Oaktree Capital Management and Hartree Partners did not succeed in their bid to take over Aegean Marine Petroleum Network, but they still want to get paid.
The two financial firms moved in a Manhattan bankruptcy court this month seeking to recover more than $1.15m in fees and expenses after their move to buy the bankrupt bunkerer was topped by Mercuria Energy Group in December.
Oaktree and Hartree argue that their efforts were what spurred Mercuria to come back with a better offer, constituting a substantial contribution that entitles them to compensation.
“Five weeks into these Chapter 11 cases, the prospects for the debtors and their stakeholders’ recoveries were grim ... A little more than two weeks later, [Aegean’s] world had completely turned around,” said attorneys for the two firms in court papers. “That dramatic improvement in [offer] is entirely attributable to the competitive tension created by the fulsome engagement of Oaktree/Hartree.”
The $1.15m-plus figure is roughly 0.33% of the increase that the unsecured creditors will receive under Mercuria’s improved plan.
Aegean Marine, hit by what it described as a nine-figure fraud and nearly insolvent, filed for bankruptcy in November. As part of that effort, its sole lender, bunkering company Mercuria, proposed a stalking horse sale.
Bargain price
Aegean Marine’s unsecured creditors claimed that Mercuria was trying to acquire the company at a bargain price.
In December, Oaktree and Hartree pitched the unsecured creditors a plan to reorganise Aegean Marine. The creditors would receive $30m in cash and 75% of the proceeds from litigation over the possible fraud, which they allege was perpetrated by founder Dimitris Melissanidis.
Not long after, Mercuria came back with a reorganisation plan of its own under which unsecured creditors would receive $40m in cash and all the litigation proceeds.
In court papers filed late last week, the unsecured creditors argued in favour of the $1.15m award. They said no other parties had stepped forward to make an offer beyond Mercuria, which was already pumping money into Aegean Marine, “and thus no other party could have been responsible” for the improved deal.
Mercuria stated in a filing last Friday that Oaktree and Hartree were only acting in their own self-interest. “Any benefit to the estate created by Oaktree’s involvement was entirely incidental to that goal, and thus cannot be considered a ‘substantial contribution’ under the applicable case law,” the filing read.
