It has submitted the scheme in the Delaware Bankruptcy Court, backed by holders of 60% of its $1.5bn credit agreement from 2006.

The plan envisions full payment in cash of claims against OSG outside the 2006 agreement.

Holders of equity interests would receive a combination of stock and warrants of the reorganised OSG valued at $61.4m.

And holders of claims arising out of the $1.5bn credit agreement will receive a pro rata share of stock and warrants.

In addition, OSG said the 7.50% unsecured notes due in 2024 and the 8.125% senior notes due in 2018 will be reinstated after OSG pays outstanding interest.

The company will raise $150m through a rights offering of shares and warrants and it added: “The plan further contemplates that the company will raise $625m in secured exit financing.”

This will allow it to pay off the secured claims of the Export-Import Bank of China in full, in cash.

It will thus no longer need to sell the ships in which the bank has an interest.

The court must approve the plan by 16 May and confirm it by order by 20 June, or creditors can back out.