Jacksonville-based Trailer Bridge Inc. has filed a Chapter 11 bankruptcy reorganization plan that calls for certain noteholders to end up with most of the company’s stock, but still leaves something for current shareholders.
Trailer Bridge filed for Chapter 11 on Nov. 16 as the marine and truck freight company faced a deadline to pay off $82.5 million in senior notes.
Under the reorganization plan filed Saturday in U.S. Bankruptcy Court in Jacksonville, that $82.5 million will be replaced with $65 million in new notes.
But the noteholders also will be issued new stock and the largest noteholders will end up with a majority of seats on Trailer Bridge’s board of directors.
Existing stockholders will be given a choice of receiving 15 cents in cash for each of their current shares or shares of the new stock issued by the company. But the total amount of shares issued to current stockholders will only be 9 percent of the total stock in the company.
Trailer Bridge’s stock was delisted by Nasdaq after filing for Chapter 11, but it still trades in the over-the-counter market.
The stock, which traded at almost $4 a year ago and was at 33 cents before the bankruptcy filing, closed Friday at 18 cents. The U.S. financial markets were closed Monday for the Martin Luther King Jr. Day holiday.
The reorganization plan lists eight classes of creditors who have claims before the stockholders, who are last in line to be paid in any Chapter 11 case and often are wiped out in a reorganization plan.
Aside from the senior noteholders, Trailer Bridge’s plan calls for other secured creditors to be paid in full for their claims.
“The company has worked very hard to reach this agreement with the major noteholders,” said Gardner Davis, an attorney with Foley & Lardner in Jacksonville who represents Trailer Bridge in the case. The plan is still subject to a vote by creditors and final approval from U.S. Bankruptcy Judge Jerry Funk, but Trailer Bridge has been expecting to move quickly through the bankruptcy process.
“The company hopes to emerge from Chapter 11 by the end of March 2012,” Davis said.
The major holders of the senior notes will end up with five of the seven seats on Trailer Bridge’s new board of directors under the plan, and they will also control a majority of the stock.
The largest noteholder, Seacor Holdings Inc., will be able to appoint three directors and Whippoorwill Associates Inc. and Edge Asset Management Inc. each will have one seat on the board. One other independent director will be chosen and the final seat will be given to Trailer Bridge’s chief executive officer.
But the plan does not name any executive officers.
Trailer Bridge CEO Ivy Barton Suter resigned in October, before the bankruptcy filing. Executive Vice President William Gotimer and Chief Financial Officer Mark Tanner were appointed as co-CEOs to replace her.
The plan does have one note of caution regarding an ongoing U.S. Department of Justice investigation into possible anti-competitive practices by companies providing ocean shipping services to Puerto Rico.
Trailer Bridge, which provides freight service between Jacksonville, Puerto Rico and the Dominican Republic, said in the plan that publicity about the federal investigation in 2008 prompted a number of class-action lawsuits against shippers, including Trailer Bridge.
Trailer Bridge said a federal court granted its motion to be dismissed with prejudice from the last of those claims in April 2010. But the company still faces possible appeals or other costs related to the investigation. A note in the reorganization plan said the company faces up to $65 million in antitrust-related claims which it “disputes and intends to contest.”
Richard Thames, an attorney at Stutsman Thames & Markey in Jacksonville who is representing the committee of unsecured creditors in the case, expressed some concern about those possible antitrust claims.
“The creditors’ committee cannot endorse any plan like that presently on the table which guarantees a substantial distribution to current equity holders without properly addressing the antitrust claims against the company. Any distribution to equity interest holders without paying all creditor claims in full is inconsistent with the distribution scheme contemplated by the Bankruptcy Code,” Thames said in an email Monday.
“As a group, I believe most of the unsecured creditors want to see Trailer Bridge succeed in its reorganization effort. It’s good for Jacksonville, the company and for the relationships which the many vendors have with the company. That’s not to say, however, that we support the Chapter 11 plan as drafted,” he said.
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