The Atlantis Paradise Island resort, located in the Bahamas. (Photo: Shutterstock.com)
Almost three months after securing bondholder support for a prepackaged bankruptcy proceeding, Ultrapetrol Bahamas Ltd., a company that floats energy boats throughout South America, filed for Chapter 11 protection on Feb. 6 in White Plains, New York.
The Nassau, Bahamas-based company lists $776.58 million in assets against $565.95 million in liabilities in its bankruptcy petition. Ultrapetrol, in a tally of its 40 largest unsecured creditors, also owes money to law firms in the U.K. and Paraguay. Gateley, a British firm that in 2015 began trading publicly, is listed as being owed $311,237 by the debtor, which owes another $70,950 for legal services to Paraguay’s Palacios, Prono & Talavera.
Ultrapetrol is an industrial shipping company that specializes in river barges that move petroleum products. The company, whose general counsel is Argentine lawyer Diego Alvarez-Blanco, does business in Argentina, Brazil, Chile, Paraguay and Uruguay. In court papers, Ultrapetrol blamed a liquidity crisis caused by “deteriorating market conditions affecting the energy and natural resource industries,” as precipitating its bankruptcy case.
But some investors, facing the potential loss of their equity, are not happy with Ultrapetrol. Argentina’s Copernico Capital Partners retained Quinn Emanuel Urquhart & Sullivan for a suit filed last week in New York that seeks to scuttle the company’s restructuring plans, according to TradeWinds.com, a trade publication for the global shipping industry. Ultrapetrol is seeking to retain three firms—Zirinsky Law Partners (ZLP), Hughes Hubbard & Reed and Seward & Kissel—to advise the company in its bankruptcy case.
The American Lawyer reported last year on the formation of New York-based ZLP by Bruce Zirinsky, a former top bankruptcy partner at Weil, Gotshal & Manges, Greenberg Traurig and Cadwalader, Wickersham & Taft. Zirinsky did not return a request for comment about his role advising Ultrapetrol, which court records show has paid his firm roughly $2.3 million over the past year. According to its application for employment, ZLP received about $1.5 million of that sum in the 90 days before Ultrapetrol’s bankruptcy filing.
A declaration filed by Zirinsky in the case states that his firm currently holds a $400,000 retainer from the debtor. Zirinsky’s hourly billing rate is listed at $1,050, while fellow ZLP partners Sharon Ricardson and Gary Ticoll are both billing $800 per hour for their services. The firm is seeking to serve as bankruptcy co-counsel to Ultrapetrol with Hughes Hubbard partner Christopher Kiplok in New York. Kiplok and Zirinsky are also working together on the Chapter 11 case of Republic Airways Holdings Ltd., which is hoping to fly out of bankruptcy this year.
According to a declaration by Kiplok in Ultrapetrol’s bankruptcy case, Hughes Hubbard has received more than $1.3 million from the company in the year prior to its Chapter 11 petition, with approximately $303,227 of that amount held on retainer at the time of its filing. Hughes Hubbard partners are billing between $700 to $1,350 per hour for their services, counsel and specialists between $720 and $1,125, and associates at rates ranging from $425 to $800. Hughes Hubbard has agreed to a 10 percent negotiated discount for fees incurred by the firm on behalf of Ultrapetrol in 2017.
Seward & Kissel partner Lawrence Rutkowski, a veteran lawyer in the shipping and maritime industry, has been a longtime legal adviser to Ultrapetrol, having handled a $220 million private equity investment in the company in 2012 and counseled on its $175 million initial public offering in 2006. Securities filings show that the IPO generated $850,000 in legal fees and expenses. A declaration by Rutkowski in Ultrapetrol’s bankruptcy states that Seward & Kissel was first engaged by the company in 1998 and has received almost $2.5 million in fees from its client within the past year.
The firm, which held a $200,000 retainer at the start of Ultrapetrol’s Chapter 11 case this week, is seeking to serve as special counsel to the company in bankruptcy court. Seward & Kissel partners are billing between $750 to $1,075 per hour, counsel between $640 and $825, and associates at hourly rates ranging from $295 to $725.
As recently noted by The American Lawyer, energy-related corporate bankruptcies have continued in 2017 after a robust period of activity last year, thanks in part to falling commodities prices. Ultrapetrol’s bankruptcy is being administered by Prime Clerk LLC, a shop formed in 2013 by former Weil restructuring partner Shai Waisman.