A filing in the Bouchard Transportation Co. Chapter 11 bankruptcy case paints a sobering picture of how one of America’s longest established maritime companies found itself plunged into a liquidity crisis, falling behind in crew wage payments, unable to maintain vessels in regulatory compliance and facing multiple vessels being scheduled for foreclosure sales.
In the filing with the U.S. Bankruptcy Court for the Southern District of Texas Houston Division, dated October 12, Matthew Ray of Portage Point Partners LLC, who is Bouchard’s proposed Chief Restructuring Officer, says that “the company’s path to the commencement of these chapter 11 cases can be traced back to a tragedy in October 2017,” when the ATB Unit Buster Bouchard/B. No. 255, caught fire and exploded off the coast of Port Aransas, Texas, resulting in the death of two crewmembers and the release of 2,000 barrels of crude oil from the barge.
“The resulting litigation, environmental costs, and public hearings conducted by the Coast Guard, exacerbated by general industry headwinds, ultimately precipitated a steady decline in both revenue and liquidity, severely straining operations throughout 2017 and 2018,” says the filing.
The filing says that despite Bouchard’s best efforts, “in December 2019, the company’s classification society, the American Bureau of Shipping (‘ABS’), cancelled its longstanding contract with Bouchard. The United States Coast Guard (the ‘Coast Guard’) subsequently lifted Bouchard’s document of compliance certification (the ‘DOC Certificate’ or “DOC”). Bouchard’s major customers require a DOC.
“Without requisite regulatory certifications, Bouchard could not service customers or generate positive cash flow. Out-of-court funding sources were tapped and then dried up. Non-core asset sales could not close on the necessary timeline. COVID-19 adversely impacted Bouchard’s efforts and industry demand. The Bouchard family stepped up with a series of loans to Bouchard in the aggregate amount of approximately $10.1 million in 2020, but even that new money injection proved insufficient. Bouchard’s financial and liquidity profile deteriorated precipitously, leaving the debtors unable to sustain even idle operations or otherwise satisfy payment obligations to crewmembers, suppliers, trade vendors, and other core business partners— many of which resorted to self-help maritime remedies throughout the U.S. Bouchard’s challenges reached a crescendo with multiple vessels being scheduled for foreclosure sales in New Orleans, Florida, Texas, and New York during the September 2020 to November 2020 timeframe, with the first foreclosure sale for two vessels scheduled for two vessels scheduled to occur on September 29, 2020.
“Accordingly, the debtors commenced these chapter 11 cases on September 28, 2020, to obtain much-needed ‘breathing space’ with the automatic stay, raise incremental financing to pay crew members, hire employees, secure their vessels, fund operations, hire a classification society to perform a requisite safety management audit and issue a new DOC, and otherwise execute on their operational turnaround.”
There’s much more that’s worthy of close attention in the entire filing which can be accessed HERE.