Michael Webber of Wells Fargo Securities warned clients that the “risk of bankruptcy remains high” but was quick to point out that doubts about the company’s ability to maintain compliance with loan covenants is not a new development.

“We note the reclassification [of long-term debt as short-term] in-and-of itself does not really change much,” he continued, adding: “That said, we believe the reclassification will likely serve as a reminder of the high degree of risk embedded in Genco, likely pressuring shares.”

Given the company’s exposure to the spot market, where freight rates continue to hover at or below breakeven levels for many operators, Webber says he doesn’t expect it to regain compliance with a net debt to Ebitda covenant when it is reinstated in the first quarter of 2014.

The analyst noted cash shortfalls could materialise as early as this year and believes Genco’s net asset value now stands at around negative $7.00 per share, which, coupled with what he described as the “growing risk” of Chapter 11, leads him to believe there is “little-to-no value for shareholders”.

Omar Nokta of Global Hunter Securities estimates the owner would need to secure freight rates of around $16,300 per day for each of its 53 vessels to break even on a net income basis and approximately $9,500 on a cash flow basis.

Today, brokers say capesize, panamax, supramax and handymax and bulkers are seeing day rates of around $5,400, $8,100, $9,200 and $8,060, respectively, in the spot market. Many fear the downturn will continue throughout the better part of 2013 or even longer.

After downgrading shares of Genco to “sell” and setting a price target of $1.00, which is in line with most analyst estimates but below the $1.79 seen in midday trading following a 10.49% spike, Gregory Lewis of Credit Suisse warned that a restructuring may be on the horizon.

“While Genco has done a lot of blocking and tackling to put itself in a position to take advantage of a potential recovery in dry bulk rates – without a recovery in dry bulk rates sooner rather than later we would expect Genco to restructure at some point in 2014,” he told clients.

“With at least one piece of bank debt sold to non-traditional shipping investors a restructuring could potentially only be a matter of time, the clock is ticking for a drybulk recovery.”

In a conference call with analysts and investors, management noted that certain members of the banking syndicates behind three of Genco's credit facilities were actively trading around $300m worth of debt during the first quarter.

Click HERE to see what management and equity analysts had to say about the paper trade