MEMORANDUM
INTERNAL / PRIVILEGED & CONFIDENTIAL
TO: Nathaniel Bower, Responsible Partner, Bankruptcy & Restructuring
FROM: Amy Chesterton, Lead Associate, Bankruptcy & Restructuring
DATE: July 15, 2023
RE: Matter Dormancy Designation and File Close-Down Procedures — Matter No. 1044-00003 (Thalassa Shipping & Logistics SA / Thalassa Americas Inc.)
APPROVED BY:
Nathaniel Bower Responsible Partner, Bankruptcy & Restructuring
Signature: ________
Date: ________
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1. Purpose and Summary
This memorandum formally designates Calderwood & Harkness LLP Matter No. 1044-00003 as dormant, effective July 15, 2023, in accordance with the firm's internal file management policies. The purpose of this memorandum is to document all relevant information necessary for the orderly close-down and archiving of the matter file, to confirm that all active workstreams have concluded, and to establish a clear framework for potential future reactivation should circumstances warrant.
Matter No. 1044-00003 involved Chapter 11 contingency planning for Thalassa Americas Inc. ("TAI"), a Delaware C-Corporation and wholly-owned subsidiary of Thalassa Shipping & Logistics Société Anonyme ("TSL"), a Greek société anonyme, as well as comprehensive advisory services in connection with an out-of-court restructuring of TSL's and TAI's consolidated indebtedness. The engagement encompassed the negotiation and documentation of a Restructuring Support Agreement ("RSA") with the principal creditor constituencies, cross-border coordination with Greek counsel, and related tax structuring advice.
The RSA was executed on March 14, 2023. All conditions precedent to closing were satisfied, and the RSA closing occurred on June 30, 2023 (the "RSA Effective Date"), thereby successfully consummating the out-of-court restructuring and averting a Chapter 11 filing by TAI. No Chapter 11 petition was filed, no Chapter 15 recognition proceeding was commenced on behalf of TSL, and the comprehensive contingency plan developed during the engagement was never activated.
As of the date of this memorandum, all material workstreams associated with the engagement are complete. The final invoice has been transmitted to the client, all amounts owed to the firm have been paid in full, and no outstanding billing disputes or adjustments remain pending. No further active legal work is anticipated absent reactivation of the matter. Accordingly, the matter is being placed in dormant status.
This memorandum sets forth: (i) the background of the matter and the engagement; (ii) a comprehensive chronology of key dates and milestones; (iii) a complete inventory of all documents in the file; (iv) document retention and storage procedures; (v) the status of the return of client property; (vi) final billing confirmation; (vii) the status of third-party engagement terminations; (viii) a summary of outstanding matters and open items that could potentially give rise to future advisory needs; (ix) procedures for reactivation of the matter; and (x) key contact information for all relevant parties. This memorandum, together with the appendices referenced herein, constitutes the firm's complete close-down record for the matter.
2. Matter Background
2.1 Client Identification
The clients in this matter are identified as follows:
Thalassa Shipping & Logistics Société Anonyme ("TSL") — A société anonyme organized and existing under the laws of the Hellenic Republic, with its registered headquarters and principal offices located at 42 Akti Miaouli, Piraeus 18538, Greece. TSL is the parent company of the Thalassa group of companies and is the primary operating entity for the group's global dry-bulk and container shipping operations. TSL's Greek Tax Identification Number (Αριθμός Φορολογικού Μητρώου, or "AFM") is 998214763.
Thalassa Americas Inc. ("TAI") — A C-Corporation organized and existing under the laws of the State of Delaware, with its principal office located at 1400 McKinney Street, Suite 2200, Houston, Texas 77010. TAI's registered agent in Delaware is Capitol Registered Agents LLC, located at 1209 Orange Street, Wilmington, Delaware 19801. TAI is a wholly-owned subsidiary of TSL and serves as the U.S. operational and financial hub for the Thalassa group's Western Hemisphere business, including vessel chartering, logistics coordination, port operations, and commercial management activities. TAI's Employer Identification Number ("EIN") is 84-3291057.
The engagement was structured as a joint engagement covering both TSL and TAI. Both entities were signatories to the engagement letter, and the scope of representation was expressly designed to encompass the interests of both the parent and the subsidiary in connection with the restructuring.
2.2 Engagement Overview
The engagement was formalized through an engagement letter dated October 25, 2022, addressed jointly to Georgios Andreadis, Chief Executive Officer of TSL, and Marcus Hale, President of TAI. The engagement letter was executed on behalf of the clients by both Mr. Andreadis and Mr. Hale, and on behalf of Calderwood & Harkness LLP by Nathaniel Bower, Responsible Partner, Bankruptcy & Restructuring.
The scope of the engagement, as defined in the engagement letter and as subsequently supplemented, encompassed the following principal workstreams:
(i) Chapter 11 Contingency Planning for TAI. Preparation of a comprehensive Chapter 11 contingency plan, including venue analysis, first-day motion preparation, DIP financing documentation, critical vendor analysis, executory contract review, and engagement of standby service providers (claims agent, CRO designee, and financial advisor), all in the event that the out-of-court restructuring process was unsuccessful and a Chapter 11 filing became necessary.
(ii) Negotiation of Out-of-Court Restructuring. Advisory services in connection with the negotiation and documentation of an out-of-court restructuring of TSL's and TAI's consolidated indebtedness, including the negotiation of forbearance extensions with secured lenders, the development and negotiation of an RSA term sheet, the preparation and execution of the RSA and related transaction documents, and representation of the clients through closing.
(iii) Cross-Border Coordination with Greek Counsel. Coordination with Vassiliou & Demetriou Law Offices, Greek counsel to TSL, on matters of Greek law relevant to the restructuring, including COMI (center of main interests) analysis for Chapter 15 purposes, the potential application of Greek Law 4738/2020 (the Greek Insolvency Code), and the implementation of restructuring transactions at the parent-company level.
(iv) Tax Structuring Advice. Advisory services relating to the U.S. and cross-border tax implications of the various restructuring alternatives under consideration, including cancellation of debt income, Section 108 exclusions, and the tax treatment of amendment fees and PIK capitalization.
A supplemental engagement letter dated November 5, 2022 was executed to formalize the addition of Sylvia Hartwell, Specialist Partner, Tax, to the engagement team and to expand the scope of the engagement to include the tax advisory services described in clause (iv) above. The supplemental engagement letter was addressed to the same client contacts and was executed on the same terms as the original engagement letter.
A retainer in the amount of $500,000 was deposited by TSL into the firm's client trust account on October 28, 2022, as acknowledged in a fee and retainer acknowledgment letter from TSL to Calderwood & Harkness LLP of the same date.
2.3 Engagement Team
The Calderwood & Harkness LLP engagement team for Matter No. 1044-00003 was composed of the following attorneys:
In addition, the engagement team was supported by paralegals and administrative staff within the Bankruptcy & Restructuring and Tax practice groups, as reflected in the firm's timekeeping and billing records.
2.4 Matter Outcome
The matter concluded successfully with the consummation of the out-of-court restructuring through the RSA closing on June 30, 2023 (the "RSA Effective Date"). The principal restructuring transactions, which were implemented at closing, included: (a) amendment and extension of the Senior Secured Credit Facility; (b) an amended and restated intercreditor agreement between the first-lien and second-lien creditors; (c) a mezzanine debt exchange, pursuant to which Dralvecen Mezzanine Capital LLC exchanged $112.3 million in mezzanine notes for $60 million in new second-lien notes and a 15% equity stake in TSL; (d) a €35 million equity contribution by KFO Holdings SA, the Kostandinos family holding company; (e) an amendment and restatement of the intercompany promissory note between TAI and TSL; and (f) payment of the missed unsecured note coupon.
The Chapter 11 contingency plan — including all draft pleadings, DIP financing documentation, and CRO standby arrangements — was never activated. No Chapter 11 petition was filed with any bankruptcy court. No Chapter 15 recognition proceeding was commenced. The extensive contingency planning materials remain part of the matter file, clearly marked as drafts that were never filed, and are addressed in the file inventory and document retention sections of this memorandum below.
3. Key Dates and Milestone Summary
The following chronology sets forth the principal dates and milestones relevant to Matter No. 1044-00003, from the origination of the underlying credit facilities through the dormancy designation:
4. File Inventory
The complete file for Matter No. 1044-00003 consists of seventy-five (75) documents, organized into the nine categories described below. A complete document index is attached as Appendix A. This section provides a summary description of each document within each category.
4.1 Engagement & Conflicts Documents (4 Items)
This category contains the foundational engagement and conflicts-clearance documentation for the matter.
Item 1. Engagement Letter — Calderwood & Harkness LLP to TSL and TAI (October 25, 2022). Original engagement letter defining the scope of representation, fee arrangements, billing rates, retainer terms, and terms of engagement for both client entities. Executed by Georgios Andreadis (CEO, TSL), Marcus Hale (President, TAI), and Nathaniel Bower (Responsible Partner, C&H).
Item 2. Conflicts Clearance Memorandum — Internal Calderwood & Harkness LLP (October 23, 2022). Internal memorandum documenting the results of the firm's conflicts clearance process conducted prior to the opening of the matter. The conflicts check was run against all identified parties, including: Nordbank International AG; Dralvecen Mezzanine Capital LLC; the individual members of the Ad Hoc Group of Senior Secured Lenders (Nordbank, Harborstone Capital Management LP, Triton Credit Partners LP, and CML Capital Advisors LLC); Garrison Trust Company (indenture trustee for the unsecured notes); and opposing counsel firms (Whitfield, Crane & Burgess LLP; Kellner & Foss LLP; and Ashford, Brightmoor Group & McKay PC). No disqualifying conflicts were identified.
Item 3. Supplemental Engagement Letter — Tax Advisory Scope (November 5, 2022). Supplemental engagement letter expanding the scope of the engagement to include tax advisory services and adding Sylvia Hartwell, Specialist Partner, Tax, to the engagement team. Executed on the same terms as the original engagement letter.
Item 4. Fee and Retainer Acknowledgment Letter — TSL to Calderwood & Harkness LLP (October 28, 2022). Letter from TSL acknowledging the deposit of the $500,000 retainer into the firm's client trust account and confirming the terms of the fee arrangement set forth in the engagement letter.
4.2 Chapter 11 Contingency Planning — Analysis & Memoranda (12 Items)
This category contains the analytical memoranda and research products prepared in connection with the Chapter 11 contingency planning workstream. All items in this category are classified as attorney work product and attorney-client privileged communications reflecting legal analysis, strategy, and advice.
Item 5. Preliminary Assessment Memo: Chapter 11 Viability and Venue Analysis (November 2, 2022). Memorandum assessing the viability of a Chapter 11 filing by TAI, including an analysis of the jurisdictional bases for filing in the United States Bankruptcy Court for the Southern District of Texas, Houston Division, which was identified as the preferred venue based on TAI's principal place of business and the location of its principal assets and operational infrastructure.
Item 6. Memorandum: COMI and Chapter 15 Recognition Issues for TSL (November 8, 2022). Memorandum analyzing the center of main interests (COMI) of TSL for purposes of a potential Chapter 15 recognition proceeding, including consideration of the location of TSL's registered office, its principal place of business, the location of its senior management, and the habitual residence of its creditors. The memorandum also addressed the procedural requirements and potential benefits and risks of seeking Chapter 15 recognition in conjunction with a TAI Chapter 11 case.
Item 7. Memorandum: Executory Contract and Unexpired Lease Analysis — TAI (November 22, 2022). Comprehensive analysis of TAI's executory contracts and unexpired leases, identifying contracts subject to assumption or rejection in a Chapter 11 case, estimating cure costs for assumed contracts, and assessing the impact of rejection on key commercial relationships, including time charter agreements, vessel management contracts, port services agreements, and office leases.
Item 8. Memorandum: Preference and Fraudulent Transfer Exposure Analysis (December 1, 2022). Memorandum analyzing TAI's exposure to preference claims under Section 547 of the Bankruptcy Code and fraudulent transfer claims under Sections 544 and 548, including a detailed analysis of the $76.4 million intercompany promissory note from TAI to TSL, which was identified as a potential target for recharacterization or avoidance in a bankruptcy proceeding.
Item 9. Memorandum: Intercompany Claims and Substantive Consolidation Risk (December 5, 2022). Memorandum assessing the risk that creditors or a Chapter 11 trustee might seek substantive consolidation of the estates of TAI and TSL (or, alternatively, equitable subordination of intercompany claims), analyzing the factors considered by courts in the Fifth Circuit and elsewhere in evaluating such requests, and recommending strategies to mitigate this risk.
Item 10. Memorandum: D&O Liability and Fiduciary Duty Issues in Zone of Insolvency (December 10, 2022). Memorandum addressing the fiduciary duties of TAI's directors and officers in the zone of insolvency, including the shift in duty from shareholders to the broader constituency of creditors, the application of the business judgment rule, and the protections available under the D&O insurance policy (Policy No. PII-DO-2022-08847, issued by Promontory Indemnity Insurance Co., with a $25M aggregate limit, brokered by Seaward & Beckett Insurance Brokers Ltd.).
Item 11. Tax Memorandum: Cancellation of Debt Income and §108 Exclusions (December 12, 2022). Prepared by Sylvia Hartwell. Memorandum analyzing the cancellation of debt ("COD") income implications of the various restructuring alternatives under consideration, including the applicability of the insolvency exclusion under IRC §108(a)(1)(B), the bankruptcy exclusion under §108(a)(1)(A) (relevant to the Chapter 11 contingency track), and the reduction of tax attributes under §108(b).
Item 12. Tax Memorandum: Cross-Border Tax Implications of Restructuring Alternatives (December 20, 2022). Prepared by Sylvia Hartwell. Memorandum analyzing the cross-border tax implications of the restructuring for both TAI and TSL, including the treatment of the intercompany note modification, the potential for deemed distributions or contributions to capital, withholding tax considerations, and the interaction of U.S. tax rules with the U.S.-Greece income tax treaty.
Item 13. Memorandum: Maritime Lien and Ship Mortgage Act Considerations (December 18, 2022). Memorandum analyzing the application of the Ship Mortgage Act (46 U.S.C. Chapter 313) and maritime lien law to the Thalassa fleet, including the priority of ship mortgages relative to preferred maritime liens, the treatment of maritime liens in a Chapter 11 case, and the impact of flag-state jurisdiction on enforcement of security interests in vessels.
Item 14. Memorandum: Critical Vendor and §503(b)(9) Claims Analysis (January 5, 2023). Memorandum identifying critical vendors of TAI whose continued supply of goods and services would be essential to the debtor's operations in a Chapter 11 case, estimating the aggregate amount of critical vendor claims, and analyzing the requirements for obtaining court approval of a critical vendor program, as well as the treatment of §503(b)(9) claims for goods received by the debtor in the ordinary course of business within the 20-day period prior to the petition date.
Item 15. Chapter 11 Contingency Playbook — Comprehensive Execution Plan (January 10, 2023). The comprehensive Chapter 11 execution plan, covering the full timeline from a Day 1 petition filing through a projected Day 300 effective date for a plan of reorganization. The playbook included: milestone schedules and critical-path analysis; an estimated $18.5 million in aggregate administrative costs (including professional fees, claims administration, and U.S. Trustee fees); DIP financing parameters consistent with the Nordbank/Triton term sheet ($75M facility, SOFR + 600 bps); the CRO engagement with Alderney Management Advisors LLC, with Richard "Rick" Thornberg designated as the CRO; cash management protocols; communication strategies for employees, customers, and vendors; and a detailed comparison of projected recoveries under a Chapter 11 plan versus the out-of-court restructuring.
Item 16. Memorandum: Impact of Greek Law 4738/2020 on Cross-Border Coordination (January 15, 2023). Memorandum analyzing the potential impact of Greek Law 4738/2020 (the Greek Insolvency Code, as amended) on the cross-border coordination between a U.S. Chapter 11 case for TAI and any parallel or ancillary proceedings involving TSL in Greece. Prepared with input from Alexandros Vassiliou of Vassiliou & Demetriou Law Offices, the memorandum addressed the interaction between the Greek insolvency framework and the UNCITRAL Model Law on Cross-Border Insolvency (as implemented in Chapter 15 of the U.S. Bankruptcy Code), as well as the implications of the European Insolvency Regulation (which does not apply directly to U.S. proceedings but informs the COMI analysis).
4.3 Chapter 11 Draft Pleadings — Standby / Never Filed (14 Items)
This category contains all draft pleadings prepared in connection with the Chapter 11 contingency plan. All items in this category are clearly marked "DRAFT — NOT FILED" and were never filed with any court. These documents should be flagged in the document management system to prevent inadvertent production in any future discovery or disclosure context.
Item 17. Draft Voluntary Petition — TAI (January 12, 2023). Draft voluntary petition for relief under Chapter 11 of the Bankruptcy Code for TAI, prepared for filing in the United States Bankruptcy Court for the Southern District of Texas, Houston Division. The petition identifies TAI's EIN as 84-3291057 and sets forth the debtor's basic information, estimated assets and liabilities, and the identity of the largest creditors. DRAFT — NOT FILED.
Item 18. Draft Corporate Ownership Statement (Rule 7007.1) (January 12, 2023). Draft statement of corporate ownership required under Federal Rule of Bankruptcy Procedure 7007.1 and Local Rules of the Southern District of Texas, disclosing that TAI is a wholly-owned subsidiary of TSL and that the Kostandinos family holds an approximately 80% indirect equity interest in TSL through KFO Holdings SA. DRAFT — NOT FILED.
Item 19. Draft Declaration of Marcus Hale in Support of First-Day Motions (January 14, 2023). Draft declaration of Marcus Hale, President of TAI, to be filed in support of the debtor's first-day motions, providing an overview of the debtor's business, the events leading to the financial difficulties, the prepetition restructuring efforts, and the basis for the first-day relief sought. DRAFT — NOT FILED.
Item 20. Draft First-Day Motion: Cash Management System (January 15, 2023). Draft motion seeking authorization to continue using the debtor's existing cash management system, including existing bank accounts, business forms, and intercompany payment practices, in accordance with the prepetition cash management arrangements. DRAFT — NOT FILED.
Item 21. Draft First-Day Motion: Employee Wages and Benefits (January 15, 2023). Draft motion seeking authorization to pay prepetition employee wages, salaries, commissions, reimbursable expenses, and benefits (including health insurance, retirement contributions, and related withholdings and deductions) for TAI's approximately 680 U.S. employees, within the priorities established by Section 507(a)(4) and (a)(5) of the Bankruptcy Code. DRAFT — NOT FILED.
Item 22. Draft First-Day Motion: Critical Vendors (January 16, 2023). Draft motion seeking authorization to pay the prepetition claims of critical vendors in the ordinary course of business, consistent with the critical vendor analysis set forth in Item 14. DRAFT — NOT FILED.
Item 23. Draft First-Day Motion: Prepetition Taxes (January 16, 2023). Draft motion seeking authorization to pay prepetition taxes, including federal, state, and local income taxes, sales and use taxes, property taxes, and employment taxes, to the extent necessary to avoid penalties, liens, or other enforcement actions that could adversely affect the debtor's estate. DRAFT — NOT FILED.
Item 24. Draft First-Day Motion: Insurance Policies (January 17, 2023). Draft motion seeking authorization to continue and renew the debtor's insurance policies, including hull and machinery insurance, protection and indemnity insurance, directors and officers liability insurance, and general commercial liability insurance, in the ordinary course of business. DRAFT — NOT FILED.
Item 25. Draft First-Day Motion: DIP Financing — Interim and Final (January 18, 2023). Draft motion seeking interim and final approval of a $75 million superpriority debtor-in-possession credit facility to be provided by Nordbank International AG and Triton Credit Partners LP, bearing interest at SOFR + 600 basis points, with an interim draw of $30 million. DRAFT — NOT FILED.
Item 26. Draft Interim DIP Order (January 18, 2023). Draft order granting interim approval of the DIP facility, authorizing an interim draw of $30 million, and providing adequate protection to prepetition secured creditors. DRAFT — NOT FILED.
Item 27. Draft Final DIP Order (January 18, 2023). Draft order granting final approval of the DIP facility on substantially the same terms as the interim order, authorizing access to the full $75 million commitment. DRAFT — NOT FILED.
Item 28. Draft Motion for Joint Administration (January 19, 2023). Draft motion seeking joint administration of any bankruptcy cases filed by TAI and any affiliated debtors for procedural convenience, without substantive consolidation. DRAFT — NOT FILED.
Item 29. Draft Application to Retain Calderwood & Harkness LLP (January 20, 2023). Draft application pursuant to Section 327(a) of the Bankruptcy Code seeking approval of the retention of Calderwood & Harkness LLP as debtor's counsel, including the required disclosures under Bankruptcy Rule 2014. DRAFT — NOT FILED.
Item 30. Draft Application to Retain Kensington Veltrian Partners LLC (January 20, 2023). Draft application seeking approval of the retention of Kensington Veltrian Partners LLC as financial advisor to the debtor, with a proposed fee structure of $250,000 per month, a completion fee of $4.5 million (in the event of a successful restructuring or sale), and a filing fee of $2.0 million (in the event a Chapter 11 petition is filed). DRAFT — NOT FILED.
Note: All fourteen draft pleadings in this category bear the watermark "DRAFT — NOT FILED" on each page. None of these documents were filed with the United States Bankruptcy Court for the Southern District of Texas or with any other court. The documents are retained in the file as attorney work product reflecting the Chapter 11 contingency planning effort and should be treated accordingly for privilege and confidentiality purposes.
4.4 DIP Financing Documents — Standby (3 Items)
This category contains the documents prepared in connection with the proposed DIP financing facility that was negotiated as part of the Chapter 11 contingency plan. The DIP facility was never funded, and the DIP Credit Agreement was never executed.
Item 31. DIP Credit Agreement — Marked Draft (December 22, 2022). Full-form draft credit agreement for the proposed $75 million DIP facility, in marked draft form with C&H's comments and proposed revisions. The DIP Credit Agreement was never executed. DRAFT — NOT EXECUTED.
Item 32. DIP Term Sheet — Annotated Comments of Calderwood & Harkness LLP (December 18, 2022). The DIP Term Sheet received from Nordbank International AG and Triton Credit Partners LP, annotated with C&H's comments and analysis. Principal terms: $75 million commitment; interest rate of SOFR + 600 basis points; 0.50% commitment fee; 12-month maturity from petition date; superpriority administrative expense claim status; priming lien on substantially all assets of TAI.
Item 33. Memorandum: DIP Budget and Adequate Protection Analysis (January 8, 2023). Memorandum analyzing the proposed DIP budget, the adequacy of the proposed DIP facility to fund the debtor's operations through the anticipated plan confirmation timeline, and the adequate protection package proposed for prepetition secured creditors. The memorandum includes a detailed analysis of the fleet valuation ($623 million per the November 2022 Drakos Maritime appraisal), the outstanding balance on the senior secured facility ($540 million), the mezzanine note balance ($112.3 million), and the resulting equity cushion analysis.
4.5 Forbearance Agreement & Extensions (5 Items)
This category contains the forbearance agreement and related documents that governed the standstill period during which the restructuring was negotiated.
Item 34. Forbearance Agreement — Executed Version, Calderwood & Harkness LLP Annotated Copy (October 10, 2022; annotations post-engagement). The executed Forbearance Agreement between TAI, TSL, Nordbank International AG (as administrative agent), and the consenting lenders, establishing a 90-day standstill through January 8, 2023. The Forbearance Agreement was executed prior to the opening of the C&H engagement; the annotations were added by C&H post-engagement as part of the initial review and analysis. The original executed copy is held by Nordbank as administrative agent; C&H retains the annotated copy only.
Item 35. First Amendment to Forbearance Agreement (January 8, 2023). Extending the standstill period from January 8, 2023 to March 8, 2023, with certain additional milestones and reporting obligations added as conditions to the extension.
Item 36. Second Amendment to Forbearance Agreement (March 8, 2023). Extending the standstill period from March 8, 2023 to April 7, 2023, contingent on the execution of the RSA by no later than March 31, 2023. The RSA was in fact executed on March 14, 2023.
Item 37. Memorandum: Analysis of Forbearance Agreement Terms and Risks (October 30, 2022). Memorandum providing a detailed analysis of the terms, conditions, and risks associated with the Forbearance Agreement, including the default interest rate (SOFR + 575 basis points), the milestones required to be achieved during the standstill period, the reporting and information-sharing obligations imposed on the borrowers, the termination events that could cause the forbearance to lapse, and the potential strategic implications of a forbearance termination.
Item 38. Letter to Whitfield, Crane & Burgess LLP re Forbearance Extension Negotiations (January 3, 2023). Letter from C&H to Graham Whitfield III of Whitfield, Crane & Burgess LLP (counsel to the Ad Hoc Group of Senior Secured Lenders) proposing terms for the first extension of the Forbearance Agreement and outlining the progress made toward an RSA framework.
4.6 Out-of-Court Restructuring — RSA & Transaction Documents (16 Items)
This category contains the core transaction documents for the out-of-court restructuring, including the RSA and all related definitive agreements, as well as the analytical memoranda prepared in support of the restructuring negotiations.
Item 39. RSA Term Sheet — Calderwood & Harkness LLP Initial Draft (February 3, 2023). The initial draft of the RSA term sheet prepared by C&H, setting forth the proposed terms of the restructuring for circulation to the client and, upon client approval, to the creditor constituencies.
Item 40. RSA Term Sheet — Revised Draft reflecting Ad Hoc Group Comments (February 10, 2023). Revised version of the RSA term sheet incorporating comments received from the Ad Hoc Group of Senior Secured Lenders through their counsel, Whitfield, Crane & Burgess LLP. The Ad Hoc Group consisted of: Nordbank International AG ($137M exposure), Harborstone Capital Management LP ($95M exposure), Triton Credit Partners LP ($68M exposure), and CML Capital Advisors LLC ($72M exposure), representing an aggregate exposure of $372M, or approximately 54.3% of the $685M senior secured facility.
Item 41. Restructuring Support Agreement — Execution Version (March 14, 2023). The fully executed Restructuring Support Agreement, setting forth the agreed terms of the out-of-court restructuring, the obligations of the parties (including the milestones for the negotiation and execution of definitive documentation), the conditions precedent to closing, and the termination events. Executed by TAI, TSL, KFO Holdings SA, Nordbank International AG (as administrative agent), and all nine consenting lenders.
Item 42. Amendment No. 1 to Senior Secured Credit Agreement (May 15, 2023). The amendment to the Senior Secured Credit Agreement implementing the agreed restructuring terms, including: extension of the maturity date to June 15, 2027; conversion of $75 million of Term Loan A principal to PIK (payment-in-kind); reduction of the revolving credit facility commitment to $150 million; reset of financial covenants (Maximum Net Leverage Ratio at 7.00x, stepping down to 6.50x by Q4 2024 and 5.50x by Q4 2025; Minimum Liquidity reduced to $30M; Interest Coverage Ratio waived through Q4 2023 and then set at 2.00x, stepping up to 2.50x by Q4 2025); an amendment fee of $5.4 million applied as PIK (added to the outstanding principal); and retroactive waiver of default interest accrued during the forbearance period.
Item 43. Amended and Restated Intercreditor Agreement (May 15, 2023). The amended and restated intercreditor agreement between Nordbank International AG (as first-lien agent) and Dralvecen Mezzanine Capital LLC (as second-lien creditor), reflecting the new capital structure following the mezzanine exchange and the issuance of the new second-lien notes.
Item 44. New Second-Lien Note Purchase Agreement — Dralvecen Mezzanine Capital LLC (May 18, 2023). The note purchase agreement governing the issuance of $60 million in new second-lien notes to BMC, bearing interest at 10.0% PIK, with a maturity date of June 2028, issued in connection with the mezzanine exchange.
Item 45. New Second-Lien Notes Indenture (May 18, 2023). The indenture governing the new second-lien notes, with Garrison Trust Company serving as indenture trustee.
Item 46. Equity Subscription Agreement — KFO Holdings SA (May 22, 2023). The equity subscription agreement pursuant to which KFO Holdings SA, the Kostandinos family holding company, subscribed for newly issued equity in TSL in the amount of €35 million (approximately $38.2 million at the applicable exchange rate of €1 = $1.0914).
Item 47. Amended and Restated Intercompany Promissory Note — TAI to TSL (May 25, 2023). The amended and restated intercompany promissory note evidencing the $76.4 million loan from TSL to TAI, as modified to reduce the interest rate from 5.0% to 2.0% per annum and to extend the maturity date to December 2028.
Item 48. Joinder Agreement — Consenting Lenders to RSA (March 14, 2023). The joinder agreement pursuant to which all nine senior secured lenders became parties to the RSA as consenting lenders.
Item 49. Consent and Waiver Letter — Garrison Trust Company (March 20, 2023). Letter from Garrison Trust Company, as indenture trustee for the $50M Senior Unsecured Notes, consenting to the RSA and waiving the event of default arising from the missed December 2022 coupon payment, conditioned upon payment in full of the missed coupon at or prior to the RSA closing.
Item 50. Memorandum: RSA Negotiation Strategy and Stakeholder Analysis (January 25, 2023). Internal memorandum setting forth the recommended negotiation strategy for the RSA, including an analysis of the interests, leverage, and likely positions of each creditor constituency (senior secured lenders, mezzanine lenders, unsecured noteholders, and equity holders), and recommended approaches for achieving consensus.
Item 51. Memorandum: Comparison of Out-of-Court Deal vs. Chapter 11 Outcomes (February 15, 2023). Memorandum presenting a detailed comparison of the projected economic outcomes for each stakeholder group under the proposed out-of-court restructuring versus a Chapter 11 reorganization, including estimated recovery percentages, timeline differences, and administrative cost differentials.
Item 52. Memorandum: Amendment Fee and PIK Capitalization Tax Treatment (May 5, 2023). Prepared by Sylvia Hartwell. Memorandum analyzing the tax treatment of the $5.4 million amendment fee applied as PIK, including the timing of income recognition and the deductibility of the fee, as well as the broader tax implications of the PIK conversion of $75 million in Term Loan A principal.
Item 53. Side Letter Agreement: Vessel Disposition Undertaking — 6 Vessels (March 14, 2023). Side letter agreement, executed concurrently with the RSA, pursuant to which TSL undertook to sell six older dry-bulk carriers from the Thalassa fleet within twelve months of the RSA execution date (i.e., by approximately March 14, 2024) for estimated aggregate proceeds of approximately $72 million, with net proceeds to be applied to prepay Term Loan A under the Senior Secured Credit Agreement.
Item 54. Lock-Up Agreement — Dralvecen Mezzanine Capital LLC (March 14, 2023). Lock-up agreement pursuant to which BMC agreed to exchange its $112.3 million in mezzanine notes for $60 million in new second-lien notes and a 15% equity stake in TSL, representing a debt haircut of approximately 46.6%.
4.7 Closing Deliverables & Opinions (8 Items)
This category contains the documents delivered at or in connection with the RSA closing on June 30, 2023.
Item 55. Closing Checklist — RSA Transactions (June 28, 2023). Comprehensive closing checklist identifying all documents to be executed and delivered, all conditions precedent to be satisfied, and all funds flows to be completed at the RSA closing.
Item 56. Closing Memorandum (June 30, 2023). Memorandum summarizing the events of the RSA closing, confirming that all conditions precedent were satisfied and all deliverables were received, and identifying any post-closing obligations.
Item 57. Calderwood & Harkness LLP Legal Opinion: Due Authorization and Enforceability — TAI (June 30, 2023). Legal opinion letter issued by Calderwood & Harkness LLP, addressed to Nordbank International AG in its capacity as administrative agent and to the senior secured lenders, opining as to the due authorization, execution, delivery, and enforceability of the RSA and the related transaction documents executed by TAI. Subject to customary assumptions, qualifications, and exceptions.
Item 58. Calderwood & Harkness LLP Legal Opinion: No Conflicts / No Violations — TAI (June 30, 2023). Legal opinion letter issued by Calderwood & Harkness LLP, addressed to Nordbank International AG in its capacity as administrative agent and to the senior secured lenders, opining that the execution, delivery, and performance by TAI of the RSA and related transaction documents do not conflict with or violate TAI's organizational documents, applicable Delaware law, or certain specified agreements. Subject to customary assumptions, qualifications, and exceptions. Original opinion letters delivered to Nordbank; file copies retained by C&H.
Item 59. Secretary's Certificate — TAI (June 30, 2023). Certificate of the corporate secretary of TAI certifying: (a) the certificate of incorporation of TAI, as amended; (b) the bylaws of TAI, as amended; (c) resolutions of the board of directors of TAI authorizing the execution, delivery, and performance of the RSA and related transaction documents; and (d) the incumbency and specimen signatures of Marcus Hale (President) and Diana Restrepo (Vice President, Finance).
Item 60. Officer's Certificate — TAI, signed by Marcus Hale (June 30, 2023). Certificate of Marcus Hale, President of TAI, certifying the accuracy of certain representations and warranties and the satisfaction of certain conditions precedent to closing, as required by the RSA.
Item 61. Solvency Certificate — TAI, signed by Diana Restrepo (June 30, 2023). Certificate of Diana Restrepo, Vice President of Finance of TAI, certifying the solvency of TAI after giving effect to the restructuring transactions consummated at closing.
Item 62. Funds Flow Memorandum (June 29, 2023). Memorandum setting forth the agreed funds flows for the RSA closing, including: (a) the KFO Holdings SA equity contribution of €35 million (approximately $38.2 million); (b) payment of the missed December 2022 unsecured note coupon of $2,062,500 to Garrison Trust Company; (c) the $5.4 million amendment fee applied as PIK (added to outstanding principal); (d) payment of Calderwood & Harkness LLP fees and disbursements; and (e) payment of the Kensington Veltrian Partners LLC completion fee of $4.5 million.
4.8 Correspondence (10 Items)
This category contains the external correspondence generated during the engagement, including letters and emails to and from opposing counsel, clients, and third parties.
Item 63. Letter to Nordbank International AG (Henrik Lüdemann) re Engagement Introduction and Information Requests (October 27, 2022). Letter from Nathaniel Bower to Henrik Lüdemann, Managing Director of Nordbank International AG, introducing Calderwood & Harkness LLP as counsel to TSL and TAI in connection with the restructuring, requesting certain information and documents, and establishing lines of communication.
Item 64. Email from Nathaniel Bower to Georgios Andreadis re Initial Strategy Call Recap (October 31, 2022). Email summarizing the initial strategy call between C&H and the client's senior management, confirming the dual-track approach to be pursued (i.e., simultaneous negotiation of an out-of-court restructuring while preparing a Chapter 11 contingency plan).
Item 65. Letter to Whitfield, Crane & Burgess LLP re Proposed Restructuring Framework (January 30, 2023). Letter from Nathaniel Bower to Graham Whitfield III of Whitfield, Crane & Burgess LLP, counsel to the Ad Hoc Group of Senior Secured Lenders, presenting the client's proposed restructuring framework and inviting engagement on the terms.
Item 66. Letter to Kellner & Foss LLP re Mezzanine Exchange Proposal (February 6, 2023). Letter from Amy Chesterton to Theodore Kellner of Kellner & Foss LLP, counsel to Dralvecen Mezzanine Capital LLC, presenting the proposed terms of the mezzanine exchange and the corresponding equity allocation.
Item 67. Letter to Ashford, Brightmoor Group & McKay PC re Treatment of Unsecured Notes under RSA (February 8, 2023). Letter from Amy Chesterton to Carolyn Brightmoor Group of Ashford, Brightmoor Group & McKay PC, counsel to the unsecured noteholders, summarizing the proposed treatment of the $50M Senior Unsecured Notes under the RSA (i.e., reinstatement on existing terms following cure of the missed coupon).
Item 68. Email from Amy Chesterton to Priya Nandakumar re RSA Markup Schedule (February 22, 2023). Email coordinating the schedule for the exchange of RSA markups among counsel and establishing the timeline for the negotiation of the definitive RSA documentation.
Item 69. Email from Nathaniel Bower to Dimitrios Kostandinos & Georgios Andreadis re RSA Execution Confirmation (March 14, 2023). Email confirming the execution of the RSA by all parties, summarizing the key terms and conditions, and outlining the next steps for the negotiation and execution of the definitive transaction documents.
Item 70. Letter to Vassiliou & Demetriou Law Offices re Greek Law Coordination on RSA Closing (May 10, 2023). Letter from Amy Chesterton to Alexandros Vassiliou of Vassiliou & Demetriou Law Offices, coordinating the Greek law aspects of the RSA closing, including the equity subscription by KFO Holdings SA, the amendment of the intercompany promissory note, and the registration of the equity issuance with the Greek General Commercial Registry (GEMI).
Item 71. Email from Colette Whitman to Irini Dalakoura re Final Invoice and Matter Dormancy (July 15, 2023). Email transmitting the final invoice for professional fees and disbursements and notifying the client of the firm's intention to place the matter in dormant status. The email confirmed total professional fees of $3,847,250, total disbursements of $142,680, and a grand total of $3,989,930.
Item 72. Letter to Pendleton Claim Services Inc. re Termination of Standby Engagement (July 10, 2023). Formal termination letter sent to Laura Pendleton, President of Pendleton Claim Services Inc., at 1601 Elm Street, Suite 4200, Dallas, Texas 75201, confirming the termination of the standby engagement for claims and noticing agent services and confirming that no amounts were owed to Pendleton.
4.9 Internal / Administrative Documents (3 Items, Including This Memorandum)
This category contains the internal administrative documents generated in connection with the opening, management, and close-down of the matter.
Item 73. Internal Matter Opening Memorandum (October 25, 2022). Internal memorandum documenting the opening of Matter No. 1044-00003, the results of the conflicts clearance process, the assignment of the engagement team, and the establishment of the billing arrangement.
Item 74. Staffing Plan and Budget Estimate Memorandum (October 26, 2022). Internal memorandum setting forth the proposed staffing plan for the engagement, the estimated budget range for the Chapter 11 contingency planning and out-of-court restructuring workstreams, and the allocation of responsibilities among the engagement team members.
Item 75. This Matter Dormancy Memorandum (July 15, 2023). The present memorandum, formally designating the matter as dormant and setting forth the file close-down procedures.
Total Documents in File: 75
5. Document Retention and Storage
5.1 Document Classification
All documents in the file for Matter No. 1044-00003 are categorized as Attorney Work Product and/or Attorney-Client Privileged Communication, and all are subject to the protections afforded by the attorney-client privilege, the work product doctrine, and such other applicable privileges and protections as may exist under federal and state law. No document in the file should be disclosed to any third party without the express prior authorization of the responsible partner and appropriate consultation with the firm's general counsel regarding privilege implications.
Within the overall privilege classification, the following sub-categories have been specifically flagged for purposes of retention and access control:
Privileged & Confidential Memoranda (Items 5–16, 33, 37, 50–52). These items constitute analysis memoranda reflecting legal strategy, legal research, and legal advice provided to the client. They represent the core attorney work product of the engagement and are entitled to the highest level of protection. These memoranda should be flagged in the document management system with the designation "PRIVILEGED — ATTORNEY WORK PRODUCT — DO NOT PRODUCE" and should not be disclosed to any party outside the firm without the express written authorization of the responsible partner and, where appropriate, the client.
Draft Pleadings — Never Filed (Items 17–30). These items are draft court filings that were prepared as part of the Chapter 11 contingency plan but were never filed with any court. All drafts are clearly marked with the watermark "DRAFT — NOT FILED." These documents are to be retained in the file but must be flagged in the document management system with a conspicuous notation to prevent inadvertent production in any future discovery, disclosure, or document-sharing context. The notation should read: "DRAFT PLEADING — NEVER FILED — ATTORNEY WORK PRODUCT — DO NOT PRODUCE WITHOUT PARTNER AUTHORIZATION."
Executed Transaction Documents (Items 34–36, 41–49, 53–54). The firm retains copies of all executed transaction documents. The original executed versions are held by the parties to the respective agreements. The firm's copies are maintained for reference and to support any future advisory work or potential reactivation of the matter.
Legal Opinions (Items 57–58). The original opinion letters were delivered to Nordbank International AG in its capacity as administrative agent on behalf of the senior secured lenders at the RSA closing on June 30, 2023. File copies of the opinion letters are retained by the firm.
Correspondence (Items 63–72). External communications with opposing counsel, clients, and third parties generated during the engagement. These communications may contain privileged information and should be treated accordingly.
Internal Administrative (Items 1–4, 73–75). Engagement documents, conflicts clearance documentation, staffing and budgeting records, and this dormancy memorandum.
5.2 Physical File Inventory
The matter was handled primarily on a paperless basis, and the firm's document management system contains the complete electronic file for Matter No. 1044-00003. The electronic file is comprehensive and includes all documents listed in Section 4 above, organized in sub-folders that mirror the nine categories described therein.
To the extent that any physical documents exist — including the original counterpart of the engagement letter (Item 1), the fee and retainer acknowledgment letter (Item 4), and any hard-copy correspondence — such physical documents are to be boxed, labeled with the matter number 1044-00003 and the client names "Thalassa Shipping & Logistics SA / Thalassa Americas Inc.," and sent to the firm's off-site storage facility in accordance with the firm's standard procedures for physical file archival. The original engagement letter and fee acknowledgment letter (physical counterparts) shall be retained in the physical file and are not to be destroyed during the retention period.
5.3 Retention Period
In accordance with Calderwood & Harkness LLP's Document Retention Policy (as most recently amended, effective January 1, 2022), all files for Matter No. 1044-00003 shall be retained for a minimum of ten (10) years from the dormancy date, i.e., through at least July 15, 2033.
However, given the cross-border nature of the matter, the complexity of the debt restructuring, and the potential for future disputes — including, without limitation, potential recharacterization claims relating to the intercompany note, covenant compliance issues under the amended Senior Secured Credit Agreement (with financial covenant step-downs running through Q4 2025), vessel disposition obligations under the Side Letter Agreement (running through approximately March 14, 2024), and the potential for governance or equity-related disputes involving Dralvecen Mezzanine Capital following the mezzanine exchange — a recommendation is hereby made to extend the retention period to twelve (12) years, i.e., through July 15, 2035. This recommendation is made in the exercise of professional judgment and is subject to the approval of the responsible partner.
In addition, the tax-related work product in the file — specifically Items 11, 12, and 52 — should be retained for at least seven (7) years following the applicable tax return filing dates for TSL and TAI for the relevant tax years, consistent with the Internal Revenue Service's statute of limitations for assessment and collection under IRC §6501 and related provisions. To the extent that the tax return filing dates are not within the firm's knowledge, the seven-year period should be measured from the later of (a) the filing deadline (including extensions) for the 2023 tax year or (b) the actual filing date, as reported by the client.
5.4 Electronic File Organization
All electronic files are stored in the firm's document management system ("DMS") under Matter No. 1044-00003. The electronic file is organized into the following sub-folders, which mirror the nine categories set forth in Section 4 above:
1. Engagement & Conflicts Documents
2. Chapter 11 Contingency Planning — Analysis & Memoranda
3. Chapter 11 Draft Pleadings — Standby / Never Filed
4. DIP Financing Documents — Standby
5. Forbearance Agreement & Extensions
6. Out-of-Court Restructuring — RSA & Transaction Documents
7. Closing Deliverables & Opinions
8. Correspondence
9. Internal / Administrative Documents
DMS access to the matter file is to be restricted, effective upon the dormancy designation, to the following personnel: Nathaniel Bower (Responsible Partner), Colette Whitman (Billing Partner), Amy Chesterton (Lead Associate), Nathan Ikeda (Working Associate), and Sylvia Hartwell (Specialist Partner, Tax). Firm administrator access shall be maintained for records management and systems administration purposes. No other personnel shall have access to the matter file without the express authorization of the responsible partner.
6. Return of Original Documents and Client Property
Upon the designation of the matter as dormant, all original client documents and client property in the possession of Calderwood & Harkness LLP are to be returned to the client, subject to the firm's right to retain copies in its electronic file.
The following items are identified for return to the client:
(a) Original Executed Engagement Letter. The original executed counterpart of the engagement letter (Item 1) will be returned to the client. A copy is retained in the firm's file.
(b) Original Client Documents. All original client documents received from TSL and/or TAI during the course of the engagement — including financial statements, board minutes, corporate records, organizational documents, and other materials provided by the client for review and analysis — are to be returned to the client. At the client's election, these documents may be returned to:
• Irini Dalakoura, Chief Financial Officer, TSL, at 42 Akti Miaouli, Piraeus 18538, Greece; or
• Diana Restrepo, Vice President of Finance, TAI, at 1400 McKinney Street, Suite 2200, Houston, Texas 77010.
The client should be contacted to confirm the preferred delivery address and any specific shipping or handling instructions.
(c) Forbearance Agreement (Item 34). The Forbearance Agreement was received prior to the opening of the C&H engagement and was annotated by C&H post-engagement. The original executed copy of the Forbearance Agreement is held by Nordbank International AG in its capacity as administrative agent. C&H retains its annotated copy only, and no original is in the firm's possession.
(d) Drakos Maritime Valuations Appraisal Report. The Drakos Maritime Valuations fleet appraisal dated November 1, 2022 (fleet value: $623 million) is client property. An electronic copy is retained in the firm's file. The original report (if in physical form) is to be returned to the client.
Copies of all client-provided documents are retained in the firm's electronic file as part of the complete matter record. The retention of copies does not constitute an assertion of any proprietary interest in the documents by the firm; such retention is solely for the purpose of maintaining a complete record of the engagement in accordance with the firm's professional obligations and document retention policies.
7. Final Billing Confirmation
The final invoice for Matter No. 1044-00003 was transmitted by Colette Whitman, Billing Partner, to Irini Dalakoura, Chief Financial Officer of TSL, on July 15, 2023, concurrent with the issuance of this memorandum.
The billing summary for the matter is as follows:
The $500,000 retainer deposited by TSL on October 28, 2022 was applied against outstanding invoices during the course of the engagement in accordance with the terms of the engagement letter. The retainer has been fully applied, and no retainer balance remains in the firm's client trust account.
The following billing rates were applied throughout the engagement:
All invoices issued during the course of the engagement have been paid in full, and no outstanding balance remains. No fee disputes, billing adjustments, or alternative fee arrangements are pending. The firm's accounts receivable records confirm that the account for Matter No. 1044-00003 carries a zero balance as of July 15, 2023.
A detailed billing statement summary is attached as Appendix B.
8. Third-Party Engagement Terminations
During the course of the engagement, Calderwood & Harkness LLP coordinated with and, in certain instances, engaged or oversaw the engagement of third-party service providers in connection with the Chapter 11 contingency plan and the out-of-court restructuring. The status of each such third-party engagement as of the dormancy date is set forth below.
8.1 Pendleton Claim Services Inc.
Pendleton Claim Services Inc. was engaged on a standby basis, pursuant to a standby engagement letter dated November 15, 2022, to serve as claims and noticing agent in the event that TAI filed a Chapter 11 petition. The Chapter 11 petition was never filed, and Pendleton's services were never activated.
A formal termination letter was sent to Laura Pendleton, President of Pendleton Claim Services Inc., at 1601 Elm Street, Suite 4200, Dallas, Texas 75201, on July 10, 2023 (Item 72 in the file inventory). The termination letter confirmed the termination of the standby engagement effective immediately and requested written acknowledgment of termination.
It is confirmed that no amounts are owed to Pendleton in connection with the standby engagement. No activation fees, standby fees, or reimbursable expenses were incurred.
8.2 Alderney Management Advisors LLC
Alderney Management Advisors LLC was engaged on a standby basis to provide interim management and Chief Restructuring Officer ("CRO") services in the event of a Chapter 11 filing. Richard "Rick" Thornberg was designated as the CRO. Alderney's services were never deployed.
It is noted that Alderney's engagement was entered into directly between TSL/TAI and Alderney, and not through Calderwood & Harkness LLP. Accordingly, the responsibility for formally terminating the Alderney engagement rests with the client. It is recommended that Calderwood & Harkness LLP follow up with Marcus Hale (President, TAI) to confirm that the client has separately terminated the Alderney standby engagement, or to offer assistance in doing so if requested.
8.3 Other Advisors — Status
The following additional advisors were engaged by the client or by other parties during the course of the restructuring:
Kensington Veltrian Partners LLC (Financial Advisor to TSL/TAI). James Calloway, Managing Director, served as lead engagement partner. The Kensington Veltrian engagement concluded upon payment of the $4.5 million completion fee at the RSA closing on June 30, 2023. No further action is required by Calderwood & Harkness LLP.
Draycott Advisory Group LLC (Financial Advisor to Ad Hoc Group). Vanessa Chow, Partner, served as the lead financial advisor to the Ad Hoc Group of Senior Secured Lenders. Draycott was not engaged by or through Calderwood & Harkness LLP, and no action is required by the firm.
Vassiliou & Demetriou Law Offices (Greek Counsel to TSL). Alexandros Vassiliou, Lead Partner, served as Greek counsel to TSL throughout the restructuring. The Vassiliou & Demetriou engagement was entered into directly between TSL and Vassiliou & Demetriou, and the status of that engagement is for the client to confirm independently. No action is required by Calderwood & Harkness LLP, though the client may wish to confirm whether the Greek counsel engagement remains active for other purposes or has been separately concluded.
9. Outstanding Matters and Open Items
Although all material workstreams associated with Calderwood & Harkness LLP's engagement have been completed and the matter is being placed in dormant status, the following items are identified as potentially giving rise to future advisory needs and should be monitored for purposes of determining whether reactivation of the matter may be warranted.