Greek owner Toisa has submitted a bankruptcy reorganisation plan in the US that aims to tackle $542m of claims against it.
In a disclosure statement filed with the Southern District of New York bankruptcy court, it said it had been in talks with lenders including ING, Commerzbank, DNB, Citi and DVB.
A general consensus has been reached with secured lenders and the creditors’ committee, but further amendments are expected ahead of a disclosure hearing on 24 January.
The scheme allows the Toisa company debtors to liquidate all assets and "address their liabilities in an orderly manner," the statement said.
"The plan provides for the distribution of substantially all of the debtors’ assets, including proceeds from the completed, ongoing, and future sale or assignment of substantially all of the debtors’ assets," it added.
This includes tankers, bulkers, OSVs and newbuilding contracts.
An administrator will be appointed to liquidate and wind down any remaining assets not sold prior to the effective date of the plan.
The statement said: "The debtors believe that the liquidation contemplated by the plan is in the best interests of its creditors.
Legal trouble could follow rejection
"If the plan is not confirmed and the settlements with and releases of the debtors’ various creditors and stakeholders are not approved, the debtors believe that they will be forced to liquidate in a manner that will likely result in litigation with its various creditors."
Chapter 7 liquidation cases could follow in that event, along with lower recovery levels.
Toisa has not been making principal repayments on loans, but has made regular interest payments, the statement revealed.
The claims total includes $159.2m of secured claims and $287.6m of unsecured ones.
This is down from $1.69bn previously, as some claims have been reduced through negotiations.
One claim that has been resolved in Toisa's favour is that arising from a 2014 order at Shanghai Zhenhua Heavy Industries in China of a diving support vessel (DSV).
The yard did not deliver the ship on time, but submitted a claim seeking damages of not less than $149.8m in the event that the debtors rejected the contract.
In March 2018, Toisa served Shanghai Zhenhua with a notice in which it lawfully cancelled the deal.
Shanghai Zhenhua responded by asserting that the termination was unlawful and said Toisa could not have completed the project to due to financial problems.
Arbitration started in London in April last year and ended with a settlement agreement that Shanghai Zhenhua will pay Toisa $20.3m and both sides would then waive their respective claims.
Toisa and 23 subsidiaries filed for bankruptcy early last year.
It listed $1.77bn in assets, including 23 offshore vessels directly owned by Toisa, as well as three offshore vessels, 13 tankers and seven bulkers owned by other subsidiaries.
More sales to come
The statement confirms the sale of 20 tankers and bulkers, including a deal for the 82,000-dwt bulker Trade Prosperity (built 2016) that is due to close by the end of January.
A total of four PSVs have also gone, and 12 more OSVs are expected to be sold before the end of February, including the 4,200-dwt PSVs Toisa Crest (built 1999), 4,400-dwt Toisa Independent (built 2003) and 4,700-dwt Toisa Invincible (built 1998).
In addition, in a separate process, the sales of the 103-loa laid-up diving support vessel (DSV) Toisa Paladin and the 131-loa support ship Toisa Pegasus (both built 2008) - also stacked - have been agreed at $20.35m and $38.95m respectively.
These should also be disposed of by the end of next month.
