Bulk Invest Files for Bankruptcy

File image courtesy Western Bulk

By MarEx 2016-03-03 21:15:26

Bulk Invest (formerly Western Bulk) announced March 3 that it has filed a petition for bankruptcy. The firm had warned that the “basis of [its] continued operations will be reassessed” if it could not successfully renegotiate its obligations – especially chartering agreements.

In today's announcement, the firm capitulated to pressure from seven Japanese owners of chartered-in vessels, who had filed an injunction to block the sale of subsidiary Western Bulk Chartering to Bulk Invest's majority shareholder, Kistefos AS, in what Bulk Invest had described as an “accelerated process.” Kistefos is wholly owned by the investor Christen Sveaas, who is also chairman of Bulk Invest.

The Japanese shipowners contended that the sale amounted to an “an illegal payment of dividend” to Kistefos and was for significantly less than the unit's true value. Bulk Invest received notice of the suit on the same day that its shareholders voted to approve the sale, which would have given the firm an injection of more than $10 million in cash; it said it had done nothing wrong when selling Western Bulk Chartering and that the transaction had been conducted on market terms.

Bulk Invest said that its final restructuring proposal would have resulted in an immediate payment to shipowners, continued charters at above-market rates, and recapitalization of the firm with contributions from “reputable players in the industry” – plus no cuts in its creditors’ claims. The seven shipowners reportedly rejected this plan; they had already publicly stated their willingness to force a bankruptcy proceeding. With their intention to block the sale of Western Bulk Chartering, Bulk Invest concluded that there was no further way forward for a restructuring of the firm.

Most of the firm's subsidiaries – presumably including Western Bulk Chartering – will continue their restructuring efforts and operations for the time being, Bulk Invest said. 

Bulk Invest had total liabilities of $143.4 million at the end of 2015. The company's shares were suspended from trade in Oslo following the bankruptcy filing. An administrator will now be appointed to decide what to do with Bulk Invest's assets.

Kistefos did not immediately respond to requests for comment.