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Bracewell & Giuliani LLP Secures Major Chapter 11 Victory for Marco Polo Seatrade BV
October 25, 2011
HOUSTON — Bracewell & Giuliani LLP announced today it won a major bankruptcy verdict on behalf of Netherlands-based global maritime shipping company Marco Polo Seatrade BV and three of its affiliates in the U.S. Bankruptcy Court for the Southern District of New York. The decision rendered by U.S. Bankruptcy Judge James M. Peck rejects motions by Marco Polo's secured banks seeking dismissal on jurisdictional and other grounds of the Chapter 11 filings.
The Marco Polo litigation was widely followed in the global maritime community. The decision validates that U.S. Chapter 11 proceedings are a viable restructuring strategy for international shipping companies as long as they have the minimal connections needed to satisfy U.S. jurisdictional requirements. The decision also confirms that U.S. Bankruptcy Courts will maintain jurisdiction over foreign debtors as long as the Chapter 11 filings were made in good faith and with the intention to properly reorganize the business.
After three days of trial, Judge Peck agreed with Bracewell that the working capital reserve maintained by Marco Polo's New York-based pool manager and the unused fee retainer held by Bracewell comprised sufficient "property" in the U.S. to sustain Chapter 11 jurisdiction. Judge Peck also found that Marco Polo had acted in complete good faith in seeking Chapter 11 relief. Judge Peck further agreed with Bracewell that, in fact, Chapter 11 was likely the only forum in which shipping companies like Marco Polo could have a reasonable opportunity to reorganize their businesses rather than liquidate.
“This victory puts to rest any concerns as to Marco Polo's eligibility for and good faith in seeking Chapter 11 relief,” said Evan Flaschen, counsel to Marco Polo and partner and chair of the Financial Restructuring Group at the firm. “Now it is our responsibility to take advantage of the opportunities that Chapter 11 offers and we look forward to working with our banks and other constituencies to develop a reorganization plan that will enable the company to emerge as a revitalized competitor in the international shipping market,” he added.
“The decision also has significant positive implications for other troubled international shipping companies which need a forum in which to reorganize their businesses. In the current difficult market environment, sometimes all that a maritime shipping company needs is a chance to catch its breath while its creditors are held at bay, and that is precisely what Chapter 11 provides,” Flaschen noted.
Bracewell attorneys involved in the matter include:
Partners: Evan Flaschen, Robert Burns, Andrew Schoulder and Michael Hefter
Associates: Mark Dendinger, Seth Cohen, Adam Shane and Brendan Derr
A Bracewell team led by Evan Flaschen, Trey Wood, Greg Nye and Jason Cohen is also representing the global shipping businesses operated by Omega Navigation Enterprises and its affiliates in their Chapter 11 cases currently pending in the Houston Bankruptcy Court, where similar motions filed by Omega Navigation's banks are scheduled for trial beginning on November 28.