French offshore services giant Bourbon Corporation said today that it has filed to enter court supervised reorganization proceedings (redressement judiciaire) to the Commercial Court of Marseilles. This came after the court rejected a request that Bourbon enter “safeguard” proceedings (procédure de sauvegarde)
In a series of letters sent on July 18, 2019, the Chinese group ICBC Leasing had expressed its intention to demand from Bourbon Corporation the payment of all outstanding rental payments up to 2026 as part of the guarantee provided to contracting companies, today in arrears. Considering that despite these calls on thr guarantee, it was not in state of cessation of payments, Bourbon Corporation filed a request for “sauvegarde” (safeguard) procedure.
Under French bankruptcy law the safeguard proceedings (procédure de sauvegarde), is intended to enable debtors that are in financial distress, but not yet insolvent, to reorganize and restructure under the court’s protection.
However on July 24, the Commercial Court of Marseilles rejected this request, considering that the guarantees activated by the Chinese company ICBC Leasing are proof that Bourbon Corporation is insolvent as of July 24, 2019.
Bourbon Corporation says it “has taken note of this judicial decision and draws the necessary conclusions thereby requesting for reorganization proceedings.”
It says that the reorganization proceedings will only concern the holding company Bourbon Corporation and not the operating companies, which will be able to continue their normal operations and continue to meet the needs of customers. Existing liabilities of the holding company currently amount to 900 million euros, or just over $1 billion.
Bourbon Corporation says its aim is to preserve the Group’s operating activities in order to actively participate in the emerging recovery of a profoundly changing market and notes that the calls on guarantees from ICBC Leasing were made despite the ongoing amicable negotiations on the financial restructuring of the group’s bank and lease debt.
In the reorganization procedings, Bourbon will pay particular attention to the positive outcome of negotiations with its creditors.
The reorganization proceedings are a collective procedure that freezes the liabilities existing at the beginning of the procedure during the observation period which can last up to 18 months. The purpose of this procedure is to enable the debtor to present a plan for the continuation of his activities by reorganizing its debt – which may be spread over a maximum period of 10 years – and to ensure its recovery.