When Genco Shipping & Trading navigated its international dry bulk shipping company through a complex $1.4 billion restructuring, it turned to Kramer Levin to steer the legal process. Pulling together resources from various parts of the firm, the Kramer Levin team worked closely with Genco management and the company’s financial adviser, now known as PJT Partners, to develop and negotiate a comprehensive agreement that consensually restructured three loan facilities totaling $1.3 billion and a $125 million unsecured convertible note facility.
Through a restructuring support agreement negotiated over a three-month period, Genco obtained support for its plan from more than 25 sophisticated financial investors and banks. The agreement converted more than $1 billion of secured debt into new equity, amended and restated the maturity and key covenants of two separate bank loan facilities totaling $250 million, and converted $125 million of convertible notes into new equity. These negotiations also resulted in a voluntary agreement to leave all other unsecured creditors unimpaired and grant new warrants to the then-existing equity holders.
The pre-bankruptcy negotiations were so successful that Genco was able to commence a true “prepackaged” Chapter 11 case for itself and 57 affiliates to implement its restructuring. Following a successful prebankruptcy solicitation, Genco and its affiliated debtors filed for bankruptcy in April 2014 in the Southern District of New York.
A small group of institutional investors purchased a material portion of Genco’s stock shortly prior to (and even after) the bankruptcy case was filed and formed an official “Equity Committee” to initiate a valuation fight. The Kramer Levin team undertook a significant bankruptcy valuation battle, and prevailed on all counts. The bankruptcy court overruled the Equity Committee’s objections, finding that Genco was insolvent using various methodologies, including an industry-specific net asset value — an approach that had not been adopted by any court. Kramer Levin’s successful valuation litigation resulted in confirmation of the prepackaged Chapter 11 plan in less than three months — a significant achievement for any prepackaged case, much less one that was hotly contested and litigated applying novel valuation methods.