October 17, 2014

Milbank Navigates Eagle Bulk Shipping Through Successful Chapter 11

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On October 15, 2014, Milbank assisted Eagle Bulk Shipping Inc. (“Eagle”) by consummating a fully consensual prepackaged chapter 11 plan of reorganization (the “Plan”) a mere 70 days after the company commenced its bankruptcy case. The transaction is particularly noteworthy, as Eagle became the first company to maintain its listing on the Nasdaq Global Select Market during the duration of its chapter 11 case and remain listed thereon following its emergence from bankruptcy. Furthermore, Milbank was able to achieve confirmation of the Plan absent a single objection from any party in interest, and without subjecting any of Eagle’s operating entities to the chapter 11 process.

Eagle, together with its 63 wholly-owned subsidiaries, operates a fleet of 45 modern vessels for shipping a broad range of major and minor “dry bulk” cargoes, including iron ore, coal, grain, cement, and fertilizer, along worldwide shipping routes.

Milbank represented Eagle, along with its subsidiaries, in a consensual restructuring of Eagle’s balance sheet, which consisted of approximately $1.2 billion of secured debt. Milbank led the negotiation of the comprehensive restructuring transaction whereby Eagle converted over 80% of its secured debt to equity, entered into a new $275 million exit facility, and paid all general unsecured claims in full in the ordinary course, while keeping each of its operating subsidiaries, who were guarantors of Eagle’s secured debt, out of chapter 11. In addition, holders of Eagle’s existing common stock received 0.5% of the new common stock in reorganized Eagle and warrants to purchase an additional 7.5% of new common stock – a significant accomplishment given that Eagle’s enterprise value was estimated to be hundreds of millions of dollars less than the face amount of Eagle’s secured debt as of September 30, 2014. Furthermore, Sophocles N. Zoullas will remain as Eagle’s Chairman and CEO.

This transaction was implemented through a restructuring support agreement and a prepackaged bankruptcy case in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) involving Eagle but none of its subsidiaries. Following a hearing on September 18, 2014, the Bankruptcy Court confirmed Eagle’s Plan a mere 43 days after Eagle filed for bankruptcy protection. Notably, all creditors entitled to vote on the Plan voted in favor of confirmation, and not a single party in interest objected to the relief requested at the Plan confirmation hearing.

On October 15, 2014, Eagle emerged from chapter 11 and substantially consummated the Plan, which achieves a substantial deleveraging of Eagle’s balance sheet (by approximately $975 million) and eliminates potential deterioration of value – and disruptions to worldwide operations – that could have otherwise resulted from a protracted and contentious bankruptcy case.

The Milbank team representing Eagle is led by Paul Aronzon (Financial Restructuring Partner, LA) and Tyson Lomazow (Financial Restructuring Partner, NY); and included Alex Kaye (Corporate Partner, NY); Rod Miller (Global Securities Partner, NY); Mike Shah (Tax Partner, NY); Alan Stone (Litigation Partner, NY); Melainie Mansfield (Corporate Partner, LA); Haig Maghakian (Financial Restructuring Associate, LA); Matthew Brod and Jonathan Newman (Financial Restructuring Associates, NY); Sam Badawi and Susan Yanes (Global Securities Associates, NY); Drew Batkin (Tax Special Counsel, NY); James Beebe (Tax Associate, NY); Brian Kelly (Corporate Special Counsel, NY); Nikkisha Smith (Corporate Associate, NY); Soo Hwang (Corporate Associate, LA); Jennifer Harris (Alternative Investments Associate, LA); and Julia Fish and Anthe Vorkas (Alternative Investments Associates, NY).