI serves as the U.S.-side operational entity for the Thalassa group. Its activities include Houston terminal operations (as sub-lessee under a long-term port facility agreement with the Port of Houston Authority), Jones Act–exempt foreign-flag vessel scheduling for vessels calling at U.S. ports, and domestic freight brokerage services. TAI is a wholly-owned subsidiary of TSL and serves as the primary obligor under the U.S. operational guarantees extended pursuant to the Senior Secured Credit Facility.
Revenue: TAI reported revenue of approximately $312 million for the fiscal year ended December 31, 2021. Estimated revenue for the fiscal year ending December 31, 2022, is approximately $198 million, reflecting reduced vessel call volumes and lower brokerage commissions.
Key Officers Searched:
•  Marcus Hale — President
•  Diana Restrepo — Vice President, Finance
•  Jonathan Kurtz — Vice President, Operations
All three individuals were searched through the NMIS database. No hits were returned for any individual.
C. KFO Holdings Société Anonyme (KFO)
Full Legal Name: KFO Holdings Société Anonyme
Entity Type: Société Anonyme (SA) organized under the laws of Greece; functions as the Kostandinos family holding company
Headquarters: 42 Akti Miaouli, Piraeus 18538, Greece (same building as TSL)
Ownership: KFO Holdings SA is controlled by Dimitrios Kostandinos and Elena Kostandinos-Pavlou, who together hold a combined 80% equity stake in TSL (62% and 18%, respectively). The remaining 20% of TSL equity is held by a combination of management shareholders and a small institutional investor.
KFO Holdings SA was searched as an affiliated entity and potential co-client, given its controlling equity position in TSL and the possibility that KFO's interests may be implicated in any restructuring or asset disposition. The NMIS search returned no hits for KFO Holdings SA or any variant thereof.
Note: KFO Holdings SA is not proposed as a client at this time, but is included in the search for completeness and because its interests are closely aligned with those of TSL. If KFO is later added as a client, a supplemental conflicts review should be conducted at that time.
III. Identified Adverse and Potentially Adverse Parties
All of the following parties were identified through preliminary discussions with Marcus Hale (TAI President), Irini Dalakoura (TSL CFO), and Stavros Papageorgiou (TSL General Counsel), as well as through a review of the executed Senior Secured Credit Agreement dated June 15, 2019 (as amended), the Mezzanine Note Purchase Agreement dated February 28, 2020, and the Indenture dated March 1, 2020 (the "2025 Notes Indenture"). Each party listed below was run through the NMIS conflicts database. This memorandum categorizes each party as (a) counterparty/lender, (b) creditor, (c) opposing counsel, (d) financial advisor, or (e) other relevant party, as indicated.
A. Senior Secured Lender Syndicate — Administrative Agent
1. Nordbank International AG (Category: Counterparty/Lender — Administrative Agent and Collateral Agent)
Entity Type: Aktiengesellschaft (AG) organized under Swiss law
Headquarters: Bahnhofstrasse 78, 8001 Zürich, Switzerland
Role: Administrative Agent and Collateral Agent under the Senior Secured Credit Agreement dated June 15, 2019 (as amended through the Third Amendment dated April 12, 2022). Nordbank is also the single largest lender in the syndicate, holding a commitment of $137 million.
Key Contact: Henrik Lüdemann, Managing Director, Shipping & Offshore Finance Division
Conflicts Search Result: No current or prior Calderwood & Harkness engagement for or against Nordbank International AG. No hit in the NMIS database. No variant searches (including "Nordbank," "Nord Bank," "Nordbank AG," and "Nordbank International") returned any results.
B. Senior Secured Lender Syndicate — Other Lenders
2. Aegean Capital Bank SA (Category: Counterparty/Lender)
Headquarters: Athens, Greece
Commitment: $110 million under the Senior Secured Credit Facility
Key Contact: Nikolaos Ventouris, Director, Structured Finance
Conflicts Search Result: No hit. No current or prior C&H representation of or adverse to Aegean Capital Bank SA.
3. Harborstone Bank plc (Category: Counterparty/Lender)
Headquarters: London, United Kingdom
Commitment: $95 million under the Senior Secured Credit Facility
Key Contact: Fiona Aldrich, Managing Director, Transportation & Infrastructure Lending
Conflicts Search Result: No hit. No current or prior C&H representation of or adverse to Harborstone Bank plc.
4. Pacifica Trade Finance Corp. (Category: Counterparty/Lender)
Headquarters: Singapore
Commitment: $82 million under the Senior Secured Credit Facility
Key Contact: Wei Lin Tan, Senior Vice President, Shipping & Trade Finance
Conflicts Search Result: No hit. No current or prior C&H representation of or adverse to Pacifica Trade Finance Corp.
5. Continental Maritime Lending GmbH (Category: Counterparty/Lender)
Headquarters: Hamburg, Germany
Commitment: $72 million under the Senior Secured Credit Facility
Key Contact: Klaus Rheinfeld, Director, Maritime Credit
Conflicts Search Result: No hit. No current or prior C&H representation of or adverse to Continental Maritime Lending GmbH.
6. Triton Credit Partners LP (Category: Counterparty/Lender)
Headquarters: 399 Park Avenue, 14th Floor, New York, New York 10022
Commitment: $68 million under the Senior Secured Credit Facility
Key Contact: David Sorokin, Partner
Conflicts Search Result: No hit. No current or prior C&H representation of or adverse to Triton Credit Partners LP. Variant searches for "Triton Credit," "Triton Partners," and "Triton Capital" were also run and returned no results pertaining to this entity.
7. Laurentian Shipping Fund II (Category: Counterparty/Lender)
Headquarters: Montreal, Canada
Commitment: $55 million under the Senior Secured Credit Facility
Key Contact: Marie-Claire Gagnon, Portfolio Manager
Conflicts Search Result: No hit. No current or prior C&H representation of or adverse to Laurentian Shipping Fund II.
8. Caspian Asset Management Ltd. (Category: Counterparty/Lender)
Headquarters: Dubai, United Arab Emirates (Dubai International Financial Centre)
Commitment: $40 million under the Senior Secured Credit Facility
Key Contact: Rashed Al-Khatib, Head of Shipping
Conflicts Search Result: No hit. No current or prior C&H representation of or adverse to Caspian Asset Management Ltd.
9. Pelagos Institutional Credit Fund (Category: Counterparty/Lender)
Headquarters: Limassol, Cyprus
Commitment: $26 million under the Senior Secured Credit Facility
Key Contact: Andreas Michailides, Fund Manager
Conflicts Search Result: No hit. No current or prior C&H representation of or adverse to Pelagos Institutional Credit Fund.
Facility Summary: The total commitments under the Senior Secured Credit Facility across all nine (9) lenders aggregate to $685 million, consisting of (i) a Term Loan A ("TLA") tranche of approximately $350 million at origination, (ii) a revolving credit facility of $235 million, and (iii) a Term Loan B ("TLB") tranche of $100 million. As of September 30, 2022, the outstanding principal balance under the facility was approximately $540 million, allocated as follows: TLA — $270 million; Revolver — $185 million (drawn); TLB — $85 million. The facility matures on June 15, 2024, subject to a springing maturity date of December 1, 2024, if certain conditions precedent are met under the Third Amendment.
C. Ad Hoc Group of Senior Secured Lenders
An informal ad hoc group of four senior secured lenders was formed in August 2022 in response to TSL's disclosure of anticipated covenant violations and the retained liquidity forecast. The Ad Hoc Group comprises the following lenders:
•  Nordbank International AG — $137 million commitment
•  Harborstone Bank plc — $95 million commitment
•  Triton Credit Partners LP — $68 million commitment
•  Continental Maritime Lending GmbH — $72 million commitment
The Ad Hoc Group collectively holds $372 million in commitments, representing approximately 54.3% of the total $685 million facility. All four constituent entities have been individually searched as described in Sections III.A and III.B above. No additional hits were returned. The Ad Hoc Group has retained Whitfield, Crane & Burgess LLP as legal counsel and Draycott Advisory Group LLC as financial advisor (each addressed separately below).
D. Mezzanine Lender
10. Dralvecen Mezzanine Capital LLC ("BMC") (Category: Counterparty/Lender — Second Lien)
Entity Type: Limited liability company organized under the laws of the State of Delaware
Headquarters: 600 Lexington Avenue, 22nd Floor, New York, New York 10022
Role: Holder of $112.3 million in mezzanine notes (second lien), originally issued at a principal amount of $100 million on February 28, 2020, pursuant to the Mezzanine Note Purchase Agreement of even date, with $12.3 million of payment-in-kind ("PIK") interest capitalized through September 30, 2022. The notes bear interest at a rate of 11.5% per annum, structured as a PIK toggle, with cash interest payable only if certain liquidity and coverage tests are satisfied (currently not satisfied). The mezzanine notes are secured by a second-priority lien on substantially all assets of TSL and TAI, subject to the terms of an Intercreditor Agreement dated February 28, 2020, among Nordbank (as First Lien Agent), BMC (as Second Lien Holder), TSL, and TAI.
Key Contact: Rebecca Marsh, Senior Partner
Conflicts Search Result: No hit. No current or prior C&H representation of or adverse to Dralvecen Mezzanine Capital LLC. Variant searches for "Dralvecen Mezzanine," "Dralvecen Capital," and "BMC Capital" were also conducted and returned no results pertaining to this entity. (Note: "Ashford Asset Management" is a distinct, unrelated entity; the NMIS system correctly distinguished the two.)
E. Unsecured Noteholders and Indenture Trustee
11. Garrison Trust Company (Category: Creditor — Indenture Trustee)
Headquarters: 100 Wall Street, 16th Floor, New York, New York 10005
Role: Indenture Trustee under the Indenture dated March 1, 2020, governing the $50 million aggregate principal amount of 8.25% Senior Unsecured Notes due March 1, 2025 (CUSIP: 87265BAB5), issued by TSL. The notes are guaranteed by TAI. As of the date of this memorandum, no payment default has occurred under the Indenture, although TSL has disclosed to the trustee that it may be unable to make the March 1, 2023 semi-annual interest payment of approximately $2.0625 million without a restructuring of its capital structure.
Key Contact: Trust Officer, Corporate Trust Division
Conflicts Search Result: No hit. No current or prior C&H representation of or adverse to Garrison Trust Company.
Note Regarding Individual Unsecured Noteholders: The individual holders of the 8.25% Senior Unsecured Notes have not yet been identified. An informal group of unsecured noteholders has been formed and has retained legal counsel (Ashford, Brightmoor Group & McKay PC, as discussed below), but the identities of the individual group members have not yet been disclosed. The Firm will conduct a supplemental conflicts check promptly upon receipt of the identities of any individual noteholders or members of the informal noteholder group. Until such time, the conflicts analysis with respect to the unsecured noteholders is necessarily incomplete.
F. Significant Trade Creditors
12. Olympian Fuel & Supply SA (Category: Creditor — Trade)
Headquarters: 7 Iroon Polytechniou, Piraeus 18535, Greece
Role: Largest trade creditor of the Thalassa group. Olympian Fuel & Supply SA is TSL's primary bunker fuel supplier for its Mediterranean and Northern European trade routes. As of September 30, 2022, TSL owed Olympian Fuel & Supply SA approximately $9.2 million, representing approximately 23.8% of TSL's total trade payables of $38.7 million as of the same date.
Key Contact: Christos Olympios, Chief Commercial Officer
Conflicts Search Result: No hit. No current or prior C&H representation of or adverse to Olympian Fuel & Supply SA.
Note Regarding Other Trade Creditors: The remaining trade creditors have not been individually identified for purposes of this initial conflicts search. A more comprehensive list of the twenty largest unsecured creditors will be compiled if and when a Chapter 11 petition is prepared for TAI. Supplemental conflicts checks will be conducted at that time.
G. Opposing / Co-Counsel Firms (Counsel to Adverse Parties)
13. Whitfield, Crane & Burgess LLP (Category: Opposing Counsel — Counsel to the Ad Hoc Group of Senior Secured Lenders)
Headquarters: 51 West 52nd Street, 38th Floor, New York, New York 10019
Lead Partner: Graham Whitfield III
Senior Associate: Priya Nandakumar
Conflicts Search Result: No current or prior client relationship between C&H and Whitfield, Crane & Burgess LLP. No C&H attorney who would be staffed on this matter has a lateral-hire conflict or any outstanding ethical screen involving WCB or its attorneys. No hit in the NMIS database. A supplemental search of the individual attorneys (Graham Whitfield III and Priya Nandakumar) also returned no results.
14. Kellner & Foss LLP (Category: Opposing Counsel — Counsel to Dralvecen Mezzanine Capital LLC)
Headquarters: 1185 Avenue of the Americas, 30th Floor, New York, New York 10036
Lead Partner: Theodore Kellner
Associate: Samantha Ong
Conflicts Search Result: No hit. No current or prior client relationship between C&H and Kellner & Foss LLP. Searches on the individual attorneys (Theodore Kellner and Samantha Ong) also returned no results.
15. Ashford, Brightmoor Group & McKay PC (Category: Opposing Counsel — Counsel to the Informal Group of Unsecured Noteholders)
Headquarters: 299 Park Avenue, 18th Floor, New York, New York 10171
Lead Partner: Carolyn Brightmoor Group
Associate: Robert Mancini
Conflicts Search Result: No hit. No current or prior client relationship between C&H and Ashford, Brightmoor Group & McKay PC. Searches on the individual attorneys (Carolyn Brightmoor Group and Robert Mancini) also returned no results.
H. Other Advisors and Service Providers (Searched for Completeness)
The following parties are not adverse to the proposed clients. They are nonetheless included in the conflicts search for completeness and to ensure that no prior adverse engagements involving these parties would impair the Firm's ability to work cooperatively with them in this matter.
16. Kensington Veltrian Partners LLC (Category: Financial Advisor — Co-Advisor to TSL/TAI)
Headquarters: 300 Park Avenue, 12th Floor, New York, New York 10022
Role: Proposed financial advisor to TSL and TAI in connection with the restructuring. A co-engagement of Kensington Veltrian and C&H by the clients is anticipated. Kensington Veltrian has been advising TSL and TAI on an informal basis since approximately July 2022 and is expected to formalize its engagement concurrent with C&H's engagement.
Key Contact: James Calloway, Managing Director
Conflicts Search Result: No hit. Not an adverse party. No C&H representation of or against Kensington Veltrian Partners LLC was identified.
17. Draycott Advisory Group LLC (Category: Financial Advisor — Advisor to the Ad Hoc Group)
Headquarters: 520 Madison Avenue, 20th Floor, New York, New York 10022
Role: Financial advisor to the Ad Hoc Group of Senior Secured Lenders.
Key Contact: Vanessa Chow, Partner
Conflicts Search Result: No hit. No current or prior C&H representation of or adverse to Draycott Advisory Group LLC.
18. Alderney Management Advisors LLC (Category: Other Relevant Party — CRO Candidate)
Headquarters: 200 Clarendon Street, 45th Floor, Boston, Massachusetts 02116
Role: Potential provider of Chief Restructuring Officer ("CRO") services to TAI. A standby engagement is expected to be entered into in connection with the Chapter 11 contingency planning workstream.
CRO Designee: Richard "Rick" Thornberg
Conflicts Search Result: No hit. Not an adverse party. No C&H representation of or against Alderney Management Advisors LLC or Richard Thornberg was identified.
19. Vassiliou & Demetriou Law Offices (Category: Other Relevant Party — Greek Co-Counsel)
Headquarters: 15 Vasilissis Sofias Avenue, Athens 10674, Greece
Role: Greek counsel to TSL. Vassiliou & Demetriou has represented TSL and the Kostandinos family for approximately fifteen years. A co-counsel arrangement is anticipated in which C&H will coordinate with Vassiliou & Demetriou on cross-border insolvency, Greek corporate law, and regulatory matters.
Lead Partner: Alexandros Vassiliou
Conflicts Search Result: No hit. Not an adverse party. No C&H representation of or against Vassiliou & Demetriou Law Offices was identified.
20. Grainger, Holt & Associates LLP (Category: Other Relevant Party — Independent Auditors)
Headquarters: 25 Cabot Square, Canary Wharf, London E14 4QA, United Kingdom
Role: Independent auditors of TSL's consolidated financial statements. Grainger, Holt has served as TSL's auditor since 2015. It is anticipated that the Firm may need to coordinate with Grainger, Holt in connection with the preparation of financial disclosures, solvency analyses, and related matters.
Lead Engagement Partner: Malcolm Holt
Conflicts Search Result: No hit. No C&H representation of or against Grainger, Holt & Associates LLP was identified.
21. Pendleton Claim Services Inc. (Category: Other Relevant Party — Potential Claims and Noticing Agent)
Headquarters: 1601 Elm Street, Suite 4200, Dallas, Texas 75201
Role: Potential claims and noticing agent for any Chapter 11 case filed by TAI. A standby engagement is expected to be negotiated as part of the Chapter 11 contingency planning workstream.
Key Contact: Laura Pendleton, President
Conflicts Search Result: No hit. Not an adverse party. No C&H representation of or against Pendleton Claim Services Inc. was identified.
22. Drakos Maritime Valuations Ltd. (Category: Other Relevant Party — Vessel Appraisers)
Headquarters: 28 Poseidonos Avenue, Piraeus 18531, Greece
Role: Vessel appraisers. Drakos Maritime Valuations has been engaged by TSL to provide desktop and on-site valuations of the fifty-vessel fleet in connection with the restructuring analysis.
Key Contact: Captain Nikos Drakos
Conflicts Search Result: No hit. No C&H representation of or against Drakos Maritime Valuations Ltd. was identified.
23. Seaward & Beckett Insurance Brokers Ltd. (Category: Other Relevant Party — Insurance Broker)
Headquarters: 71 Fenchurch Street, London EC3M 4BS, United Kingdom
Role: Insurance broker for TSL's fleet, covering protection and indemnity (P&I), hull and machinery (H&M), loss of hire, and freight demurrage and defense (FD&D) policies.
Key Contact: Ian Beckett
Conflicts Search Result: No hit. No C&H representation of or against Seaward & Beckett Insurance Brokers Ltd. was identified.
24. Promontory Indemnity Insurance Co. (Category: Other Relevant Party — D&O Insurance Carrier)
Jurisdiction: Bermuda
Role: Carrier of the directors' and officers' liability insurance policy for TSL and TAI. Policy No. PII-DO-2022-08847, with an aggregate limit of $25 million. The policy period runs from August 1, 2022 through July 31, 2023. Coverage may be implicated in the event of any litigation or claims against TSL or TAI officers and directors in connection with the restructuring.
Conflicts Search Result: No hit. No C&H representation of or against Promontory Indemnity Insurance Co. was identified.
25. Capitol Registered Agents LLC (Category: Other Relevant Party — Registered Agent)
Address: 1209 Orange Street, Wilmington, Delaware 19801
Role: Registered agent for TAI in the State of Delaware. This is a ministerial role only. Capitol Registered Agents was searched for completeness.
Conflicts Search Result: No hit.
IV. Search Methodology
The conflicts search was conducted in accordance with Calderwood & Harkness's standard conflicts clearance procedures, as set forth in the Firm's Conflicts Policy Manual (revised January 2022) and the New York Rules of Professional Conduct, Rules 1.7 and 1.10. The search methodology encompassed the following steps:
1. NMIS Database Search. All entity names were run through the Calderwood & Harkness NMIS conflicts database, including full legal names, abbreviated names, trade names, d/b/a designations, and commonly used acronyms. For entities with non-English names or transliterated names (e.g., Greek entities), variant transliterations and English equivalents were also searched. Specifically, the following search strings were employed for the proposed clients: "Thalassa Shipping," "Thalassa Logistics," "Thalassa Shipping & Logistics," "TSL SA," "Thalassa Americas," "TAI," "KFO Holdings," and "Kostandinos." Analogous variant searches were conducted for each adverse and other party identified in Section III above.
2. Individual Name Searches. Searches were also run on all identified individuals, including principals, officers, directors, general counsel, and key contacts at each entity listed in Sections II and III above. In total, searches were conducted on approximately thirty-five (35) individual names.
3. Cross-Reference Check — Active, Dormant, and Closed Matters. A cross-reference check was performed against the Firm's complete matter list, encompassing active, dormant, and closed matters, for the period extending back seven (7) years from the date of the search (i.e., from October 22, 2015 through October 22, 2022). This cross-reference was designed to identify not only current engagements but also any prior representations that might give rise to a successive-representation conflict under Rule 1.9 of the New York Rules of Professional Conduct.
4. Practice Group Manual Review. In addition to the automated NMIS search, a manual review was conducted by contacting the practice group leaders and relevant senior associates in the following practice groups at Calderwood & Harkness: Bankruptcy & Restructuring, Finance, Shipping & Maritime, and Tax. Each practice group was asked to confirm whether any of the identified entities or individuals had been involved in any engagement, whether or not such engagement had been formally opened in the NMIS system. No additional potential conflicts were identified through this manual review.
5. Affiliated Entity and Subsidiary Search. All affiliated entities and subsidiaries known at this stage were included in the search. This encompassed KFO Holdings SA (the Kostandinos family holding company), TAI (the wholly-owned U.S. subsidiary), and any other affiliated entities disclosed by the proposed clients. It is noted that TSL owns and operates its fleet through a structure involving fourteen (14) vessel-owning special purpose vehicles ("SPVs"), each of which is referenced as collateral under the Senior Secured Credit Agreement. The specific legal names of these SPVs have not yet been provided by the client. A supplemental conflicts search will be required and will be conducted promptly upon receipt of the full list of SPV names.
6. Lateral Attorney Screen Review. The Firm's records of outstanding lateral-hire ethical screens were reviewed to confirm that no attorney who would be staffed on this matter has any screen that would be implicated by the proposed engagement.
V. Analysis of Potential Issues
A. No Current Representations of Adverse Parties
Calderwood & Harkness does not currently represent, and has not within the past seven (7) years represented, any of the following adverse or potentially adverse parties:
•  Any of the nine (9) senior secured lenders: Nordbank International AG, Aegean Capital Bank SA, Harborstone Bank plc, Pacifica Trade Finance Corp., Continental Maritime Lending GmbH, Triton Credit Partners LP, Laurentian Shipping Fund II, Caspian Asset Management Ltd., or Pelagos Institutional Credit Fund;
•  The mezzanine lender, Dralvecen Mezzanine Capital LLC;
•  The indenture trustee, Garrison Trust Company;
•  The largest trade creditor, Olympian Fuel & Supply SA; or
•  Any of the identified opposing counsel firms: Whitfield, Crane & Burgess LLP, Kellner & Foss LLP, or Ashford, Brightmoor Group & McKay PC.
Accordingly, no current-client conflict under Rule 1.7 and no successive-representation conflict under Rule 1.9 of the New York Rules of Professional Conduct has been identified with respect to any of these parties.
B. No Lateral Attorney Conflicts
No current Calderwood & Harkness attorney who would be staffed on the proposed matter has any lateral-hire conflict or outstanding ethical screen in connection with any of the identified parties or their counsel. Specifically, the following attorneys have been confirmed as clear:
•  Nathaniel Bower — joined C&H in 2009 from Castellane & Bramwell LLP; no relevant conflicts.
•  Colette Whitman — joined C&H in 2014 from Tanaka & Brennan LLP; no relevant conflicts.
•  Amy Chesterton — joined C&H as a first-year associate in 2019 from Columbia Law School; no lateral-hire screen applicable.
•  Nathan Ikeda — joined C&H as a first-year associate in 2020 from NYU School of Law; no lateral-hire screen applicable.
•  Sylvia Hartwell — joined C&H in 2006 from Drummond & Fenwick LLP; no relevant conflicts.
Each team member has individually confirmed, by written certification to the Conflicts Department, that he or she has no personal or professional relationship with any identified adverse party, counsel, or financial advisor that could give rise to a conflict of interest or the appearance of impropriety.
C. Joint Representation Considerations — TSL and TAI
The proposed engagement involves the joint representation of a parent company (TSL) and its wholly-owned subsidiary (TAI). Joint representation of a parent and subsidiary is common in restructuring engagements and is generally permissible where the interests of both entities are aligned and both entities provide informed consent. See N.Y. R. Prof. Conduct 1.7(b); ABA Model Rule 1.7, Comment [34].
At this time, the interests of TSL and TAI are aligned. Both entities share the common objective of avoiding a Chapter 11 filing for TAI (and any corresponding Greek insolvency proceeding for TSL) and executing an out-of-court restructuring of the group's consolidated indebtedness. Both entities are represented by the same management team, and the decision-making authority for the restructuring rests with the TSL board (through Dimitrios Kostandinos as Chairman and Georgios Andreadis as CEO).
Potential Divergence of Interests: The Firm has identified the following scenario in which the interests of TSL and TAI could diverge, giving rise to a concurrent-client conflict:
Chapter 11 Filing by TAI Only. If a Chapter 11 petition is filed for TAI but not for TSL, TAI would become a debtor-in-possession with fiduciary duties to its own estate and creditors under 11 U.S.C. §§ 1107–1108. These fiduciary duties could conflict with the interests of TSL in its capacity as (i) the sole equity holder of TAI, and (ii) the holder of the $76.4 million intercompany note payable by TAI to TSL. In particular:
•  Intercompany Note Treatment. The intercompany note of $76.4 million from TAI to TSL is currently subordinated pursuant to the Subordination Agreement dated June 15, 2019. In a Chapter 11 case, the treatment of this intercompany claim could become contested. The senior secured lenders or the unsecured noteholders might seek to equitably subordinate the intercompany claim under 11 U.S.C. § 510(c) or to recharacterize it as a capital contribution. TAI, as debtor-in-possession, might have an independent duty to analyze whether the intercompany claim is valid and whether it was incurred on arms'-length terms.
•  Substantive Consolidation. If a creditor or the U.S. Trustee seeks substantive consolidation of TAI and TSL, the interests of the two entities could diverge sharply, as consolidation would merge the estates and eliminate the intercompany claim but could also expose TSL's assets to the claims of TAI's creditors.
•  Asset Transfers and Preference Claims. TAI's debtor-in-possession duties would require it to investigate whether any pre-petition transfers to TSL constitute avoidable preferences under 11 U.S.C. § 547 or fraudulent transfers under 11 U.S.C. § 548 or applicable state law. The pursuit or non-pursuit of such claims could place TAI in direct conflict with its parent, TSL.
Recommended Engagement Letter Provisions: To address these joint-representation concerns, the engagement letter should include (i) a clear disclosure to both TSL and TAI of the potential for conflicts arising from the joint representation; (ii) an advance waiver and acknowledgment by both clients of the risk of diverging interests, particularly in the event of a Chapter 11 filing for TAI only; and (iii) a provision expressly permitting C&H to withdraw from the representation of one or both clients if an actual, irreconcilable conflict materializes that cannot be cured by informed consent. Both TSL and TAI should be advised to consult with independent counsel regarding the implications of the joint representation before signing the engagement letter.
D. Potential Future Issues
The following potential future issues have been identified and should be monitored throughout the engagement:
1. Approach by Adverse Parties. If any member of the Ad Hoc Group, any individual lender, Dralvecen Mezzanine Capital, or any unsecured noteholder seeks to retain C&H on any unrelated matter during the pendency of this engagement, a formal conflict analysis should be conducted before any such engagement is accepted, and an ethical screen may need to be implemented. The Conflicts Department has been alerted to this possibility.
2. Vessel-Owning SPVs. As noted in Section IV above, the fourteen (14) vessel-owning SPVs identified as collateral under the Senior Secured Credit Agreement have not yet been individually searched. The Firm has requested a full list of SPV names from Stavros Papageorgiou (TSL General Counsel), and a supplemental conflicts search must be conducted promptly upon receipt. If any SPV has been involved in prior litigation or transactions in which C&H represented an adverse party, a supplemental analysis will be required.
3. Unsecured Noteholder Identification. The individual members of the informal group of unsecured noteholders have not been identified. A supplemental conflicts search will be conducted when their identities are disclosed.
4. Additional Parties. If additional parties become involved in the restructuring — including, without limitation, potential acquirers of vessels or terminal assets, DIP lenders, replacement agents, statutory committees appointed by the U.S. Trustee, or regulatory bodies — a supplemental conflicts check will be required for each such party.
VI. Proposed Engagement Team
The following attorneys are proposed to be staffed on the matter:
Each team member has confirmed, through individual written certification submitted to the Conflicts Department on October 22, 2022, that he or she has no personal or professional relationship with any identified adverse party, counsel, or financial advisor that would give rise to a conflict of interest or require recusal. If additional attorneys are staffed on this matter at any time during the engagement, a supplemental individual conflicts check and certification will be required prior to their beginning work.
VII. Conclusion and Recommendation
Based on the comprehensive conflicts search and analysis described in this memorandum, no disqualifying conflicts of interest have been identified under Rule 1.7 (concurrent-client conflicts), Rule 1.9 (successive-representation conflicts), or Rule 1.10 (imputation of conflicts) of the New York Rules of Professional Conduct. The Firm is cleared to proceed with the joint engagement of Thalassa Shipping & Logistics Société Anonyme and Thalassa Americas Inc. under proposed matter number 1044-00003.
The engagement letter, which is expected to be dated on or about October 25, 2022, should include the following provisions:
1.  Standard Advance Conflict Waiver Provisions Addressing Joint Representation. The engagement letter should contain a clear disclosure that C&H is representing both TSL and TAI in this matter, an explanation of the potential for diverging interests (particularly in the event of a Chapter 11 filing for TAI only), and an advance waiver by both clients acknowledging and consenting to the joint representation.
2.  Provisions Addressing Potential Future Conflicts. The engagement letter should include a provision stating that if any identified adverse party (or any entity that later becomes adverse in this matter) seeks to retain C&H on a matter unrelated to this engagement, C&H reserves the right to accept such engagement, provided that it is not substantially related to this matter and does not involve the assertion of a claim against TSL or TAI.
3.  Right of Withdrawal. The engagement letter should include a provision expressly acknowledging that C&H may withdraw from the representation of one or both clients if an irreconcilable conflict arises between TSL and TAI that cannot be resolved through informed consent, ethical screening, or other measures. In such event, C&H would assist the withdrawing client in obtaining substitute counsel and would cooperate in transitioning the representation.
Supplemental Conflicts Checks. The following supplemental conflicts checks will be required during the course of the engagement and should be initiated promptly upon the occurrence of the triggering event:
(a) Upon receipt of the legal names of the fourteen (14) vessel-owning SPVs from TSL's General Counsel;
(b) Upon disclosure of the identities of individual unsecured noteholders or members of the informal noteholder group;
(c) Upon the involvement of any additional parties in the restructuring, including but not limited to potential acquirers, DIP lenders, replacement agents, statutory committees, or regulatory bodies; and
(d) Upon the addition of any new C&H attorneys to the engagement team.
VIII. Conflicts Department Certification
The undersigned hereby certifies that a comprehensive conflicts search was conducted through the Calderwood & Harkness New Matter Intake System ("NMIS") on October 22–23, 2022, in connection with the proposed engagement of Thalassa Shipping & Logistics Société Anonyme and Thalassa Americas Inc. (Proposed Matter No. 1044-00003). The NMIS database was current as of October 22, 2022, at 11:59 p.m. Eastern Time. All search results have been reviewed, analyzed, and documented in this memorandum. The search encompassed all entity names, individual names, and variant designations identified by the requesting attorney and the Conflicts Department.
No disqualifying conflicts were identified. Supplemental searches will be required as additional party identifications become available, as described in Section VII of this memorandum.
CONFLICTS DEPARTMENT CERTIFICATION
Searched by: ________
Name: Katherine M. Rosario
Title: Senior Conflicts Analyst
Date: October 23, 2022
PREPARED BY:
________________________________________
Name: Amy Chesterton
Title: Associate, Bankruptcy & Restructuring
Date: October 23, 2022
REVIEWED AND APPROVED BY:
________________________________________
Name: Nathaniel Bower
Title: Partner, Bankruptcy & Restructuring
Date: ________
Appendix A: Summary Table of All Searched Parties and Results
The following table summarizes all entities and individuals searched in connection with the proposed engagement, together with their role in the matter, their relationship to the proposed clients, the NMIS search result, and the disposition of each entry.
Note: Entries marked "Requires Supplemental Search" indicate parties whose specific identities have not yet been provided. Supplemental conflicts searches will be conducted promptly upon receipt of this information, as described in Section VII of this memorandum.
Appendix B: NMIS Search Run Confirmation Report
The system-generated NMIS Search Run Confirmation Report is attached hereto as a separate document and incorporated by reference into this memorandum. The key details of the search confirmation are as follows:
Internal Document Reference Number: NMIS-CK-2022-10-47283
Search Initiated By: Katherine M. Rosario, Senior Conflicts Analyst, Conflicts Department
Search Requested By: Amy Chesterton, Associate, Bankruptcy & Restructuring
Date/Time of Search Initiation: October 22, 2022, at 9:14 a.m. Eastern Time
Date/Time of Search Completion: October 23, 2022, at 2:47 p.m. Eastern Time
Database Currency Date: October 22, 2022, at 11:59 p.m. Eastern Time
Total Number of Search Strings Run: 127
Total Number of Hits Returned: 0
Database Scope: All active, dormant, and closed matters from October 22, 2015 through October 22, 2022 (seven-year lookback period); all current client and adverse party records; all individual attorney lateral-hire screen records.
The full NMIS Search Run Confirmation Report, including a complete listing of all 127 search strings used (entity names, individual names, variant spellings, abbreviations, and acronyms), is maintained on file with the Conflicts Department and is available for review upon request.
This memorandum is privileged and confidential and constitutes attorney work product prepared in anticipation of litigation and in connection with the provision of legal services. It is intended solely for internal use by Calderwood & Harkness LLP and should not be disclosed to any person or entity outside the Firm without the prior written consent of the Responsible Partner.
Name | Role | Title | Conflicts Confirmed Clear
Nathaniel Bower | Responsible Partner | Partner, Bankruptcy & Restructuring | Yes
Colette Whitman | Billing Partner | Partner, Bankruptcy & Restructuring | Yes
Amy Chesterton | Lead Associate | Associate, Bankruptcy & Restructuring | Yes
Nathan Ikeda | Working Associate | Associate, Bankruptcy & Restructuring | Yes
Sylvia Hartwell | Specialist Partner (Tax) | Partner, Tax | Yes
No. | Entity / Individual Name | Role in Matter | Relationship to Client | NMIS Search Result | Disposition
— | Thalassa Shipping & Logistics SA (TSL) | Proposed Client (Parent) | Client | No Hit | Cleared
— | Dimitrios Kostandinos | Chairman, TSL; 62% equity holder | Client Principal | No Hit | Cleared
— | Elena Kostandinos-Pavlou | Vice Chairwoman, TSL; 18% equity holder | Client Principal | No Hit | Cleared
— | Georgios Andreadis | CEO, TSL | Client Principal | No Hit | Cleared
— | Irini Dalakoura | CFO, TSL | Client Principal | No Hit | Cleared
— | Stavros Papageorgiou | General Counsel, TSL (Greece) | Client Principal | No Hit | Cleared
— | Thalassa Americas Inc. (TAI) | Proposed Client (Subsidiary) | Client | No Hit | Cleared
— | Marcus Hale | President, TAI | Client Principal | No Hit | Cleared
— | Diana Restrepo | VP Finance, TAI | Client Principal | No Hit | Cleared
— | Jonathan Kurtz | VP Operations, TAI | Client Principal | No Hit | Cleared
— | KFO Holdings SA | Family Holding Company | Affiliated Entity | No Hit | Cleared
1 | Nordbank International AG | Admin Agent / Senior Secured Lender ($137M) | Adverse | No Hit | Cleared
2 | Aegean Capital Bank SA | Senior Secured Lender ($110M) | Adverse | No Hit | Cleared
3 | Harborstone Bank plc | Senior Secured Lender ($95M) | Adverse | No Hit | Cleared
4 | Pacifica Trade Finance Corp. | Senior Secured Lender ($82M) | Adverse | No Hit | Cleared
5 | Continental Maritime Lending GmbH | Senior Secured Lender ($72M) | Adverse | No Hit | Cleared
6 | Triton Credit Partners LP | Senior Secured Lender ($68M) | Adverse | No Hit | Cleared
7 | Laurentian Shipping Fund II | Senior Secured Lender ($55M) | Adverse | No Hit | Cleared
8 | Caspian Asset Management Ltd. | Senior Secured Lender ($40M) | Adverse | No Hit | Cleared
9 | Pelagos Institutional Credit Fund | Senior Secured Lender ($26M) | Adverse | No Hit | Cleared
10 | Dralvecen Mezzanine Capital LLC | Mezzanine Lender / Second Lien ($112.3M) | Adverse | No Hit | Cleared
11 | Garrison Trust Company | Indenture Trustee (8.25% Notes) | Adverse | No Hit | Cleared
12 | Olympian Fuel & Supply SA | Largest Trade Creditor ($9.2M) | Adverse | No Hit | Cleared
13 | Whitfield, Crane & Burgess LLP | Counsel to Ad Hoc Group | Opposing Counsel | No Hit | Cleared
14 | Kellner & Foss LLP | Counsel to BMC | Opposing Counsel | No Hit | Cleared
15 | Ashford, Brightmoor Group & McKay PC | Counsel to Unsecured Noteholder Group | Opposing Counsel | No Hit | Cleared
16 | Kensington Veltrian Partners LLC | Financial Advisor to TSL/TAI | Co-Advisor | No Hit | Cleared
17 | Draycott Advisory Group LLC | Financial Advisor to Ad Hoc Group | Adverse Advisor | No Hit | Cleared
18 | Alderney Management Advisors LLC | CRO Candidate | Neutral / Co-Advisor | No Hit | Cleared
19 | Vassiliou & Demetriou Law Offices | Greek Counsel to TSL | Co-Counsel | No Hit | Cleared
20 | Grainger, Holt & Associates LLP | Independent Auditors of TSL | Neutral | No Hit | Cleared
21 | Pendleton Claim Services Inc. | Potential Claims/Noticing Agent | Neutral | No Hit | Cleared
22 | Drakos Maritime Valuations Ltd. | Vessel Appraisers | Neutral | No Hit | Cleared
23 | Seaward & Beckett Insurance Brokers Ltd. | Insurance Broker | Neutral | No Hit | Cleared
24 | Promontory Indemnity Insurance Co. | D&O Policy Carrier | Neutral | No Hit | Cleared
25 | Capitol Registered Agents LLC | TAI Registered Agent (DE) | Neutral (Ministerial) | No Hit | Cleared
— | 14 Vessel-Owning SPVs | Collateral Entities | Affiliated Entities | Not Yet Searched | Requires Supplemental Search
— | Individual Unsecured Noteholders | Creditors | Adverse | Not Yet Searched | Requires Supplemental Search