Feb. 21 (Bloomberg) -- Unsecured creditors of General Maritime Corp., the second-largest U.S. owner of oil tankers, objected to the company’s reorganization plan to reduce debt by $600 million and cancel all of its old stock.
The official committee of unsecured creditors said that General Maritime failed to fully explore alternatives to a $175 million equity investment from Oaktree Capital Management LP, according to a filing in federal bankruptcy court in New York today,
A plan of reorganization “should never come at the expense of a good faith process that treats all creditors fairly and equitably and complies with applicable law,” lawyers for the committee said in the filing.
The company’s disclosure statement is “devoid of any discussion” of “some alternative to the terms dictated by Oaktree,” according to the filing.
In its reorganization plan filed Feb. 1, General Maritime said it had engaged in “extensive, good faith negotiations” with secured creditors, and that secured claims would be repaid in full and a rights offering was expected to raise $61.3 million.
‘All the Hallmarks’
The company, based in New York, won approval of the $175 million investment from Oaktree in December after changing terms to address creditors’ objections. U.S. Bankruptcy Judge Martin Glenn said the arrangement had “all the hallmarks of a loan-to- own structure.”
Adam Rogoff, a lawyer representing General Maritime, didn’t immediately return a call seeking comment on the objection after regular business hours.
Under the terms of the plan, Oaktree’s $175 million in secured debt will be repaid in full and converted to equity in the reorganized company. General unsecured creditors will get warrants to buy stock in the new company, which would be valued at an estimated $421.1 million.
General Maritime, which operates in more than 230 ports of call in more than 70 countries, filed for bankruptcy in November. The company listed assets of $1.71 billion and debt of $1.41 billion in its Chapter 11 petition.
The case is In re General Maritime Corp., 11-15285, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
--With assistance from Tiffany Kary in New York. Editors: Peter Blumberg, Joe Schneider
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