Bunker Fuel Supplier Files for Chapter 11 Bankruptcy Protection
September 9, 2015
On Aug. 28, Bunkers International Corp., one of the largest suppliers of bunker fuel in the world, announced that it had filed for Chapter 11 bankruptcy protection.
The bunker fuel supplier company was forced to seek bankruptcy protection after its primary lender terminated its lending agreement.
Bunkers International loses primary lender, becomes insolvent
The global bunker fuel supplier cited in bankruptcy documents that it had lost a majority of its operating capital after its primary lender cut off financing, according to the Orlando Sentinel. PNC Bank cut off financing after Bunkers International had failed to meet one of the technical conditions of the credit agreement. Although the company did not miss a payment, it has violated the technical terms, and thus the company was sent into default status. After PNC terminated the contract, Bunkers International and its affiliated companies in Florida, New York, Colombia, U.K., Greece, South Africa and Singapore were forced to downsize operations. In court papers, the company stated that if it had not filed for Chapter 11 protection, a portion of its recently fueled ships would have been subject to seizure.
This announcement represents the culmination of a stunning decline since last year, after the company reported approximately $740 million in revenues for 2014. However, according to Seatrade Maritime News, with the collapse of bunker fuel prices now nearing ten-year lows and with no end in sight, Bunkers International quickly became a much smaller company.
In bankruptcy papers, the company cited $40 million in liabilities, which most notably included $1 million in debt to American Express. Bunkers International also has outstanding debts with other companies around the world, including firms located in areas where the company has a strong presence such as Venezuela, Curaçao and Singapore.
The reorganization plan
The company’s restructuring plan will ensure that its outstanding pre-bankruptcy debts will be eliminated. However, Bunkers International officials stated that the company will maintain its payment schedule for all post-filing obligations.Bunkers also reported that it intends to continue operations for itself and its three related companies throughout the bankruptcy period, as it will seek to reach financing agreements.