Bloomberg blasts TBS

TBS International’s US bankruptcy case has reignited spirited conversations about cash-strapped foreign owners and legal jurisdiction.

Bill Rochelle.

“This is another situation in which a shipper with very little in the way of connection with the United States is going to use a United States court to reorganise itself,” Rochelle told listeners Wednesday morning. “They as you can see they did not try to do it in the hometown of Dublin.”

While it would seem the commentator is familiar with the bankruptcies of Greek product tanker owner Omega Navigation Enterprise and Dutch operator Marco Polo Seatrade, which emerged victorious in a fight to keep their cases in the US despite objections from creditors, it appears he may not have done his homework on TBS.

The largest of the tweendecker specialist’s offices is in Yonkers, New York, where it was established in 1993. The international network also includes an outpost in Houston. It migrated to Dublin just a few years ago for tax purposes.

While Rochelle objected to the use of US bankruptcy courts by ‘foreign’ shipowners, he was not surprised by TBS’s choice of venue as it gives the company access to a popular judge, Robert Drain, and the fact that cash-strapped companies prefer US Chapter 11 over European insolvency because it prevents the liquidation of assets.

“I am seeing a distinctive pattern here where folks are taking their cases and getting them up to Bob Drain’s court in White Plains because up in White Plains there is only one bankruptcy judge and that is Bob Drain,” the columnist noted.

As TradeWinds has reported, TBS filed a “pre-packaged” bankruptcy plan earlier this week. It hopes to pay off all its unsecured creditors and restructure the company within the next two months with the blessing of lenders, which will be given equity in the ‘new’ company in exchange for a reduction in debt.

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