scc Doc 70 Filed 03/14/17 Entered 03/14/17 22:01:33 Main Document Pg 1 of 36

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1 scc Doc 70 Filed 03/14/17 Entered 03/14/17 22:01:33 Main Document Pg 1 of 36 TOGUT, SEGAL & SEGAL LLP One Penn Plaza Suite 3335 New York, New York (212) Albert Togut Frank A. Oswald Brian F. Moore Kyle J. Ortiz Counsel to the Debtors and Debtors in Possession Hearing Date: March 17, 2017 at 10:00 a.m. (ET) Objection Deadline: March 16, 2017 at 4:00 p.m. (ET) UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK x : In re: : Chapter 11 : TOISA LIMITED, et al., : Case No (SCC) : Debtors. 1 : (Jointly Administered) : x 1 The Debtors are as follows: Trade Prosperity, Inc.; Toisa Limited; United Courage, Inc.; Trade Vision, Inc.; United Journey, Inc.; United Kalavryta, Inc.; Trade Sky, Inc.; Trade Industrial Development Corporation; United Honor, Inc.; Trade Will, Inc.; United Leadership Inc.; United Seas, Inc.; United Dynamic, Inc.; United Emblem, Inc.; United Ideal Inc.; Trade Unity, Inc.; Trade Quest, Inc.; Trade Spirit, Inc.; Trade Resource, Inc.; United Ambassador, Inc.; Edgewater Offshore Shipping, Ltd.; United Banner, Inc.; Toisa Horizon, Inc.; and Trade and Transport Inc. 1

2 scc Doc 70 Filed 03/14/17 Entered 03/14/17 22:01:33 Main Document Pg 2 of 36 DEBTORS MOTION FOR ENTRY OF INTERIM AND FINAL ORDERS, UPON CONSENT OF THE DEBTORS AND CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK (I) AUTHORIZING THE DEBTORS LIMITED USE OF CREDIT AGRICOLE S CASH COLLATERAL, (II) GRANTING ADEQUATE PROTECTION TO CREDIT AGRICOLE, (III) MODIFYING THE AUTOMATIC STAY, (IV) SCHEDULING A FINAL HEARING, AND (V) GRANTING RELATED RELIEF TO THE HONORABLE SHELLEY C. CHAPMAN, UNITED STATES BANKRUPTCY JUDGE: Toisa Limited and certain of its affiliates, as debtors and debtors in possession in the above-captioned cases (collectively, the Debtors ), hereby seek ( Motion ), among other things, entry of an interim order, substantially in the form attached hereto as Exhibit A (the Interim Order ), and thereafter a final order, in substantially the same form as the Interim Order (the Final Order and, together with the Interim Order, the Orders ), pursuant to sections 105, 361, 362, 363, 507(b) and 552 of title 11 of the United States Code (the Bankruptcy Code ), Rules 2002, 4001, 6003, 6004 and 9014 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules ), and Rule of the Local Bankruptcy Rules for the Southern District of New York (the Local Bankruptcy Rules ): (a) authorizing the limited use of cash collateral, as that term is defined in section 363 of the Bankruptcy Code, in which Crédit Agricole Corporate and Investment Bank ( Credit Agricole ) has a lien or other interest, whether existing on the Petition Date (as defined below), arising pursuant to the Orders, or otherwise; (b) granting adequate protection to Credit Agricole; (c) modifying the automatic stay imposed under section 362 of the Bankruptcy Code to the extent necessary to 2

3 scc Doc 70 Filed 03/14/17 Entered 03/14/17 22:01:33 Main Document Pg 3 of 36 implement the terms of the Orders; (d) scheduling a hearing to consider entry of the Final Order; and (e) granting related relief. In support of this Motion, the Debtors rely upon and incorporate by reference the Declaration of Robert Hennebry Pursuant to Local Bankruptcy Rule and in Support of the Debtors Chapter 11 Petitions and First Day Pleadings [Docket No. 3] (the First-Day Declaration ). In further support of the Motion, the Debtors, by and through their undersigned counsel, respectfully state that: JURISDICTION AND VENUE 1. This Court has jurisdiction over this Motion pursuant to 28 U.S.C. 157 and This is a core proceeding under 28 U.S.C. 157(b). Venue of these cases and this Motion in this district is proper under 28 U.S.C and The predicates for the relief requested herein are sections 105, 361, 362, 363, 507(b) and 552 of the Bankruptcy Code, Bankruptcy Rules 2002, 4001, 6003, 6004 and 9014 and Local Bankruptcy Rule PRELIMINARY STATEMENT 3. Following extensive good-faith, arm s-length negotiations between the Debtors and Credit Agricole, the parties have reached an agreement that permits the applicable Debtors to use Credit Agricole s cash collateral on the terms and conditions set forth in the Interim Order. In exchange for the consensual use of cash collateral, the applicable Debtors have agreed to provide, among other things, Credit Agricole with adequate protection, including adequate protection liens, superpriority claims, and 3

4 scc Doc 70 Filed 03/14/17 Entered 03/14/17 22:01:33 Main Document Pg 4 of 36 payment of interest, fees and expenses, all as more fully set forth in the Interim Order. The Debtors believe that the use of cash collateral on the terms and conditions set forth in the Interim Order is in the best interests of their estates because they need to use the cash collateral to fund ongoing costs and expenses to maintain the Vessels (as defined below) on which Credit Agricole has a lien. Accordingly, this Motion should be approved. BACKGROUND A. The Chapter 11 Cases 4. On January 29, 2017, (the Petition Date ), the Debtors each commenced a case by filing a petition for relief under chapter 11 of the Bankruptcy Code (collectively, the Chapter 11 Cases ) in the United States Bankruptcy Court for the Southern District of New York (the Court ). The Debtors Chapter 11 Cases have been consolidated for procedural purposes only and are being jointly administered. 5. The Debtors continue to operate their businesses and manage their properties as debtors and debtors in possession pursuant to Bankruptcy Code sections 1107(a) and No trustee or examiner has been appointed in these Chapter 11 Cases. As of the date hereof, no creditors committee has been appointed. 4

5 scc Doc 70 Filed 03/14/17 Entered 03/14/17 22:01:33 Main Document Pg 5 of The factual background regarding the Debtors, including their business operations, their corporate and capital structure, and the events leading to these Chapter 11 Cases, is set forth in detail in the First Day Declaration. 2 B. Credit Agricole Offshore Vessel Facility 7. Debtor Toisa Limited (the Offshore Vessel Borrower ) is a borrower under the Loan Agreement, dated September 21, 2007 (as amended, restated, supplemented or otherwise modified from time to time, the Offshore Vessel Facility, and together with all other loan and security documents executed or delivered in connection with the Offshore Vessel Facility, the Offshore Vessel Facility Documents ), in the original principal amount of $96,000,000, with Credit Agricole (previously known as Calyon) as lender. 8. As of the Petition Date, not less than $47,400,000 in principal amount was outstanding under the Offshore Vessel Facility (the Offshore Vessel Prepetition Obligations ). The Offshore Vessel Prepetition Obligations include the principal of, and all interest, fees, expenses, and other charges owing as of the Petition Date under the Offshore Vessel Facility Documents. Borrowings under the Offshore Vessel Facility are secured by three platform supply vessels, the Toisa Valiant, the Toisa Vigilant and the Toisa Voyager (each a Credit Agricole Offshore Vessel, and collectively the Credit 2 Capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the First Day Declaration. 5

6 scc Doc 70 Filed 03/14/17 Entered 03/14/17 22:01:33 Main Document Pg 6 of 36 Agricole Offshore Vessels ). Each of the Credit Agricole Offshore Vessels is owned by the Offshore Vessel Borrower. 9. Prior to the Petition Date, the Offshore Vessel Borrower granted to Credit Agricole, as lender, security interests in and liens on (the Offshore Vessel Prepetition Liens ) (a) each of the Credit Agricole Offshore Vessels, (b) the Earnings (as defined in the Offshore Vessel Facility Documents and including, but not limited to, charter income) arising out of the use of each of the Credit Agricole Offshore Vessels (the Offshore Vessel Earnings ), (c) the Charters and Charter Guarantees relating to each of the Credit Agricole Offshore Vessels (as defined in the Offshore Vessel Facility Documents) (the Offshore Vessel Charters ), (d) the Insurances (as defined in the Offshore Vessel Facility Documents) and requisition compensation relating to each of the Credit Agricole Offshore Vessels and (e) deposit accounts into which, among other things, the Offshore Vessel Earnings are to be deposited and retention accounts into which amounts designated for the payment of principal and interest under the Offshore Vessel Facility Documents are to be deposited (together, the Offshore Vessel Accounts, and collectively with (i) the collateral described herein and in the Offshore Vessel Facility Documents, including the documents enumerated in Exhibit 1 attached to the Interim Order, and (ii) the Offshore Vessel Cash Collateral (as defined below), the Offshore Vessel Prepetition Collateral ). 6

7 scc Doc 70 Filed 03/14/17 Entered 03/14/17 22:01:33 Main Document Pg 7 of 36 C. Credit Agricole Tanker Facility 10. Trade Industrial Development Corporation (the Tanker Borrower ) is a borrower under the Loan Agreement, dated November 7, 2008 (as amended, restated, supplemented or otherwise modified from time to time, the Tanker Facility, and together with all other loan, guarantee, assignment and security documents executed or delivered in connection with the Tanker Facility, the Tanker Facility Documents ), in the original principal amount of $60,000,000, with Credit Agricole (as assignee of Emporiki Bank of Greece S.A.) as lender. Trade and Transport Inc. ( T&T, together with the Offshore Vessel Borrower and the Tanker Borrower, the CA Debtors ) is a guarantor of the Tanker Borrower s obligations under the Tanker Facility. 11. As of the Petition Date, not less than $25,976,000 in principal amount was outstanding under the Tanker Facility (the Tanker Prepetition Obligations ). The Tanker Prepetition Obligations include the principal of, and all interest, fees, expenses, and other charges owing as of the Petition Date under the Tanker Facility Documents. Borrowings under the Tanker Facility are secured by the product crude oil tanker vessel named United Grace (the Credit Agricole Tanker ; together with the Credit Agricole Offshore Vessels, the Vessels ). The Credit Agricole Tanker is owned by the Tanker Borrower. 12. Prior to the Petition Date, the Tanker Borrower granted to Credit Agricole, as lender, security interests in and liens on (the Tanker Prepetition Liens ) (a) the 7

8 scc Doc 70 Filed 03/14/17 Entered 03/14/17 22:01:33 Main Document Pg 8 of 36 Credit Agricole Tanker, (b) the Earnings (as defined in the Tanker Facility Documents and including, but not limited to, the charter income) arising out of the use of the Credit Agricole Tanker (the Tanker Earnings ), (c) the Insurances (as defined in the Tanker Facility Documents) and requisition compensation relating to the Credit Agricole Tanker, and (d) deposit accounts into which, among other things, the Tanker Earnings are to be deposited and retention accounts into which amounts designated for the payment and principal and interest under the Tanker Facility Documents are to be deposited (together, the Tanker Accounts, and collectively with (i) the collateral described herein and in the Tanker Facility Documents, including the documents enumerated in Exhibit 2 attached to the Interim Order, and (ii) the Tanker Cash Collateral (as defined below), the Tanker Prepetition Collateral ). RELIEF REQUESTED 13. By this Motion, the Debtors request entry of the Interim Order, and thereafter, following adequate notice to parties entitled to receive notice pursuant to the Bankruptcy Rules, the Final Order. 14. In accordance with Bankruptcy Rule 4001(b) and Local Bankruptcy Rule , the following is a summary of the relief requested and set forth in the proposed 8

9 scc Doc 70 Filed 03/14/17 Entered 03/14/17 22:01:33 Main Document Pg 9 of 36 form of Interim Order, together with references to the applicable sections of the Interim Order. 3 Material Terms Entities with Interest in the Cash Collateral Bankruptcy Rule 4001(b)(1)(B)(i) Purposes for Use of Cash Collateral Bankruptcy Rule 4001(b)(1)(B)(ii); Local Bankruptcy Rule (a)(1) Summary of Material Terms Credit Agricole [(Interim Order, Section C)] The Offshore Vessel Borrower shall not use any Offshore Vessel Cash Collateral except (i) upon the terms and conditions set forth in the Interim Order, (ii) upon Credit Agricole s prior written consent (which consent may be provided or withheld in Credit Agricole s sole discretion) or (iii) as otherwise approved by this Court. The Tanker Borrower shall not use any Tanker Cash Collateral except (i) upon the terms and conditions set forth in the Interim Order, (ii) upon Credit Agricole s prior written consent (which consent may be provided or withheld in Credit Agricole s sole discretion) or (iii) as otherwise approved by this Court. The Offshore Vessel Borrower is authorized to use Offshore Vessel Cash Collateral and the Tanker Borrower is authorized to use Tanker Cash Collateral, in each case subject to the terms and conditions of the Interim Order during the period from the entry of the Interim Order through the Termination Date (as defined below) (such period, the Budget Period ) to: (i) in the case of the Offshore Vessel Borrower, fund the relevant Vessel Expenses in relation to the Credit Agricole Offshore Vessels solely in accordance with the applicable rolling 13-week cash flow forecast of the Offshore Vessel Borrower s cash receipts and expenditures attached to the Interim Order as Exhibit 3 and for no other purpose, and (ii) in the case of the Tanker Borrower, fund the relevant Vessel Expenses in relation to the Credit Agricole Tanker solely in accordance with the applicable rolling 13-week cash flow forecast of the Tanker Borrower s 3 In the event of any inconsistency between this summary and the Interim Order, the terms of the Interim Order shall control. 9

10 scc Doc 70 Filed 03/14/17 Entered 03/14/17 22:01:33 Main Document Pg 10 of 36 cash receipts and expenditures in respect of the Credit Agricole Tanker attached to the Interim Order as Exhibit 4 and for no other purpose. Amount of Cash Collateral to Be Used Local Bankruptcy Rule (a)(1) Budget Provisions Bankruptcy Rule 4001(b)(1)(B)(ii); Local Bankruptcy Rule (a)(2) [(Interim Order, Section 3)] See attached Budget. [(Interim Order, Exhibits 3 and 4)] The Budget. The budget to be attached as Exhibits 3 and 4 to the Interim Order shall be on a per Vessel and consolidated basis (as such budget may be amended, extended, supplemented, or otherwise modified from time to time by the Offshore Vessel Borrower and the Tanker Borrower, as applicable, in each case with the prior written consent of Credit Agricole (which consent may be provided or withheld in Credit Agricole s sole discretion), the Budget ). In the event of any dispute regarding the substance of any Budget to be approved by Credit Agricole, the Offshore Vessel Borrower or the Tanker Borrower, as applicable, shall consult in good faith with Credit Agricole to resolve such dispute; provided that if the applicable Borrower and Credit Agricole are unable to resolve such dispute, a party may request that the Court resolve such dispute on shortened notice; provided, further, that during the pendency of any such dispute, the applicable Borrower shall comply with the applicable Budget then in effect. Permitted Deviation. Notwithstanding the Budget, so long as no Termination Event has occurred, (i) the Offshore Vessel Borrower may use the Offshore Vessel Cash Collateral in accordance with the Interim Order in an amount that would not cause the Offshore Vessel Borrower to use Offshore Vessel Cash Collateral for Total Disbursements in an aggregate amount greater than 100% of the Total Disbursements budgeted on a per Vessel basis during the Budget Period pursuant to the Budget then in effect and (ii) the Tanker Borrower may use the Tanker Cash Collateral in accordance with the Interim Order in an amount that would not cause the Tanker Borrower to use Tanker Cash Collateral for Total Disbursements in an 10

11 scc Doc 70 Filed 03/14/17 Entered 03/14/17 22:01:33 Main Document Pg 11 of 36 aggregate amount greater than 105% of the Total Disbursements budgeted during the Budget Period pursuant to the Budget then in effect (collectively, a Permitted Deviation ); provided that neither the Offshore Vessel Borrower nor the Tanker Borrower shall be permitted to use Offshore Vessel Cash Collateral or Tanker Cash Collateral, as applicable, to pay Total Management Fees in excess of the amount budgeted for Total Management Fees during the Budget Period pursuant to the applicable Budget then in effect. Material Terms: Duration and Use of Cash Collateral Bankruptcy Rule 4001(b)(1)(B)(iii); Local Bankruptcy Rule (a)(10) [(Interim Order, Section 3)] The Debtors authorization to use the Offshore Vessel Cash Collateral and the Tanker Cash Collateral shall automatically terminate on the date (the Termination Date ) which is the earliest to occur of (A) October 3, 2017 (the Expiration Date ); provided that the Expiration Date may be extended from time to time by written agreement between Credit Agricole and the Debtors, in the exercise of their respective sole discretion, without further order of the Court), (B) the occurrence of any of the events set forth in clauses (a), (b), (d), (f), (g), (h), (i), (j), (k), (l), (m), (n), (o), (p), (q), (r), (s), (u), (v), (w) or (x) of paragraph 19 of the Interim Order, in each case unless Credit Agricole waives the Termination Event triggered by such occurrence in its sole discretion, and (C) five (5) business days following the delivery of a written notice (any such notice, a Default Notice ) by Credit Agricole to the Debtors, the U.S. Trustee, and counsel to the Committee, if any (such five-business-day period of time, the Default Notice Period ) of the occurrence and continuance of any of the events set forth in clauses (c), (e), (t) or (y) of paragraph 19 of the Interim Order unless such occurrence and continuance is cured by the Debtors prior to the expiration of the Default Notice Period with respect to such clause or the Termination Event triggered by such occurrence and continuance is waived by Credit Agricole in its sole discretion; provided that, during the Default Notice Period, the Debtors shall be entitled to continue to use the Offshore Vessel Cash Collateral and the Tanker Cash Collateral in accordance with the terms of the Interim Order. [(Interim Order, Section 19).] 11

12 scc Doc 70 Filed 03/14/17 Entered 03/14/17 22:01:33 Main Document Pg 12 of 36 Material Terms: Termination Events Bankruptcy Rule 4001(b)(1)(B)(iii); Local Bankruptcy Rule (a)(10) Each of clauses (a) through (y) below are referred to in the Interim Order as a termination event ( Termination Event ): a. The reversal, vacatur, modification, or stay of the Interim Order in any manner adverse to Credit Agricole, without the prior written consent of Credit Agricole, which consent may be provided or withheld in Credit Agricole s sole discretion, or any of the Debtors shall file any pleading seeking the foregoing relief; b. The entry by the Court of an order (i) dismissing any of the CA Debtors Chapter 11 Cases, (ii) converting any CA Debtor s Chapter 11 Case to a case under Chapter 7 of the Bankruptcy Code, or (iii) appointing a Chapter 11 trustee or an examiner in any CA Debtor s Chapter 11 Case where such Chapter 11 trustee or examiner is given the power to operate any CA Debtor s business, or any of the Debtors shall file any pleading seeking the foregoing relief; c. The failure of the Offshore Vessel Borrower or the Tanker Borrower to make any payments as set forth in paragraph 6 of the Interim Order when due; d. The failure of the Debtors, Sealion and MMS to deliver the Accounting or deposit the Net Proceeds into the CA Segregated Account, in each case as required by paragraph 11 of the Interim Order; e. The failure of the Offshore Vessel Borrower or the Tanker Borrower to comply with the reporting requirements as set forth in paragraph 4 of the Interim Order, in the event that such failure is not cured on or within fifteen (15) calendar days after the delivery of written notice of such failure by Credit Agricole to the Notice Parties; f. The incurrence of any postpetition liens or security interests that are superior to or pari passu with those liens in favor of Credit Agricole, but excluding those permitted by paragraph 6 of the Interim Order; g. The Debtors shall have filed a motion or application for the approval of any superpriority claim or any lien (other than any such claim or lien granted or permitted pursuant to paragraphs 6 or 7 of the Interim Order), which is pari passu with or senior to any of the Adequate Protection Liens or 507(b) 12

13 scc Doc 70 Filed 03/14/17 Entered 03/14/17 22:01:33 Main Document Pg 13 of 36 Claims, without the prior written consent of Credit Agricole, which consent may be provided or withheld in Credit Agricole s sole discretion; h. Any party forecloses (or a deed in lieu of foreclosure or the like is granted) on one or more of the Vessels; i. A final order shall be entered on any motion filed by any person (other than Credit Agricole) in any CA Debtor s Chapter 11 Case seeking to lift the automatic stay to exercise any rights with respect to any of the Offshore Vessel Prepetition Collateral, the Tanker Prepetition Collateral, the Collateral, or the CA Segregated Account, without the prior written consent of Credit Agricole, which consent may be provided or withheld in Credit Agricole s sole discretion; j. unless approved by the Court or agreed to in writing in advance by Credit Agricole in its sole discretion, the entry into any long-term charter (i.e., in excess of 12 months) on any Vessel; k. commencement of any action, including the filing of any pleading, by any Debtor, or direct or indirect non-debtor affiliate or subsidiary of a Debtor, against Credit Agricole challenging the Stipulations or Releases in paragraphs C or D of the Interim Order, except as permitted in paragraph 10 of the Interim Order; l. the Court shall hereafter grant any application or motion or borrowing request of the Debtors seeking to incur indebtedness for borrowed money from any party other than Credit Agricole, which shall be secured by a lien on, or otherwise have a claim against or recourse to, as the case may be, the Offshore Vessel Borrower, the Tanker Borrower, the Offshore Vessel Prepetition Collateral, the Tanker Prepetition Collateral, the Collateral or the CA Segregated Account; m. the Court shall hereafter grant any application or motion granting a junior lien on any of the Offshore Vessel Prepetition Collateral, the Tanker Prepetition Collateral or the Collateral; n. any Vessel is arrested, confiscated, seized, taken in execution, impounded, forfeited, detained in exercise or purported exercise of any possessory lien or other claim, or otherwise taken from the possession of the applicable Debtor, and such Vessel is not returned to the possession of, or 13

14 scc Doc 70 Filed 03/14/17 Entered 03/14/17 22:01:33 Main Document Pg 14 of 36 retrieved or repossessed by, the applicable Debtor for use and operation within fourteen (14) calendar days; o. the registration of any Vessel under the laws of its flag jurisdiction or the class status of any Vessel (other than a Vessel in lay-up) is cancelled or terminated without the prior written consent of Credit Agricole and not restored within five (5) business days after cancellation or termination, provided that the Debtors have given prompt written notice to Credit Agricole of the occurrence of any such cancellation, and if prompt written notice is not given, the Termination Event shall be deemed to have immediately occurred; p. any insurance cover for the Vessel (including, without limitation, any hull and machinery and war risks cover and any protection and indemnity risks cover, including in respect of environmental claims and oil pollution risks arising in jurisdictions where any Vessel operates or trades) is cancelled or is not renewed, and replacement cover is not put in place within five (5) business days of such cancellation or nonrenewal, whether by reason of any Debtor failing to comply with any requirements of such cover or for any other reason, provided that the Debtors have given prompt written notice to Credit Agricole of the occurrence of any such cancellation or non-renewal, and if prompt written notice is not given, the Termination Event shall be deemed to have immediately occurred; q. the entry of an order of this Court approving any claims for recovery of amounts under section 506(c) of the Bankruptcy Code or otherwise arising from the preservation or disposition of any Offshore Vessel Prepetition Collateral or Tanker Prepetition Collateral; r. the Adequate Protection Liens and the 507(b) Claims granted to Credit Agricole shall cease to be valid, perfected and enforceable in all respects, or any Debtor shall assert the invalidity or unenforceability of any of the Adequate Protection Liens or 507(b) Claims; s. any Debtor shall support (in any case by way of, inter alia, any motion or other pleading filed with this Court or any other writing to another party in interest executed by or on behalf of any Debtor) any other person s motion to disallow or 14

15 scc Doc 70 Filed 03/14/17 Entered 03/14/17 22:01:33 Main Document Pg 15 of 36 subordinate in whole or in part Credit Agricole s claim in respect of Offshore Vessel Prepetition Obligations or Tanker Prepetition Obligations or to challenge the Stipulations and Releases in paragraphs C and D of the Interim Order; t. the failure by the Offshore Vessel Borrower to adhere to its Budget then in effect or the failure of the Tanker Borrower to adhere to its Budget then in effect, in each case except with respect to Permitted Deviations; u. any of the Offshore Vessel Borrower, Tanker Borrower, T&T, Sealion or MMS shall have transferred or used any Offshore Vessel Prepetition Collateral, Tanker Prepetition Collateral, Collateral or any funds in the CA Segregated Account to satisfy any obligations of any other vessel lenders to any of the Debtors after the Petition Date; v. any of the Offshore Vessel Borrower, Tanker Borrower, T&T, Sealion or MMS shall have failed to transfer any Offshore Vessel Prepetition Collateral, Tanker Prepetition Collateral or Collateral or any proceeds thereof to the applicable Offshore Vessel Account or Tanker Vessel Account in accordance with the terms of the Interim Order and any interim or final order governing the Debtors cash management; w. the Final Order shall not have been entered by this Court on or before June 2, 2017; x. any Termination Event occurs and is continuing under any other cash collateral order; or y. the Debtors shall fail to comply with any other provision of the Interim Order. Material Terms: Effect of Termination Date Bankruptcy Rule 4001(b)(1)(B)(iii); Local Bankruptcy Rule (a)(10) [(Interim Order, Section 19)] On and after the Termination Date, the CA Debtors shall immediately cease using the Offshore Vessel Cash Collateral and the Tanker Cash Collateral, and Credit Agricole may in accordance with the terms and conditions of the Interim Order, absent further order of the Court, exercise the rights and remedies available under the Offshore Vessel Facility Documents and the Tanker Facility Documents, the Interim Order or applicable law, including, without limitation, foreclosing upon and selling all or a portion of the Offshore Vessel Prepetition Collateral, the Tanker Prepetition Collateral 15

16 scc Doc 70 Filed 03/14/17 Entered 03/14/17 22:01:33 Main Document Pg 16 of 36 or the Collateral in order to collect any amounts payable to Credit Agricole under the Interim Order and apply the same to such obligations. The Automatic Stay shall be deemed modified and vacated to the extent necessary to permit such actions. Notwithstanding the occurrence of a Termination Date or anything in the Interim Order, all of the rights, remedies, benefits and protections provided to Credit Agricole under the Interim Order shall survive the Termination Date. Material Terms: Segregated Accounts Bankruptcy Rule 4001(b)(1)(B)(iii) Proposed Adequate Protection Liens Bankruptcy Rule 4001(b)(1)(b)(iv); Local Bankruptcy Rules (a)(3) and (a)(6) [(Interim Order, Section 19)] Within three days of delivery of the Accounting (as defined in the Interim Order) to Credit Agricole, the Debtors, Sealion, and MMS, as applicable, shall deposit the Net Proceeds (as defined in the Interim Order), if any, into a segregated account of the Debtors for Credit Agricole s sole benefit (the CA Segregated Account ). The Net Proceeds shall not be used by the Debtors, Sealion or MMS, as applicable, for any purpose without Credit Agricole s prior written consent, which consent (i) may be provided or withheld in Credit Agricole s sole discretion and (ii) may be provided in connection with the Budget. [(Interim Order, Section 11)] Pursuant to Sections 361(2), 363(c)(2) and 363(e) of the Bankruptcy Code, effective as of and continuing from the Petition Date, valid, binding, continuing, enforceable and fully perfected first priority senior priming non-avoidable security interests in, and liens on (the Adequate Protection Liens ) (all property described in paragraph 6(a) of the Interim Order being collectively referred to as the Collateral ) (i) the Offshore Vessel Prepetition Collateral (including all prepetition Offshore Vessel Earnings) and all other of the Offshore Vessel Borrower s now owned and hereafter acquired property and assets, real or personal, tangible or intangible, and all property of the Offshore Vessel Borrower s estate relating to the Credit Agricole Offshore Vessels, wherever located and by whomever held, including the Offshore Vessel Charters (including, without limitation, the respective charters between the Offshore Vessel Borrower and Sealion and Sealion and Petróleo Brasileiro S.A. or any affiliate thereof), all postpetition charters, charter revenue and Offshore 16

17 scc Doc 70 Filed 03/14/17 Entered 03/14/17 22:01:33 Main Document Pg 17 of 36 Vessel Earnings, Insurances, requisition compensation, bank accounts and other security, deposit or retention accounts of the Offshore Vessel Borrower relating to the Credit Agricole Offshore Vessels, and all proceeds, products, rents, and revenues of any and all of the foregoing, whether arising from Section 552(b) of the Bankruptcy Code or otherwise, along with any property acquired postpetition that forms part of, or is an appurtenance to, the Credit Agricole Offshore Vessels; provided that, for the avoidance of doubt, nothing herein shall be deemed to create any lien on or otherwise encumber any property of the Offshore Vessel Borrower that does not relate to the Credit Agricole Offshore Vessels, and (ii) the Tanker Prepetition Collateral (including all prepetition Tanker Earnings) and all other of the Tanker Borrower s now owned or hereafter acquired property and assets, real or personal, tangible or intangible, and all property of the Tanker Borrower s estate relating to the Credit Agricole Tanker, wherever located and by whomever held, including all prepetition charters, postpetition charters, charter revenue and Tanker Earnings, Insurances, requisition compensation, bank accounts and other security, deposit or retention accounts of the Tanker Borrower relating to the Credit Agricole Tanker, and all proceeds, products, rents, and revenues of any and all of the foregoing, whether arising from Section 552(b) of the Bankruptcy Code or otherwise, along with any property acquired postpetition that forms part of, or is an appurtenance to, the Credit Agricole Tanker, in each case (x) subject to the Carve-Out (as defined below) and (y) excluding causes of action (and proceeds thereof) arising under Bankruptcy Code Sections 544, 545, 546, 547, 548, 549, 550, and 553 or any similar state or federal law (collectively, the Avoidance Actions ). Effect of Adequate Protection Liens on Existing Liens Local Bankruptcy Rule (a)(4) [(Interim Order, Section 6)] Each Adequate Protection Lien in respect of the Offshore Vessel Borrower shall be (i) a fully perfected first priority replacement lien on the Offshore Vessel Borrower s prepetition and postpetition property relating to the Credit Agricole Offshore Vessels to the same extent, priority and enforceability held by Credit Agricole as of the Petition Date, including first priority 17

18 scc Doc 70 Filed 03/14/17 Entered 03/14/17 22:01:33 Main Document Pg 18 of 36 liens on all proceeds, products, or profits of the Offshore Vessel Prepetition Collateral, (ii) a fully perfected first priority lien on all of the Offshore Vessel Borrower s prepetition and postpetition property, whether existing as of the Petition Date or thereafter acquired, relating to the Credit Agricole Offshore Vessels that is not otherwise encumbered by a validly perfected, enforceable, non-avoidable security interest or lien and (iii) a fully perfected second priority lien on all of the Offshore Vessel Borrower s prepetition and postpetition property, whether existing as of the Petition Date or thereafter acquired, relating to the Credit Agricole Offshore Vessels, which is subject to a validly perfected lien as of the Petition Date, to the Restricted Permitted Liens (as defined below), or to a valid and unavoidable lien in existence immediately prior to the Petition Date that is perfected after the Petition Date as permitted by Bankruptcy Code Section 546(b). Each Adequate Protection Lien in respect of the Tanker Borrower shall be (i) a fully perfected first priority replacement lien on the Tanker Borrower s prepetition and postpetition property relating to the Credit Agricole Tanker to the same extent, priority and enforceability held by Credit Agricole as of the Petition Date, including first priority liens on all proceeds, products, or profits of the Tanker Prepetition Collateral, (ii) a fully perfected first priority lien on all of the Tanker Borrower s prepetition and postpetition property, whether existing as of the Petition Date or thereafter acquired, relating to the Credit Agricole Tanker that is not otherwise encumbered by a validly perfected, enforceable, non-avoidable security interest or lien and (iii) a fully perfected second priority lien on all of the Tanker Borrower s prepetition and postpetition property, not constituting the Tanker Prepetition Collateral, whether existing as of the Petition Date or thereafter acquired, relating to the Credit Agricole Tanker, which is subject to a validly perfected lien as of the Petition Date, to the Restricted Permitted Liens (as defined below) or to a valid and unavoidable lien in existence immediately prior to the Petition Date that is perfected after the Petition Date as permitted by Bankruptcy Code Section 546(b). 18

19 scc Doc 70 Filed 03/14/17 Entered 03/14/17 22:01:33 Main Document Pg 19 of 36 The Adequate Protection Liens in respect of the Offshore Vessel Borrower and the Tanker Borrower shall in all cases be prior and senior to all liens, encumbrances and security interests in and to such Collateral granted by operation of law or consensually by the Offshore Vessel Borrower or the Tanker Borrower, as applicable, after the Petition Date except for liens, encumbrances and security interests that meet each of the following three conditions: (x) the lien, encumbrance or security interest is incidental to the conduct of the business of the Offshore Vessel Borrower or the Tanker Borrower, as applicable; (y) the lien, encumbrance or security interest arises by operation of any applicable law; and (z) pursuant to such applicable law, the lien, encumbrance or security interest ranks prior and senior to, or pari passu with, the Adequate Protection Liens (the Restricted Permitted Liens ). The Adequate Protection Liens shall not be (i) subject to any lien that is avoided and preserved for the benefit of the Offshore Vessel Borrower s or the Tanker Borrower s estates under Bankruptcy Code Section 551 or (ii) subordinated to any other lien under Bankruptcy Code Sections 363 and 364. Proposed Adequate Protection Payments Bankruptcy Rule 4001(b)(1)(b)(iv); Local Bankruptcy Rules (a)(3) and (a)(6) [(Interim Order, Section 6)] Each of the Offshore Vessel Borrower and the Tanker Borrower are directed and authorized to pay to Credit Agricole adequate protection payments on the last business day of each month after entry of the Interim Order in an amount equal to (i) all accrued and unpaid prepetition 4 or postpetition interest, expenses, fees and costs due and payable under either the Offshore Vessel Facility Documents or the Tanker Facility Documents, as applicable, calculated based on the non-default contract rate of interest set forth in the Offshore Vessel Facility Documents in respect of the Offshore Vessel Borrower and the Tanker Facility Documents in respect of the Tanker Borrower (collectively, the Adequate Protection Interest Payments ), it 4 The Debtors made an interest payment to Credit Agricole in the approximate amount of $65,000 immediately prior to the Petition Date that did not appear in Credit Agricole s account until January 30, The Debtors have agreed to permit Credit Agricole to apply that interest payment to reduce amounts owed to it by the Debtors. 19

20 scc Doc 70 Filed 03/14/17 Entered 03/14/17 22:01:33 Main Document Pg 20 of 36 being understood that the default rate will accrue to the fullest extent permitted under the Bankruptcy Code, with all rights to object thereto fully preserved, and (ii) all reasonable and documented unpaid post-petition fees and expenses of legal, financial, and other professionals of Credit Agricole in connection with the Offshore Vessel Facility Documents, the Tanker Facility Documents or the Debtors Chapter 11 Cases (the Expense Reimbursement, and together with the Adequate Protection Interest Payments, the Adequate Protection Payments ). None of the fees, costs and expenses payable pursuant to paragraph 6 of the Interim Order shall be subject to separate approval by this Court, and no recipient of any such payment shall be required to file or serve upon any party an interim or final fee application with respect thereto. The U.S. Trustee, the Debtors, and the Committee, if one is appointed by the U.S. Trustee, shall have seven (7) days from the date of delivery of such invoices to review (the Invoiced Fees ); provided that the Debtors and the U.S. Trustee may preserve their right to dispute the payment of any portion of the Invoiced Fees (the Disputed Invoiced Fees ) if, within the seven day period, (i) the Debtors pay in full the Invoiced Fees, including the Disputed Invoiced Fees, and (ii) the Debtors or the U.S. Trustee file with the Court and serve upon Credit Agricole a motion or other pleading, on at least ten days prior written notice to Credit Agricole, of any hearing on such motion or other pleading, setting forth specific objections to the Disputed Invoiced Fees. Proposed Adequate Protection Claims Bankruptcy Rule 4001(b)(1)(b)(iv); Local Bankruptcy Rules (a)(3) and (a)(6) [(Interim Order, Section 6)] The Offshore Vessel Borrower grants an allowed superpriority administrative expense claim to Credit Agricole against the Offshore Vessel Borrower with priority over any and all other administrative expense claims against the Offshore Vessel Borrower now existing or hereafter arising in the Chapter 11 Cases, and the Tanker Borrower and T&T grant allowed superpriority administrative expense claims to Credit Agricole against the Tanker Borrower and T&T on a joint and several basis with priority over any and all other administrative expense claims against the Tanker Borrower and T&T now 20

21 scc Doc 70 Filed 03/14/17 Entered 03/14/17 22:01:33 Main Document Pg 21 of 36 existing or hereafter arising in the Chapter 11 Cases (collectively, the 507(b) Claims ), subject only to the Carve- Out, which 507(b) Claims shall have recourse to and be payable from all prepetition and postpetition property of the Offshore Vessel Borrower, the Tanker Borrower and T&T, as applicable, including, without limitation, subject to entry of the Final Order, proceeds and property recovered in respect of Avoidance Actions. Credit Agricole agrees that (i) its 507(b) Claim against the Offshore Vessel Borrower shall be pari passu with other 507(b) Claims against the Offshore Vessel Borrower held by any other secured vessel lender that consents to a cash collateral order that provides that Credit Agricole shall have a 507(b) Claim that is pari passu with such secured vessel lender s 507(b) Claim and (ii) its 507(b) Claim against T&T shall be pari passu with other 507(b) Claims against T&T held by any other secured vessel lender that consents to a cash collateral order that provides that Credit Agricole shall have a 507(b) Claim that is pari passu with such secured vessel lender s 507(b) Claim. Except for the Carve-Out and as provided in the immediately preceding sentence, no cost or expense of administration under Bankruptcy Code Sections 105 or 503(b) or otherwise, including those resulting from the conversion of these Chapter 11 Cases pursuant to Bankruptcy Code Section 1112, shall be senior to, or pari passu with, Credit Agricole s 507(b) Claims. Modification of the Automatic Stay Bankruptcy Rule 4001(b)(1)(B)(iii); Local Bankruptcy Rule (a)(10) [(Interim Order, Section 7)] The Automatic Stay shall be modified to permit the Debtors and Credit Agricole to perform the transactions and take all actions contemplated or permitted by the Interim Order, including, without limitation, (a) to allow the Adequate Protection Payments to be made, (b) to allow Credit Agricole to apply any prepetition interest held by it from and after the Petition Date to reduce the Offshore Vessel Prepetition Obligations and the Tanker Prepetition Obligations, as applicable, and (c) to allow Credit Agricole, upon the occurrence of a Termination Date, to terminate the use of Offshore Vessel Cash Collateral and Tanker Cash Collateral in accordance with the Interim Order. [(Interim Order, Section 12)] 21

22 scc Doc 70 Filed 03/14/17 Entered 03/14/17 22:01:33 Main Document Pg 22 of 36 Carve-Out Bankruptcy Rule 4001(b)(1)(B)(iii); Local Bankruptcy Rules (a)(5) and (d) For purposes of the Interim Order, the term Carve-Out shall mean: (a) in connection with the CA Debtors Chapter 11 Cases prior to a Termination Event (i) all fees required to be paid to the Clerk of the Bankruptcy Court and to the U.S. Trustee under section 1930(a) of title 28 of the United States Code for the CA Debtors Chapter 11 Cases, whether paid directly by the CA Debtors or on their behalf, and (ii) professional fees and expenses of the Debtors that are incurred and appropriately and fairly allocated to the CA Debtors Chapter 11 Cases, and invoiced and payable under sections 330 and 331 of the Bankruptcy Code or otherwise, whether prior to or after a Termination Event, whether paid directly by the CA Debtors or on their behalf in an amount not to exceed $100,000, and (b) in connection with the CA Debtors Chapter 11 Cases after a Termination Event and without duplication of the amounts described in clause (a) above, (i) an aggregate amount not to exceed $50,000 comprised of professional fees and expenses of the Debtors that are incurred and that are appropriately and fairly allocated to the CA Debtors Chapter 11 Cases and (ii) an amount not to exceed $25,000 comprised of the professional fees and expenses incurred by a chapter 7 trustee appointed in the CA Debtors cases and that are appropriately and fairly allocated to the CA Debtors, all of the foregoing whether paid directly by the CA Debtors or on their behalf; provided, however, that the Debtors shall be permitted to pay the professional fees and expenses described in clause (b) and the amount of such fees and expenses (to the extent allowed by the Bankruptcy Court) paid under clause (b) shall not be reduced by the amount of any compensation and reimbursement of expenses incurred prior to the occurrence of a Termination Event whether paid prior to or after a Termination Event. In the event that the U.S. Trustee appoints a Committee in these Chapter 11 Cases, Credit Agricole and the Debtors will negotiate an appropriate carve-out for Committee professional fees in good faith. [(Interim Order, Section 8)] 22

23 scc Doc 70 Filed 03/14/17 Entered 03/14/17 22:01:33 Main Document Pg 23 of 36 Provisions that Could Restrict the Rights and Powers of the Debtor in Possession Bankruptcy Rule 4001(b)(1)(B) (iii); Local Bankruptcy Rule (a)(8) Stipulations. Without prejudice to the rights, if any, of any other party (but subject to the limitations thereon described in paragraph 10 of the Interim Order), the Debtors acknowledge, admit, stipulate and agree (collectively, the Stipulations ) that: (1)(a) the Offshore Vessel Prepetition Obligations constitute legal, valid, binding, enforceable and non-avoidable obligations of the Offshore Vessel Borrower under the Offshore Vessel Facility Documents and are deemed to be allowed claims of Credit Agricole against the Offshore Vessel Borrower; and (b) no offsets, recoupments, challenges, objections, defenses, claims or counterclaims of any kind or nature to any of the Offshore Vessel Prepetition Obligations exist, and no portion of the Offshore Vessel Prepetition Obligations is subject to any challenge or defense of any kind or nature including, without limitation, avoidance, disallowance, disgorgement, recharacterization or subordination (whether equitable or otherwise pursuant to the Bankruptcy Code or applicable nonbankruptcy law); (2) the Offshore Vessel Prepetition Liens constitute legal, valid, binding, properly perfected and enforceable first priority liens on and security interests in the Offshore Vessel Prepetition Collateral (including the Offshore Vessel Cash Collateral (as defined below) but excluding the Offshore Vessel Charters) that are not subject to avoidance or subordination pursuant to the Bankruptcy Code or applicable non-bankruptcy law; (3) all proceeds in the Offshore Vessel Accounts, all prepetition Offshore Vessel Earnings and all postpetition Offshore Vessel Earnings (for which the Debtors shall be required to provide an accounting and reconciliation for the period beginning with the daily balance as of the close of business on August 31, 2016 and each day through the date of entry of the Interim Order within fifteen (15) days of the entry of the Interim Order in accordance with paragraph 11 of the Interim Order) and all Insurances and requisition compensation in relation to each of the Credit Agricole Offshore Vessels shall constitute cash collateral within the meaning of Section 363(a) of the Bankruptcy Code (collectively, the Offshore Vessel Cash Collateral ); provided, however, Credit Agricole s and the Debtors rights are reserved 23

24 scc Doc 70 Filed 03/14/17 Entered 03/14/17 22:01:33 Main Document Pg 24 of 36 as to the characterization of the funds, and any interests therein, held at the Debtors non-debtor affiliate, Sealion Shipping, Ltd. ( Sealion ), as of the Petition Date; (4)(a) the Tanker Prepetition Obligations constitute legal, valid, binding, enforceable and non-avoidable obligations of the Tanker Borrower and T&T under the Tanker Facility Documents and are deemed to be allowed claims of Credit Agricole against each of the Tanker Borrower and T&T; and (b) no offsets, recoupments, challenges, objections, defenses, claims or counterclaims of any kind or nature to any of the Tanker Prepetition Obligations exist, and no portion of the Tanker Prepetition Obligations is subject to any challenge or defense of any kind or nature including, without limitation, avoidance, disallowance, disgorgement, recharacterization or subordination (whether equitable or otherwise pursuant to the Bankruptcy Code or applicable non-bankruptcy law); (5) the Tanker Prepetition Liens constitute legal, valid, binding, properly perfected and enforceable first priority liens on and security interests in the Tanker Prepetition Collateral (including in the Tanker Cash Collateral (as defined below)) that are not subject to avoidance or subordination pursuant to the Bankruptcy Code or applicable non-bankruptcy law; and (6) all proceeds in the Tanker Accounts, all prepetition Tanker Earnings and all postpetition Tanker Earnings (for which the Debtors shall be required to provide an accounting and reconciliation for the period beginning with the daily balance as of the close of business on August 31, 2016 and each day through the date of entry of the Interim Order within fifteen (15) days of the entry of the Interim Order in accordance with paragraph 11 of the Interim Order) and all Insurances and requisition compensation in relation to the Credit Agricole Tanker shall constitute cash collateral within the meaning of Section 363(a) of the Bankruptcy Code (collectively, the Tanker Cash Collateral ); provided, however, Credit Agricole s and the Debtors rights are reserved as to the characterization of the funds, and any interests therein, held at the Debtors non-debtor affiliate, Marine Management Services M.C. ( MMS ), as of the Petition Date. 24

25 scc Doc 70 Filed 03/14/17 Entered 03/14/17 22:01:33 Main Document Pg 25 of 36 Releases. Subject to the entry of the Final Order and without prejudice to the rights of any other party (but subject to the limitations thereon described in paragraph 10 of the Interim Order), each of the Debtors and the Debtors estates, on its own behalf and on behalf of its past, present and future predecessors, successors, heirs, subsidiaries, and assigns, hereby, to the maximum extent permitted by applicable law, unconditionally, irrevocably and fully, forever waives and releases Credit Agricole and its former, current, or future officers, employees, directors, agents, representatives, owners, members, partners, financial advisors, legal advisors, shareholders, managers, consultants, accounts, attorneys, affiliates, and predecessors in interest of any and all Claims (as defined in section 101(5) of the Bankruptcy Code), counterclaims, causes of action, defenses or setoff rights that exist on the date the Interim Order is entered relating to any of the Offshore Vessel Prepetition Collateral, the Tanker Prepetition Collateral, the Offshore Vessel Facility Documents or the Tanker Facility Documents or the transactions contemplated under such documents, whether known, unknown, asserted, unasserted, suspected, unsuspected, accrued, unaccrued, fixed, contingent, pending or threatened, arising at law or in equity, including, without limitation, any socalled lender liability, recharacterization, subordination, avoidance or other claim arising under or pursuant to section 105 or chapter 5 of the Bankruptcy Code or under any other similar provisions of applicable state or federal law and any and all claims and causes of action regarding the validity, priority, perfection or avoidability of Credit Agricole s liens or claims. Subject to paragraph 10 of the Interim Order, the Debtors acknowledgements, stipulations, and releases shall be binding on the Debtors and their respective representatives, successors and assigns, and, on each of the Debtors estates, all creditors thereof and each of their respective representatives, successors and assigns, including, without limitation, any trustee or other representative appointed in these Chapter 11 Cases, whether any such trustee or representative is appointed under chapter 7 or chapter 11 of the Bankruptcy Code. [(Interim Order, Sections C and D)] 25