DRAFT — PREPARED ON A CONTINGENCY BASIS — NEVER FILED Calderwood & Harkness LLP — Matter No. 1044-00003 Prepared by: Amy Chesterton (Lead Associate) and Nathan Ikeda (Working Associate) Under supervision of: Nathaniel Bower (Responsible Partner)
UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION
^1 The Debtors in these Chapter 11 cases, along with the last four digits of each Debtor's federal tax identification number, will be set forth on Exhibit B to the petition. The lead Debtor's address is 1400 McKinney Street, Suite 2200, Houston, Texas 77010.
MOTION OF DEBTORS FOR ENTRY OF AN ORDER DIRECTING JOINT ADMINISTRATION OF CHAPTER 11 CASES
I. INTRODUCTION AND RELIEF REQUESTED
Thalassa Americas Inc. ("TAI"), a corporation organized under the laws of the State of Delaware (EIN 84-3291057), with its principal office located at 1400 McKinney Street, Suite 2200, Houston, Texas 77010, and certain of its affiliated debtors and debtors in possession (collectively, the "Debtors" and each individually, a "Debtor"), by and through their proposed counsel, Calderwood & Harkness LLP, hereby respectfully move this Court (the "Motion") for entry of an order, substantially in the form attached hereto as Exhibit A (the "Proposed Order"), pursuant to Rule 1015(b) of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"), directing the joint administration of the Chapter 11 cases of all Debtors listed on the petition for procedural purposes only. In support of this Motion, the Debtors respectfully represent as follows:
TAI is a wholly-owned subsidiary of Thalassa Shipping & Logistics Société Anonyme ("TSL"), a Greek société anonyme (anonimi etairia) organized under the laws of the Hellenic Republic, with its registered headquarters located at 42 Akti Miaouli, Piraeus 18538, Greece. TSL was founded in 1987 by the Kostandinos family and has since grown into one of the leading independent shipping and logistics enterprises operating across the Mediterranean, Black Sea, and transatlantic trade lanes.
This Motion has been prepared on a contingency basis in the event that multiple Thalassa entities — including TAI, as the lead debtor, and certain vessel-owning special purpose vehicles ("SPVs") organized by TSL to hold title to specific vessels within the Thalassa fleet — file voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code") in this Court. The preparation of this Motion was contemplated by, and is consistent with, the companion Chapter 11 Contingency Playbook dated January 10, 2023 (the "Contingency Playbook"), which set forth detailed analyses of the potential multi-entity filing scenario and the operational and legal considerations attendant thereto.
TSL owns and operates a fleet of fifty (50) vessels, comprising thirty-eight (38) dry-bulk carriers and twelve (12) container vessels, through fourteen (14) vessel-owning SPVs, each of which holds title to one or more vessels. TAI serves as the primary U.S. operating platform for the Thalassa enterprise, conducting Houston terminal operations at the Port of Houston, Jones Act–exempt foreign-flag vessel scheduling, and domestic freight brokerage activities. TAI is the logical lead debtor in any multi-entity Chapter 11 filing given its presence in this district, its role as co-borrower under the U.S. Tranche of the Senior Secured Credit Facility (defined below), and its centrality to the Thalassa enterprise's U.S. operations.
By this Motion, the Debtors seek joint administration of their respective Chapter 11 cases for procedural convenience only. The Debtors expressly do not seek, and this Motion should not be construed as seeking, substantive consolidation of the Debtors' estates. Each Debtor's estate will remain legally separate and distinct, and the claims against each Debtor will be separately scheduled and administered. Joint administration is sought solely to promote administrative efficiency, reduce costs, and simplify case management for the benefit of the Debtors, their creditors, the United States Trustee, and all other parties in interest.
II. JURISDICTION AND VENUE
This Court has jurisdiction to consider this Motion 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 pursuant to 28 U.S.C. § 157(b)(2). Venue is proper in the Southern District of Texas, Houston Division, pursuant to 28 U.S.C. § 1408 because TAI's principal place of business and principal office have been located at 1400 McKinney Street, Suite 2200, Houston, Texas 77010, for greater than one hundred eighty (180) days prior to the date on which the petition would be filed.
TAI is organized as a C-Corporation under the General Corporation Law of the State of Delaware. TAI's registered agent for service of process in Delaware is Capitol Registered Agents LLC, located at 1209 Orange Street, Wilmington, Delaware 19801. TAI is registered to do business in the State of Texas and maintains its principal office and primary operations in Houston, Texas.
The affiliated vessel-owning SPVs that may file Chapter 11 petitions alongside TAI are, or would be, eligible for filing in this district based on their affiliation with TAI under 28 U.S.C. § 1408(2), which provides that a case under Title 11 may be commenced in the judicial district in which a case concerning such person's affiliate is pending under Title 11. Accordingly, once TAI's Chapter 11 petition is filed in this district, any affiliated SPV may properly file its petition here as well.
The statutory predicates for the relief requested herein are set forth in Bankruptcy Rule 1015(b) and are further discussed in Section IV below.
III. BACKGROUND
A. Overview of the Thalassa Enterprise
TSL was founded in 1987 by the Kostandinos family in Piraeus, Greece, and has grown over a period of more than thirty-five years into a diversified shipping and integrated logistics enterprise of substantial scale. TSL is currently chaired by Dimitrios Kostandinos (age 71), the founding family patriarch, who holds approximately sixty-two percent (62%) of the equity of TSL. Elena Kostandinos-Pavlou (age 44), Vice Chairwoman and daughter of Dimitrios Kostandinos, holds approximately eighteen percent (18%) of the equity of TSL. The combined family equity interest of approximately eighty percent (80%) is held through KFO Holdings Société Anonyme ("KFO"), a Greek société anonyme organized under the laws of the Hellenic Republic with its registered address at 42 Akti Miaouli, Piraeus 18538, Greece — the same address as TSL's headquarters. The remaining approximately twenty percent (20%) equity in TSL is held by various management and institutional investors.
TSL's day-to-day operations are overseen by a professional management team led by Chief Executive Officer Georgios Andreadis (age 56), a non-family professional manager who has served in that capacity since 2015. Mr. Andreadis is supported by Chief Financial Officer Irini Dalakoura (age 49) and General Counsel (Greece) Stavros Papageorgiou (age 52), among other senior executives. The professional management structure reflects TSL's commitment to institutional governance practices notwithstanding the family's controlling equity position.
The Thalassa fleet comprises fifty (50) vessels organized across four principal vessel classes:
The foregoing valuations were prepared as of November 1, 2022, by Drakos Maritime Valuations Ltd. (Captain Nikos Drakos, Principal), an independent maritime appraisal firm. The November 2022 appraised fleet value of $623 million represents a decline of approximately $268 million, or thirty percent (30.1%), from the January 2022 appraised value of $891 million, reflecting the severe deterioration in global dry-bulk and container shipping markets experienced during 2022.
TSL's global 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 U.S.-reported revenue similarly declined from approximately $312 million in fiscal year 2021 to an estimated $198 million in fiscal year 2022, a decline of approximately 36.5%.
TSL employs approximately 4,200 people globally, including shore-side personnel and seafarers. Approximately 680 of those employees are located in the United States and employed through TAI, primarily at the Houston terminal facility and the Houston corporate office. TAI's Houston-based workforce includes terminal operators, logistics coordinators, vessel scheduling personnel, freight brokerage staff, and corporate and administrative personnel.
TSL provides integrated port-to-door logistics services across the Mediterranean, Black Sea, and transatlantic trade lanes. In addition to its vessel fleet, TSL operates terminal facilities at the Port of Piraeus, the Port of Thessaloniki, and the Port of Houston. The Houston terminal facility, operated by TAI under a long-term lease, is a critical component of the Thalassa enterprise's transatlantic trade lane operations and serves as the primary gateway for Thalassa's U.S.-bound cargo.
B. TAI — The Lead Debtor
TAI is a Delaware C-Corporation and the primary U.S. operating subsidiary of TSL. TAI was incorporated in 2008 and has served as the Thalassa enterprise's U.S. operational and commercial hub since its formation. TAI is led by the following officers:
• Marcus Hale, President (age 48) — Mr. Hale has served as President of TAI since 2018 and is responsible for the overall management and strategic direction of TAI's U.S. operations.
• Diana Restrepo, Vice President of Finance (age 41) — Ms. Restrepo has served as VP Finance since 2019 and oversees TAI's financial reporting, treasury management, and coordination with TSL's CFO in Piraeus.
• Jonathan Kurtz, Vice President of Operations (age 45) — Mr. Kurtz has served as VP Operations since 2017 and manages TAI's Houston terminal operations, vessel scheduling, and domestic freight brokerage activities.
TAI's operations encompass three primary business lines: (i) Houston terminal operations at the Port of Houston, including cargo handling, storage, and transshipment services; (ii) Jones Act–exempt foreign-flag vessel scheduling, which involves the coordination and management of TSL's foreign-flag vessels calling at U.S. ports in compliance with applicable federal maritime law; and (iii) domestic freight brokerage, under which TAI arranges the inland transportation of cargo arriving at or departing from the Houston terminal.
TAI is a co-borrower under the U.S. Tranche (Term Loan B) of the Senior Secured Credit Facility described in greater detail in Section III.E below. The Term Loan B is an $85 million non-amortizing bullet maturity loan that represents TAI's direct borrowing obligation under the facility. TAI is also liable for its proportionate share of obligations under the Revolving Credit Facility as a co-borrower and guarantor.
In addition, TAI owes TSL the sum of $76.4 million under a subordinated intercompany promissory note (the "Intercompany Note") originally bearing interest at a rate of 5.0% per annum. The Intercompany Note was originally issued in connection with capitalization and operational funding transactions between TSL and TAI. The obligations under the Intercompany Note are subordinated to all senior and mezzanine indebtedness of TAI and the other Debtors.
C. The Vessel-Owning SPVs
TSL's fleet of fifty (50) vessels is held through fourteen (14) vessel-owning SPVs, each of which is organized for the specific purpose of holding title to one or more vessels. This single-purpose entity structure is standard practice in the international shipping industry and serves to isolate maritime risk, facilitate vessel-level financing, and comply with flag-state requirements.
The equity interests in each of the fourteen SPVs are pledged as collateral under the $685 million Senior Secured Credit Facility. Nordbank International AG, as Collateral Agent, holds first-priority liens on the equity interests of TAI and each of the fourteen SPVs, as well as first-priority ship mortgages on each of the fifty vessels comprising the Thalassa fleet.
In the event of a multi-entity Chapter 11 filing, one or more of the SPVs with a sufficient U.S. nexus or otherwise subject to the jurisdiction of this Court may file voluntary Chapter 11 petitions alongside TAI. The determination of which SPVs would join in the filing will be made based on operational necessity, lender negotiations, and the strategic objectives of the restructuring, in each case in consultation with the Debtors' professionals and the key stakeholders in these cases.
The SPVs are integral components of the Thalassa enterprise. Although organized as separate legal entities, they share overlapping management with TAI and TSL. The SPVs do not maintain independent management teams; rather, their operations are directed and coordinated by TAI and TSL personnel on a centralized basis. The SPVs share common administrative functions, including accounting, treasury, human resources, and legal support, all of which are provided through TAI (for U.S.-related matters) and TSL (for international matters). Moreover, the SPVs share overlapping creditor relationships with TAI, most significantly through the Senior Secured Credit Facility and the Mezzanine Notes, under which the SPVs' assets (the vessels) serve as collateral securing the same indebtedness for which TAI is a co-borrower and guarantor.
D. The Liquidity Crisis and Events Leading to Potential Filing
The Thalassa enterprise's current financial distress is the direct result of a severe and sustained downturn in global shipping markets, particularly the dry-bulk sector. The Baltic Dry Index (the "BDI"), which serves as a benchmark for the cost of shipping major raw materials by sea, declined approximately fifty-eight percent (58%) between January 2022 and September 2022. This precipitous decline in charter rates was driven by a confluence of macroeconomic headwinds, including slowing global trade growth, reduced Chinese commodity demand, and overcapacity in the global dry-bulk fleet.
The impact on TSL's revenue-generating capacity was immediate and severe. TSL's average daily time-charter equivalent ("TCE") rate fell from $24,800 per day (the fiscal year 2021 average) to $11,200 per day (the third quarter of 2022 average), representing a decline of approximately fifty-five percent (55%). This dramatic reduction in TCE rates cascaded throughout the Thalassa enterprise's financial performance and ultimately triggered a series of covenant defaults and liquidity events, as described below.
September 15, 2022: Minimum Liquidity Covenant Breach. As of September 15, 2022, TSL's consolidated unrestricted cash balance fell to $27.3 million, representing a shortfall of $12.7 million against the $40 million Minimum Liquidity Covenant set forth in Section 7.01(a) of the Senior Secured Credit Agreement dated June 15, 2019 (as amended, the "Credit Agreement"). This breach constituted an Event of Default under Section 8.01(d) of the Credit Agreement.
September 30, 2022: Financial Covenant Breaches. As of the fiscal quarter ended September 30, 2022, TSL breached two additional financial maintenance covenants:
(i) Maximum Net Leverage Ratio. The Maximum Net Leverage Ratio was 7.82x, calculated as Net Debt of $770.9 million divided by last-twelve-months ("LTM") EBITDA of $98.6 million. The applicable covenant threshold under Section 7.01(b) of the Credit Agreement was 5.50x, resulting in a breach of 2.32x.
(ii) Minimum Interest Coverage Ratio. The Minimum Interest Coverage Ratio was 1.74x, calculated as LTM EBITDA of $98.6 million divided by LTM Interest Expense of $56.7 million. The applicable covenant threshold under Section 7.01(c) of the Credit Agreement was 2.50x, resulting in a shortfall of 0.76x.
Each of the foregoing breaches constituted a separate Event of Default under Section 8.01(d) of the Credit Agreement.
October 10, 2022: Forbearance Agreement. On October 10, 2022, TSL and the Senior Secured Lender syndicate (as defined below) executed a Forbearance Agreement (the "Forbearance Agreement") pursuant to which the lenders agreed to a ninety (90)-day standstill with respect to the exercise of remedies arising from the foregoing Events of Default. The initial standstill period ran through January 8, 2023. The Forbearance Agreement was subsequently extended on two occasions: first, to March 8, 2023, pursuant to a First Amendment to Forbearance Agreement dated January 6, 2023; and second, to April 7, 2023, pursuant to a Second Amendment to Forbearance Agreement dated March 3, 2023. The forbearance remains in effect as of the date of this Motion, but its expiration is approaching, and no assurance can be given that it will be further extended.
December 1, 2022: Missed Unsecured Note Interest Payment. On December 1, 2022, TSL failed to make the scheduled semi-annual interest payment of $2,062,500 on its $50 million 8.25% Senior Unsecured Notes due March 1, 2025 (the "Unsecured Notes"). The missed payment amount was calculated as follows: $50,000,000 principal × 8.25% annual interest rate ÷ 2 semi-annual periods = $2,062,500. The indenture governing the Unsecured Notes (the "Indenture") provides for a thirty (30)-day cure period following a missed interest payment. That cure period expired on January 1, 2023, without the payment being made, constituting an Event of Default under Section 6.01 of the Indenture. Garrison Trust Company, as indenture trustee, was notified of the default.
December 15, 2022: DIP Term Sheet. On December 15, 2022, the Debtors received a term sheet (the "DIP Term Sheet") from Nordbank International AG and Triton Credit Partners LP for a proposed $75 million superpriority debtor-in-possession credit facility (the "DIP Facility"). The DIP Facility, as proposed, bears interest at a rate of SOFR plus 600 basis points, carries a commitment fee of 0.50%, and has a twelve (12)-month maturity. The DIP Facility is described in greater detail in Section IX below and is the subject of a separate first-day motion.
E. The Capital Structure
The Thalassa enterprise's capital structure as of September 30, 2022, is summarized below:
Senior Secured Credit Facility. The cornerstone of the Thalassa enterprise's capital structure is a $685 million Senior Secured Credit Facility (the "Senior Secured Credit Facility" or "Credit Facility") originally entered into on June 15, 2019, by and among TSL, TAI, the vessel-owning SPVs (as co-borrowers and guarantors), and a syndicate of nine (9) institutional lenders, with Nordbank International AG serving as Administrative Agent and Collateral Agent. As of September 30, 2022, $540 million was outstanding under the Credit Facility, allocated as follows:
(i) Term Loan A: $270 million remaining principal balance (originally $400 million, after thirteen (13) quarterly amortization payments of $10 million each). Term Loan A amortizes on a quarterly basis with the remaining balance due at maturity.
(ii) Revolving Credit Facility: $185 million drawn of a $200 million total commitment, leaving $15 million of undrawn availability. The Revolving Credit Facility provides working capital liquidity for the Thalassa enterprise.
(iii) Term Loan B (U.S. Tranche): $85 million non-amortizing bullet maturity. TAI is the primary co-borrower on the U.S. Tranche, which was structured specifically to fund TAI's U.S. operations.
The Credit Facility bears interest at a rate of SOFR plus 375 basis points, with a default rate of an additional 200 basis points applicable upon the occurrence and continuance of an Event of Default. The default rate has been applicable since September 15, 2022, the date of the first covenant breach.
The Credit Facility is secured by first-priority liens on substantially all assets of the Thalassa enterprise, including: (a) first-priority ship mortgages on all fifty (50) vessels in the fleet; (b) first-priority security interest in the Houston terminal lease; (c) first-priority security interest in all accounts receivable; and (d) first-priority pledges of the equity interests in TAI and each of the fourteen (14) vessel-owning SPVs.
The nine-lender syndicate, and each lender's approximate commitment and funded exposure, is as follows:
An Ad Hoc Group of Senior Secured Lenders (the "Ad Hoc Group"), comprising Nordbank International AG, Harborstone Bank plc, Triton Credit Partners LP, and Continental Maritime Lending GmbH, holds collectively approximately $372 million in funded exposure, representing approximately 54.3% of the total $685 million facility commitment. The Ad Hoc Group is represented by Whitfield, Crane & Burgess LLP (Graham Whitfield III, Partner) and advised by Draycott Advisory Group LLC (Vanessa Chow, Managing Director).
Mezzanine Notes. TSL and the vessel-owning SPVs are obligors under $112.3 million in outstanding Mezzanine Notes (original principal amount of $100 million, with $12.3 million of payment-in-kind ("PIK") interest capitalized to date) held by Dralvecen Mezzanine Capital LLC ("Dralvecen"). The Mezzanine Notes bear interest at 11.5% per annum on a PIK toggle basis; Dralvecen elected to receive all interest in PIK form commencing in the second quarter of 2022. The Mezzanine Notes are secured by second-priority liens on the same collateral securing the Senior Secured Credit Facility, subject to an Intercreditor Agreement dated June 15, 2019, between Nordbank (as first-lien agent) and Dralvecen. The Mezzanine Notes mature on December 15, 2024. Dralvecen is represented by Kellner & Foss LLP (Theodore Kellner, Partner), 1185 Avenue of the Americas, 30th Floor, New York, New York 10036.
Unsecured Notes. TSL issued $50 million in 8.25% Senior Unsecured Notes due March 1, 2025 (the "Unsecured Notes"). The Unsecured Notes are unsecured obligations of TSL and are governed by an Indenture dated March 1, 2020, with Garrison Trust Company, 100 Wall Street, 16th Floor, New York, New York 10005, serving as indenture trustee. As described in Section III.D above, TSL is in default under the Indenture following the missed interest payment on December 1, 2022 and the expiration of the thirty-day cure period on January 1, 2023. An informal group of holders of the Unsecured Notes (the "Informal Noteholder Group") is represented by Ashford, Brightmoor Group & McKay PC (Carolyn Brightmoor Group, Partner), 299 Park Avenue, 18th Floor, New York, New York 10171.
Intercompany Note. TAI owes TSL the sum of $76.4 million under the Intercompany Note, which is a subordinated intercompany promissory note originally bearing interest at 5.0% per annum. The Intercompany Note is contractually subordinated to all senior and mezzanine indebtedness.
Trade Payables. As of September 30, 2022, the Thalassa enterprise's consolidated trade payables totaled approximately $38.7 million. The largest single trade creditor is Olympian Fuel & Supply SA, owed approximately $9.2 million for bunker fuel and related maritime supplies provided to vessels across multiple SPVs.
Summary of Total Debt. The Thalassa enterprise's total consolidated debt as of September 30, 2022, is approximately $847.3 million, summarized as follows:
IV. LEGAL BASIS FOR JOINT ADMINISTRATION
A. Bankruptcy Rule 1015(b)
Federal Rule of Bankruptcy Procedure 1015(b) provides the legal authority for the relief sought herein. Rule 1015(b) states, in pertinent part:
"If two or more petitions are pending in the same court by or against . . . a debtor and an affiliate, the court may order a joint administration of the estates."
Fed. R. Bankr. P. 1015(b).
TAI and the vessel-owning SPVs are "affiliates" within the meaning of Section 101(2) of the Bankruptcy Code, which defines "affiliate" to include, inter alia, an "entity that directly or indirectly owns, controls, or holds with power to vote, 20 percent or more of the outstanding voting securities of the debtor" and a "corporation 20 percent or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote, by the debtor." 11 U.S.C. § 101(2). Here, TSL directly or indirectly owns one hundred percent (100%) of the equity of TAI and one hundred percent (100%) of the equity of each of the fourteen vessel-owning SPVs. Accordingly, TAI and each SPV are affiliates of one another within the meaning of Section 101(2), and the threshold statutory requirement for joint administration under Rule 1015(b) is satisfied.
Joint administration is a procedural mechanism designed to promote efficiency and reduce administrative costs in multi-debtor Chapter 11 cases. Critically, joint administration does not affect the substantive rights of any party in interest. Each debtor's estate remains legally separate and distinct; creditors' claims against each debtor are maintained on an individual basis; and the legal attributes of each estate — including its assets, liabilities, and priority structure — are preserved in full. See In re Enron Corp., Case No. 01-16034 (Bankr. S.D.N.Y. 2001) (granting joint administration of approximately 80 debtor entities); In re Lehman Brothers Holdings Inc., Case No. 08-13555 (Bankr. S.D.N.Y. 2008) (joint administration of numerous affiliated debtors).
B. Applicable Standards
Courts in this district and across the country routinely grant motions for joint administration where the debtors are related entities, share common management and ownership, and have overlapping creditor constituencies. The relevant factors considered by courts in evaluating joint administration requests include: (i) whether the proposed co-debtors are affiliates within the meaning of 11 U.S.C. § 101(2); (ii) whether joint administration will promote efficiency and reduce administrative costs; (iii) whether creditors and other parties in interest will benefit from consolidated case management; and (iv) whether any party in interest will be prejudiced by joint administration.
The United States Bankruptcy Court for the Southern District of Texas, Houston Division, has consistently approved joint administration in multi-entity cases involving affiliated shipping, energy, and industrial companies. See, e.g., In re Hercules Offshore, Inc., Case No. 15-34221 (Bankr. S.D. Tex. 2015); In re Exterran Holdings, Inc., Case No. 15-35615 (Bankr. S.D. Tex. 2015); In re Seadrill Ltd., Case No. 17-60079 (Bankr. S.D. Tex. 2017). In each of these cases, the Court found that joint administration of affiliated debtor entities promoted efficiency, reduced administrative costs, and served the best interests of the estates and their creditors without prejudice to any party.
Joint administration promotes efficiency by consolidating notices, scheduling, and case management under a single case number and docket. It enables the Court, the United States Trustee, creditors, and other parties in interest to monitor the progress of related cases through a unified filing system, thereby avoiding the confusion and expense that would arise from maintaining multiple separate dockets for functionally integrated enterprises.
V. GROUNDS FOR JOINT ADMINISTRATION
A. Common Ownership and Management
All potential debtor entities that may file Chapter 11 petitions in this Court are wholly owned, directly or indirectly, by TSL. TSL holds one hundred percent (100%) of the equity of TAI and one hundred percent (100%) of the equity, directly or through intermediate holding entities, of each of the fourteen vessel-owning SPVs. The Thalassa enterprise operates as a unified, centrally managed business notwithstanding its multi-entity corporate structure.
TAI and the SPVs share common officers and directors. Marcus Hale, in his capacity as President of TAI, oversees operational coordination across the Thalassa enterprise's U.S. activities, including the scheduling and logistical management of vessels owned by the SPVs that call at U.S. ports. Diana Restrepo, as Vice President of Finance of TAI, manages consolidated financial reporting for TAI and coordinates closely with TSL's CFO, Irini Dalakoura, on enterprise-wide treasury management and reporting. Jonathan Kurtz, as Vice President of Operations of TAI, coordinates vessel scheduling, terminal operations, and freight brokerage activities that involve assets held by multiple SPVs.
Central decision-making for the Thalassa enterprise flows from TSL's board of directors — consisting of Dimitrios Kostandinos (Chairman), Elena Kostandinos-Pavlou (Vice Chairwoman), and Georgios Andreadis (CEO) — through TAI to the vessel-owning SPVs. Strategic decisions regarding vessel deployment, chartering strategy, capital expenditures, and debt management are made at the TSL and TAI levels and implemented across the SPVs.
The SPVs do not maintain independent management structures. They have no independent employees, no independent offices, and no independent decision-making authority. Their operations are directed entirely by TAI and TSL personnel. This common management structure strongly supports joint administration, as separate case administration would be entirely artificial given the actual operational integration of the potential debtor entities.
B. Overlapping Creditor Bodies
The creditor bodies of TAI and the SPVs are substantially overlapping. The most significant creditor relationship — the Senior Secured Credit Facility — spans TAI and all fourteen vessel-owning SPVs. Nordbank International AG, as Collateral Agent, holds first-priority liens on the equity interests of TAI and each of the fourteen SPVs, as well as first-priority ship mortgages on each of the fifty vessels in the fleet. The nine-lender syndicate under the Credit Facility has claims against, and security interests in the assets of, both TAI and the SPVs simultaneously. Joint administration will enable these lenders — and the Ad Hoc Group in particular — to monitor and participate in the Chapter 11 cases through a single docket rather than multiple parallel proceedings.
The intercreditor relationship between Nordbank (as first-lien agent) and Dralvecen Mezzanine Capital LLC (as second-lien holder) similarly spans the entire enterprise. The Intercreditor Agreement dated June 15, 2019, which governs the relative priorities, rights, and remedies of the first-lien and second-lien creditors, applies to all collateral securing both the Senior Secured Credit Facility and the Mezzanine Notes. Joint administration will facilitate the Court's oversight of the intercreditor dynamics that will inevitably arise in these cases.
Trade creditors, including the largest trade creditor, Olympian Fuel & Supply SA (owed approximately $9.2 million), supply bunker fuel and related maritime services to vessels held by multiple SPVs. These vendors interact with the Thalassa enterprise on a consolidated basis and would benefit from a single point of contact and case management.
The same Ad Hoc Group of Senior Secured Lenders — Nordbank International AG, Harborstone Bank plc, Triton Credit Partners LP, and Continental Maritime Lending GmbH, holding collectively approximately $372 million, or 54.3%, of the $685 million Credit Facility — is represented by a single law firm, Whitfield, Crane & Burgess LLP (Graham Whitfield III), and advised by a single financial advisor, Draycott Advisory Group LLC (Vanessa Chow). Joint administration would align the case structure with the reality that these creditors are already engaging with the Thalassa enterprise on a consolidated basis.
C. Integrated Operations and Cash Management
TAI and the SPVs operate under a centralized cash management system (the "Cash Management System") through which funds flow between TAI's Houston operations and the various SPVs in connection with vessel chartering revenue, operational expenses, and intercompany transactions. In the ordinary course of business, chartering revenue earned by vessels owned by the SPVs is collected through TAI's accounts and distributed to the SPVs (net of management fees and operating costs). Conversely, the SPVs fund certain operational expenditures through TAI's centralized treasury function.
A companion first-day motion, the Draft First-Day Motion: Authority to Continue Cash Management System, dated January 15, 2023, seeks authority for the Debtors to maintain the Cash Management System on a postpetition basis. That motion, which is being prepared concurrently with this Motion, describes the Cash Management System in detail, including the specific bank accounts, intercompany payment flows, and controls in place to track intercompany transactions.
Joint administration would facilitate the Court's oversight of intercompany cash flows, the DIP financing budget, and the adequate protection obligations that will apply across the debtor entities. Maintaining separate dockets for TAI and the SPVs while they share a unified cash management system would create unnecessary complexity and increase the risk of inconsistent orders that could disrupt the Debtors' operations.
D. Cost and Efficiency Benefits
Joint administration will avoid duplicative noticing, scheduling, and case management costs that would otherwise be incurred if the Chapter 11 cases were administered separately. The Debtors' financial advisor, Kensington Veltrian Partners LLC, has estimated that the aggregate Chapter 11 administrative costs for the first twelve (12) months of the cases (including professional fees, claims administration, and noticing costs) will total approximately $18.5 million. Joint administration would prevent the material additional costs that would be incurred from maintaining separate dockets, filing duplicative pleadings, and conducting parallel hearings for each debtor entity.
Pendleton Claim Services Inc. ("Pendleton"), the standby claims and noticing agent that was engaged by the Debtors on November 15, 2022, would manage a single unified docket and claims register under joint administration, rather than multiple separate case dockets. Pendleton is led by Laura Pendleton, President, and is headquartered at 1601 Elm Street, Suite 4200, Dallas, Texas 75201. The engagement of a single claims agent to manage a unified docket will significantly reduce noticing costs and administrative burden, while ensuring that all parties in interest have access to comprehensive, organized case information.
Creditors, the Office of the United States Trustee, and all other parties in interest will benefit from having a single point of reference for all filings, schedules, orders, and other case documents. In a multi-debtor case of this complexity, the ability to access all relevant information through a single docket is of paramount importance to the efficient and transparent administration of the estates.
E. No Prejudice to Any Party
Joint administration will not alter the substantive rights of any creditor or other party in interest. Each Debtor's estate will remain legally distinct. Claims against each individual debtor entity will be separately scheduled and administered, with Pendleton maintaining a claims register in which each claim is coded by individual debtor entity to ensure accurate tracking and administration.
The Debtors are not seeking substantive consolidation by this Motion. Each SPV's assets — principally, the individual vessels held by that SPV — and liabilities will be separately tracked and accounted for throughout these cases. The legal separateness of the estates will be preserved in all respects.
Moreover, any party in interest retains the right to request that the Court order the separation of any or all of the jointly administered cases if joint administration is shown to be prejudicial to such party's interests. Bankruptcy Rule 1015(b) expressly contemplates that the Court may modify or terminate a joint administration order at any time upon a showing of cause. This safeguard ensures that no party is locked into a procedural arrangement that disadvantages it.
VI. DESCRIPTION OF POTENTIAL DEBTOR ENTITIES
The following is a description of the debtor entities whose Chapter 11 cases are the subject of this Motion:
Thalassa Americas Inc. ("TAI") — Lead Debtor. TAI is a corporation organized under the laws of the State of Delaware (C-Corporation). EIN: 84-3291057. Principal office: 1400 McKinney Street, Suite 2200, Houston, Texas 77010. Registered agent: Capitol Registered Agents LLC, 1209 Orange Street, Wilmington, Delaware 19801. TAI is the primary U.S. operating subsidiary of TSL and conducts Houston terminal operations, Jones Act–exempt foreign-flag vessel scheduling, and domestic freight brokerage.
Vessel-Owning SPVs (SPV 1 through SPV 14) — One or more of the fourteen (14) vessel-owning SPVs organized by TSL may file Chapter 11 petitions alongside TAI. Each SPV holds title to one or more specific vessels within the Thalassa fleet of fifty (50) vessels. The equity interests of each SPV are pledged as collateral under the Senior Secured Credit Facility. The names, jurisdictions of organization, tax identification numbers, and registered agent information for each filing SPV will be set forth on Exhibit B to the applicable petition at the time of filing.
The exact set of SPV co-debtors to be included in the Chapter 11 filing will be determined based on operational necessity, the extent of each SPV's U.S. nexus, the requirements of the DIP financing, and the outcome of lender negotiations at the time of filing. This Motion has been drafted to accommodate flexibility in the number and identity of the filing entities, and the Proposed Order attached hereto as Exhibit A contemplates the joint administration of TAI and whatever affiliated debtor entities ultimately file petitions in this Court.
TSL itself, the Greek parent company, is not expected to file a voluntary petition for relief under Chapter 11 of the Bankruptcy Code. TSL is organized under Greek law and, if it commences insolvency proceedings, would be expected to do so under Greek insolvency law (Law 4738/2020 on the Settlement of Debts and the Granting of a Second Chance, as amended). In that event, a separate proceeding under Chapter 15 of the Bankruptcy Code may be initiated in this Court to seek recognition of the Greek proceedings as a foreign main proceeding. Any such Chapter 15 proceeding would be coordinated with, but would remain procedurally and legally distinct from, the jointly administered Chapter 11 cases of TAI and the SPVs.
VII. PROPOSED CASE CAPTION AND ADMINISTRATION
The Debtors respectfully request that all Chapter 11 cases filed by TAI and its affiliated debtor entities be jointly administered under Case No. __ (the lead case number to be assigned by the Clerk of Court to TAI's petition upon filing). The Debtors further request that the caption for all jointly administered cases read as follows:
In re:
THALASSA AMERICAS INC., et al.,
Debtors.
All pleadings, notices, motions, applications, orders, and other documents filed in the jointly administered cases shall bear the joint caption. A single claims register shall be maintained by the claims and noticing agent, Pendleton Claim Services Inc., with all claims coded by individual debtor entity so that the claims against each estate may be separately identified, tracked, and administered. All hearings in the jointly administered cases shall be scheduled on a consolidated basis before the same judge.
VIII. PROFESSIONAL RETENTION CONTEXT
The Debtors have engaged or propose to engage the following professionals to assist in the administration of their Chapter 11 cases:
Proposed Counsel. Calderwood & Harkness LLP serves as proposed counsel to all Debtors. The engagement team includes Nathaniel Bower (Responsible Partner), Colette Whitman (Billing Partner), Amy Chesterton (Lead Associate), Nathan Ikeda (Working Associate), and Sylvia Hartwell (Specialist Tax Partner). Calderwood & Harkness's offices are located at 780 Third Avenue, New York, New York 10017. The internal matter number for this engagement is 1044-00003. A separate retention application — the Draft Application to Retain Calderwood & Harkness LLP as Debtor's Counsel, dated January 20, 2023 — is being prepared for concurrent filing with the petition and first-day motions.
Financial Advisor. Kensington Veltrian Partners LLC ("Kensington Veltrian") serves as financial advisor to all Debtors. The engagement is led by James Calloway, Managing Director. Kensington Veltrian's fee structure consists of a $250,000 monthly advisory fee and a $2.0 million filing fee payable upon the commencement of the Chapter 11 cases. A separate retention application — the Draft Application to Retain Kensington Veltrian Partners LLC as Financial Advisor, dated January 20, 2023 — is being prepared for concurrent filing.
Chief Restructuring Officer. Alderney Management Advisors LLC ("Alderney"), headquartered at 200 Clarendon Street, 45th Floor, Boston, Massachusetts 02116, was engaged on a standby basis to provide the services of Richard "Rick" Thornberg as Chief Restructuring Officer ("CRO") for TAI in the event that a Chapter 11 petition is filed. Mr. Thornberg's appointment as CRO would become effective upon the filing of the petition, and a retention application for Alderney will be filed concurrently with the first-day motions.
Joint administration would permit these professionals to serve all Debtors efficiently through a single engagement and a single set of retention applications, thereby avoiding the need for duplicative retention motions, fee applications, and court approvals for each individual debtor entity. This approach is consistent with standard practice in multi-entity Chapter 11 cases and will conserve estate resources while ensuring that the Debtors' professionals can serve all estates in a coordinated and effective manner.
IX. DIP FINANCING CROSS-REFERENCE
Concurrently with the filing of the petition and first-day motions, the Debtors intend to file a motion — the Draft First-Day Motion: Approval of DIP Financing, dated January 18, 2023 — seeking interim and final approval of a $75 million superpriority debtor-in-possession credit facility (the "DIP Facility"). The DIP Facility will be provided by Nordbank International AG (as DIP Agent) and Triton Credit Partners LP, pursuant to the DIP Term Sheet received on December 15, 2022. The principal terms of the DIP Facility include:
• Facility Amount: $75,000,000
• Interest Rate: SOFR + 600 basis points
• Commitment Fee: 0.50%
• Maturity: 12 months from closing
• Priority: Superpriority administrative claim pursuant to 11 U.S.C. § 364(c)(1)
• Security: Priming liens on all collateral, subject to adequate protection for existing secured creditors
The DIP Facility is structured to finance the operations of TAI and, to the extent necessary, the SPV co-debtors on a consolidated basis. The DIP budget will allocate liquidity across the debtor entities based on their respective operational needs, vessel operating expenses, and restructuring costs.
Joint administration facilitates the Court's review and oversight of the DIP budget and adequate protection obligations across all debtor entities. A single docket and unified case management structure will enable the Court, the United States Trustee, creditors' committees, and other parties in interest to monitor the use of DIP proceeds and compliance with the DIP budget on a consolidated basis, while also preserving the ability to track each debtor entity's individual financial performance.
X. CHAPTER 11 CONTINGENCY TIMELINE CROSS-REFERENCE
The Contingency Playbook dated January 10, 2023, sets forth a detailed timeline for the Chapter 11 cases, including the following key milestones:
These milestones contemplate a restructuring process of approximately ten (10) months from petition date to emergence. The ability to meet these milestones will depend on numerous factors, including the trajectory of the shipping markets, the progress of negotiations with the Senior Secured Lender syndicate and other stakeholders, and the Court's scheduling.
Joint administration is critical to maintaining these milestones across all co-debtor cases. Separate case administration would require parallel scheduling of hearings, separate approval of each stage of the restructuring process, and duplicative filings that would inevitably slow the pace of the cases and increase costs. A unified docket and consolidated hearing schedule will enable the Debtors and all parties in interest to pursue an efficient and expeditious restructuring.
XI. NOTICE
Notice of this Motion has been provided, or will be provided at the time of filing, to the following parties:
(a) The Office of the United States Trustee for the Southern District of Texas (Houston Division);
(b) Nordbank International AG (Henrik Lüdemann, Managing Director), Bahnhofstrasse 78, 8001 Zürich, Switzerland, in its capacity as Administrative Agent and Collateral Agent under the Senior Secured Credit Facility;
(c) Whitfield, Crane & Burgess LLP (Graham Whitfield III), 51 West 52nd Street, 38th Floor, New York, New York 10019, as counsel to the Ad Hoc Group of Senior Secured Lenders;
(d) Kellner & Foss LLP (Theodore Kellner), 1185 Avenue of the Americas, 30th Floor, New York, New York 10036, as counsel to Dralvecen Mezzanine Capital LLC;
(e) Ashford, Brightmoor Group & McKay PC (Carolyn Brightmoor Group), 299 Park Avenue, 18th Floor, New York, New York 10171, as counsel to the Informal Noteholder Group;
(f) Garrison Trust Company, 100 Wall Street, 16th Floor, New York, New York 10005, as indenture trustee for the Unsecured Notes;
(g) The thirty (30) largest unsecured creditors of each Debtor; and
(h) All parties that have filed requests for notice pursuant to Bankruptcy Rule 2002.
The Debtors submit that no further notice of this Motion is required under the circumstances, and that the foregoing notice is sufficient to afford all interested parties an adequate opportunity to be heard with respect to the relief requested herein.
XII. NO PRIOR REQUEST
No prior request for the relief sought herein has been made to this or any other court.
XIII. PRAYER FOR RELIEF
WHEREFORE, the Debtors respectfully request that this Court enter an order, substantially in the form of the Proposed Order attached hereto as Exhibit A:
1. Directing the joint administration of the Chapter 11 cases of Thalassa Americas Inc. and any affiliated debtor entities filing petitions in this Court, under a single lead case number assigned to Thalassa Americas Inc.;
2. Authorizing the use of a consolidated caption for all jointly administered cases, to read: "In re Thalassa Americas Inc., et al.";
3. Directing that a single claims register be maintained by the claims and noticing agent, Pendleton Claim Services Inc., with claims coded by individual debtor entity;
4. Directing that all notices, pleadings, motions, applications, orders, and other documents be filed on the consolidated docket;
5. Granting such other and further relief as this Court deems just and proper.
Dated: January 19, 2023
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Nathaniel Bower (Responsible Partner) Amy Chesterton (Lead Associate) Nathan Ikeda (Working Associate)
780 Third Avenue New York, New York 10017 Telephone: (212) 555-4000 Facsimile: (212) 555-4001
Proposed Counsel to the Debtors
EXHIBIT A
PROPOSED ORDER DIRECTING JOINT ADMINISTRATION OF CHAPTER 11 CASES
UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION
ORDER DIRECTING JOINT ADMINISTRATION OF CHAPTER 11 CASES
Upon the Motion of the above-captioned debtors and debtors in possession (collectively, the "Debtors") for entry of an order directing joint administration of their Chapter 11 cases pursuant to Rule 1015(b) of the Federal Rules of Bankruptcy Procedure (the "Motion");^2 and the Court having reviewed the Motion; and the Court having considered the Declaration of Marcus Hale in Support of First-Day Motions (the "Hale Declaration"); and the Court having reviewed the record in these cases; and the Court having determined that the relief requested in the Motion is in the best interest of the Debtors' estates, their creditors, and all parties in interest; and the Court having found that it has jurisdiction to consider the Motion and grant the relief requested therein pursuant to 28 U.S.C. §§ 157 and 1334; and the Court having found that this is a core proceeding pursuant to 28 U.S.C. § 157(b)(2); and the Court having found that venue is proper in this district pursuant to 28 U.S.C. § 1408; and the Court having found that notice of the Motion was adequate and sufficient under the circumstances; and after due deliberation and sufficient cause appearing therefor:
^2 Capitalized terms used but not defined herein have the meanings ascribed to them in the Motion.
THE COURT HEREBY FINDS THAT:
A. The Debtors are "affiliates" within the meaning of 11 U.S.C. § 101(2), as each Debtor is directly or indirectly wholly owned by Thalassa Shipping & Logistics Société Anonyme.
B. Joint administration of the Debtors' Chapter 11 cases will promote efficiency, avoid duplicative filings, reduce administrative costs, and facilitate the orderly administration of the Debtors' estates.
C. Joint administration will benefit the Debtors' estates, their creditors, the Office of the United States Trustee, and all other parties in interest.
D. No party in interest will be prejudiced by joint administration of the Debtors' Chapter 11 cases.
E. Joint administration as contemplated herein is solely a procedural mechanism and does not constitute, and shall not be deemed to constitute, a substantive consolidation of the Debtors' estates.
IT IS HEREBY ORDERED THAT:
1. The Motion is GRANTED as set forth herein.
2. The Chapter 11 cases of Thalassa Americas Inc. and its affiliated debtors that have filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in this Court shall be, and hereby are, jointly administered under Case No. __ for procedural purposes only.
3. The caption for all jointly administered cases shall read as follows:
In re:
THALASSA AMERICAS INC., et al.,
Debtors.
Case No. __
Chapter 11
(Jointly Administered)
4. A single docket shall be maintained for all jointly administered cases. All pleadings, motions, applications, notices, orders, and other documents filed in the jointly administered cases shall be filed on the joint docket under the lead case number.
5. The claims and noticing agent, Pendleton Claim Services Inc., shall maintain a single claims register for the jointly administered cases. All claims filed in the jointly administered cases shall be coded by individual debtor entity to ensure accurate tracking, administration, and distribution.
6. This Order is without prejudice to the substantive rights of any creditor or other party in interest. Each Debtor's estate shall remain legally separate and distinct from the estate of every other Debtor. The joint administration of these cases shall not constitute, and shall not be construed to constitute, a substantive consolidation of the Debtors' estates.
7. Nothing in this Order shall be deemed to constitute a substantive consolidation of the Debtors' estates, an assumption or assignment of any contract or agreement, or a determination of the tax or other consequences of any transaction.
8. The Court retains jurisdiction to hear and determine all matters arising from or related to the implementation, interpretation, and enforcement of this Order.
9. Notwithstanding Bankruptcy Rule 6004(h), this Order shall be effective immediately upon entry.
________________________________________
UNITED STATES BANKRUPTCY JUDGE
Dated: ____
CERTIFICATE OF SERVICE
I, Nathan Ikeda, an associate at Calderwood & Harkness LLP, proposed counsel to the Debtors, hereby certify that on January 19, 2023, a true and correct copy of the foregoing Motion of Debtors for Entry of an Order Directing Joint Administration of Chapter 11 Cases and the proposed order attached thereto as Exhibit A was served upon the following parties by electronic mail and/or overnight delivery service:
(a) Office of the United States Trustee for the Southern District of Texas, Houston Division;
(b) Nordbank International AG, Attention: Henrik Lüdemann, Managing Director, Bahnhofstrasse 78, 8001 Zürich, Switzerland, as Administrative Agent and Collateral Agent under the Senior Secured Credit Facility;
(c) Whitfield, Crane & Burgess LLP, Attention: Graham Whitfield III, 51 West 52nd Street, 38th Floor, New York, New York 10019, as counsel to the Ad Hoc Group of Senior Secured Lenders;
(d) Kellner & Foss LLP, Attention: Theodore Kellner, 1185 Avenue of the Americas, 30th Floor, New York, New York 10036, as counsel to Dralvecen Mezzanine Capital LLC;
(e) Ashford, Brightmoor Group & McKay PC, Attention: Carolyn Brightmoor Group, 299 Park Avenue, 18th Floor, New York, New York 10171, as counsel to the Informal Noteholder Group;
(f) Garrison Trust Company, 100 Wall Street, 16th Floor, New York, New York 10005, as indenture trustee for the 8.25% Senior Unsecured Notes due March 1, 2025;
(g) The thirty (30) largest unsecured creditors of each Debtor, as identified on the creditor matrix filed with each Debtor's petition; and
(h) All parties that have filed requests for notice pursuant to Bankruptcy Rule 2002.
________________________________________
Nathan Ikeda Calderwood & Harkness LLP 780 Third Avenue New York, New York 10017 Telephone: (212) 555-4000
Dated: January 19, 2023