Global law firms are reaping the benefits of an ongoing financial crunch plaguing the world’s shipping fleets.
While funding woes, oversupply, and lagging freight rates have left the shipping industry navigating rough fiscal waters since the global economic downturn began four years ago, the Eurozone’s ongoing financial crisis has spawned a fresh wave of insolvencies in the sector, according to the Financial Times
White & Case is playing a role in several shipping-related matters, announcing Wednesday that it advised a committee of secured lenders in reaching a successful debt restructuring agreement with Danish shipper Torm. The Hellerup-based company threatened to slip into bankruptcy last month before agreeing to a deal that extends its existing $1.8 billion in bank debt until 2016. Completed last week, the debt deal gives banks a nearly 73 percent stake in Torm, which is being advised by partner Rikke Pietersen from Danish firm Gorrissen Federspiel in Copenhagen.
Kirkland & Ellis restructuring partner Edward Sassower represented unsecured shipowners that provide vessels to Torm on long-term charter, who will take a 17 percent stake in Torm as part of the rescue deal. Thomas Albrechtsen, a partner at Danish firm Kromann Reumert, and Singapore’s Rajah & Tann advised other parties to the restructuring plan.
Thomas Lauria, global head of the financial restructuring and insolvency practice at White & Case, led a team of White & Case lawyers advising creditors in their negotiations with Torm. Other lawyers from the firm working on the matter included finance partners Magdalene Bayim-Adomako and David Joyce, as well as restructuring partners Scott Greissman, David Manson, and Richard Kebrdle in. ( Both Manson and Kebrdle were elected to the firm’s partnership last month.)
That wasn’t White & Case’s only shipping deal of late. A team of lawyers from the firm led by corporate partner Alan Burke in London advised Saudi Arabia’s state-owned oil giant Saudi Aramco on the $1.3 billion merger of its Vela International Marine division with The National Shipping Company of Saudi Arabia, better known as Bahri. White & Case is a longtime legal adviser to Dhahran-based Aramco, counseling the world’s largest oil producer last year on a plan to build a $20 billion petrochemical plant.
Reed Smith partners Charles Brown and Philip Rymer in London represented Aramco on the specialist shipping aspects of the deal, which closed last week after being announced last month. (Aramco, whose operations were reportedly the target of an Iranian cyberattack in August, saw its Vela unit make headlines  four years ago when Somali pirates seized one of its tankers.)
The transaction effectively transfers ownership of Vela’s entire fleet to Bahri and makes that company the exclusive provider of crude shipping services for Aramco, according to The Associated Press. The merger will also make Bahri the world’s fourth-largest owner of large crude oil carriers called VLCCs, Reuters reports.
Clifford Chance corporate partner Mike Taylor and finance partner Nick Swinburne led a team from the Magic Circle firm advising Bahri on the agreement. Saudi firm Al Jadaan & Partners also had a role providing local counsel to Bahri on the matter. ( Clifford Chance represented Saudi Arabia’s Aujan Industries last year when it sold half of its beverage business to soft drink giant Coca-Cola for $980 million.)
While Torm successfully restructures and Bahri takes to the seas, other global shipping companies are finding themselves bogged down in the murky waters of bankruptcy court.
Overseas Shipholding Group (OSG), the largest tanker operator in the United States, filed for Chapter 11 protection in Delaware on Wednesday. The New York–based company, which boasts a fleet of more than 100 tankers, lists $4.2 billion in total assets against nearly $2.7 billion in liabilities. Reuters reports that OSG’s bankruptcy filing is the third-largest in the U.S. this year in total assets, trailing only Eastman Kodak and Residential Capital.
Cleary Gottlieb Steen & Hamilton global restructuring and insolvency chair James Bromley in New York is advising OSG in the Chapter 11 case, along with partner Derek Abbott and special counsel Daniel Butz from Delaware’s Morris, Nichols, Arsht & Tunnell, which is serving as local counsel to the debtor. Neither firm has yet filed billing statements with the bankruptcy court.
White & Case is playing a role in the OSG bankruptcy as well, representing a group of lenders in restructuring negotiations with the company. Israel’s Recanati family owns 25 percent of the debtor, which is the world’s second-largest independent tanker operator by fleet size. OSG joins the ranks of other leading shipowners that have slipped into insolvency in recent months like General Maritime, Humpuss Sea Transport, Marco Polo Seatrade, Omega Navigation Enterprises, Sanko Steamship, and Stephenson Clarke Shipping, according to our previous reports.
Proskauer Rose is also providing counsel to OSG as the company attempts to restructure in bankruptcy. Earlier this year, OSG promoted deputy general counsel and former Proskauer corporate finance partner Janice Smith to chief risk officer and head of governmental affairs. James Edelson, another Proskauer alum, serves as general counsel for OSG.  Stanley Komaroff, a corporate partner at the firm who chaired Proskauer until 1999, was previously a member of OSG’s board of directors.