Nautilus Holdings, Ltd., a company that owns 16 containerships and charters them to various liner companies, filed for protection along with several affiliates under Chapter 11 of the U.S. Bankruptcy Code on Tuesday, citing the downturn in the container shipping industry.
The ships have been on charter to companies such as Maersk, Evergreen, Yang Ming, Hapag-Lloyd, UASC, and CCNI.
According to a declaration by James Mesterharm, a managing director
of AlixPartners who is acting as the Nautilus’s chief restructuring
officer, Nautilus and its affiliated companies have containerships
ranging in size from 2,500 TEU-7,000 TEU. He said their aggregate
container carrying capacity of 70,000 TEU makes the company one of the
world’s top 25 independent containership owners.
Mesterharm told the court the company’s strategy has been to employ its ships “on long-term charters to take advantage of the associated stable cash flow and high utilization rates.”
While those long-term charters “have allowed the debtors to weather, until now, the downturn in the container shipping market, which commenced in late 2008,” he said “the debtors' business has experienced significant pressure as a result of the expiration of several existing long-term charter contracts with rates higher than current charter rates, which reflect a depressed market for container vessels.”
Mesterharm added, "Reduced cash flows as existing long-term, higher rate charters expire, combined with the debtors' highly-leveraged capital structure, have left some of the debtors struggling to service their debt. As a result, some of the debtors have not been able to comply with certain covenants and payment obligations under their loan agreements.”
He said, however, that the companies believe they are positioned to perform well due to its mix of various size ships, the fact that some its charters will not expire until 2018-19, and that it has relationships with top liner companies leading consolidation in the shipping industry.
According to the company’s filing with the U.S. Bankruptcy Court for the Southern District in White Plains, the company has assets between $500 million and $1 billion, and estimated liabilities between $100 million and $500 million.
The top creditors holding secured claims are Citibank, HSH Nordbank, and DVB. The 30 creditors holding the largest unsecured claims are owed unsecured amounts ranging from $1,023,687 to $15,039.
Court filings can be viewed here
Nautilus’s chief executive officer is Andreas Papathomas, who is also
chairman of Synergy, a non-debtor that provides management services to