rdd Doc 29 Filed 02/06/17 Entered 02/06/17 23:38:03 Main Document Pg 1 of 70. In re : Chapter 11 Case No.

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1 Pg 1 of 70 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK x In re : Chapter 11 Case No. ULTRAPETROL (BAHAMAS) LIMITED, et al., : 17- ( ) x Debtors. 1 : (Joint Administration Pending) DEBTORS APPLICATION FOR AUTHORITY TO EMPLOY AND RETAIN ALIXPARTNERS INTERNATIONAL, LLC TO PROVIDE FINANCIAL ADVISORY AND RESTRUCTURING CONSULTING SERVICES TO THE DEBTORS NUNC PRO TUNC TO THE COMMENCEMENT DATE Ultrapetrol (Bahamas) Limited ( UBL ) and certain of its wholly-owned direct and indirect subsidiaries, as debtors and debtors in possession in the above-captioned chapter 11 cases (collectively with UBL, Ultrapetrol or the Debtors and collectively with its non-debtor affiliates, the Company ), respectfully represent: Background 1. On the date hereof (the Commencement Date ) each of the Debtors filed with this Court a voluntary petition for relief under chapter 11 of title 11, United States Code (the Bankruptcy Code ). The Debtors are authorized to continue to operate their businesses and manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the 1. The Debtors in these chapter 11 cases are the following entities: Ultrapetrol (Bahamas) Limited, Arlene Investments, Inc.; Brinkley Shipping Inc.; Cedarino S.A.; Compañia Paraguaya De Transporte Fluvial S.A.; Dampierre Holdings Spain, S.A.; Danube Maritime Inc.; Dingle Barges Inc.; Eastham Barges Inc.; General Ventures Inc.; Hallandale Commercial Corp.; Longmoor Holdings, Inc.; Marine Financial Investment Corp.; Massena Port S.A.; Oceanpar S.A.; Parabal S.A.; Parfina S.A.; Princely International Finance Corp.; Regal International Investments S.A.; Riverpar S.A.; Riverview Commercial Corp.; Thurston Shipping Inc.; UABL Barges (Panama) Inc.; UABL Limited; UABL Paraguay S.A.; UABL Towing Services S.A.; UABL S.A.; Ultrapetrol S.A.; UPB (Panama) Inc.; UP River (Holdings) Ltd. (Bahamas); and UP River Terminals (Panama) S.A. The foreign equivalent of an EIN, if any, for each Debtor is set forth in its chapter 11 petition.

2 Pg 2 of 70 Bankruptcy Code. No trustee, examiner, or statutory committee of unsecured creditors has been appointed in these cases. 2. Contemporaneously herewith, the Debtors have filed a motion requesting joint administration of their chapter 11 cases for procedural purposes only pursuant to Fed. R. Bankr. P. 1015(b). Ultrapetrol s Businesses 3. Ultrapetrol is an industrial shipping company serving the marine transportation needs of clients in South America and the North Sea geographic markets. UBL, the parent holding company, is a public company whose shares of common stock trade on the OTCQB Venture Market under the symbol ULTR. Ultrapetrol and its non-debtor affiliates serve the shipping markets for grain, forest products, minerals, crude oil, petroleum and refined petroleum products, the general cargo and container trade, as well as the offshore oil platform supply market. Ultrapetrol focuses on operating an efficient and versatile fleet that will allow it to provide an array of transportation services to customers in several different industries. Its business strategy is to leverage its expertise and strong customer relationships to grow its volume, efficiency, and market share in a targeted manner. 4. Historically, Ultrapetrol has organized its business and evaluated performance by its operations in three business segments: River, Ocean, and Offshore Supply. Ultrapetrol s River Business, with 685 barges (of which 24 are under lease) and 35 pushboats as of January 31, 2017, is the largest owner and operator of river barges and pushboats that transport dry bulk and liquid cargos through the Hidrovia Region of South America, a large area with growing agricultural, forest, and mineral related exports that is crossed by navigable rivers that flow through Argentina, Brazil, Bolivia, Paraguay, and Uruguay to ports serviced by ocean export vessels. The River Business also owns a barge building facility which is the most 2

3 Pg 3 of 70 modern of its kind in South America at Punta Alvear, one grain loading terminal, a new midstream transshipment station for agricultural products, and 50% of a joint venture on a second terminal in Paraguay, which can also load and discharge liquid cargos such as vegetable oils and petroleum products. Ultrapetrol s Ocean Business, which was recently sold in accordance with Ultrapetrol s agreement with the lenders to that business, owned two oceangoing vessels and bareboat chartered two other vessels. These vessels were employed in the South American coastal trade, where Ultrapetrol has held preferential rights and customer relationships. Non-Debtor affiliates that comprise the Offshore Supply Business own and operate thirteen platform supply vessels and one remotely-operated vehicle support vessel that provide critical logistical and transportation services for offshore petroleum exploration and production companies in the coastal waters of Brazil and the North Sea. 5. Detailed information regarding Ultrapetrol s business, capital structure, and the circumstances leading to the commencement of these chapter 11 cases is set forth in the Declaration of Damián Scokin Pursuant to Local Bankruptcy Rule The Debtors Prepackaged Plan 6. Prior to the Commencement Date, the Debtors solicited votes on proposed alternative joint prepackaged plans of reorganization under chapter 11 of the Bankruptcy Code pursuant to a disclosure statement, dated November 30, 2016 and a supplement thereto, dated January 17, 2017 (together, the Disclosure Statement ). The alternative plans contemplated two scenarios: (i) the implementation of a restructuring of Ultrapetrol s River and Ocean Business indebtedness as had been agreed with the secured lenders thereto, pursuant to which the Debtors, other than UBL, would be plan proponents (the Parent-Excluded Plan ) or (ii) if the Debtors also obtained an agreement with the secured lenders to its Offshore Supply Business, the 3

4 Pg 4 of 70 comprehensive agreed restructurings of Ultrapetrol s River, Ocean, and Offshore Supply Business indebtedness, pursuant to which all Debtors would be plan proponents (the Parent- Included Plan ). As set forth in the Certification of Prime Clerk LLC Regarding the Solicitation of Votes and Tabulation of Ballots Cast on the Debtors Amended Prepackaged Joint Plan of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code (the Vote Certification ), filed on the Commencement Date, each of the Parent-Excluded Plan and the Parent-Included Plan has been accepted by the classes required to confirm the Plan. 7. By the conclusion of the solicitation period on February 2, 2017, and after a year of discussions followed by an exhaustive marketing process and extensive and vigorous negotiations, Ultrapetrol had reached agreements for the comprehensive restructurings of its River, Ocean, and Offshore Supply Businesses, as reflected in, among other things, restructuring support agreements with both (i) their secured River and Ocean Business lenders, including the holders of over 84% of the 8.875% First Preferred Ship Mortgage Notes due 2021 (the 2021 Notes, and such holders, the Supporting Noteholders ), the International Finance Corporation ( IFC ), the OPEC Fund for International Development ( OFID ), and (ii) all of the holders of their secured Offshore Supply Business indebtedness (collectively, the Offshore Lenders ). 8. As explained in the Disclosure Statement, the Debtors determination of whether to seek confirmation of the Parent-Included Plan or the Parent-Excluded Plan was dependent upon whether (i) the Common Terms Agreement an agreement with the Offshore Lenders amending and restructuring their loans (the Offshore Loan Agreements ) was executed no later than two business days prior to the conclusion of the solicitation period and (ii) the Offshore Lenders voted to accept the Parent-Included Plan. These requirements have been satisfied, and accordingly, the Debtors are requesting that the Court confirm the Parent- 4

5 Pg 5 of 70 Included Plan, which was overwhelmingly accepted by all classes entitled to vote, and will enable Ultrapetrol to implement the comprehensive restructuring of its River, Ocean, and Offshore Supply Business indebtedness. 9. On the Commencement Date, the Debtors filed the proposed Debtors Second Amended Prepackaged Joint Plan of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code, dated February 6, 2017 (the Plan ) and the Disclosure Statement with the Court. Under the Parent-Included Plan, the assets and liabilities of the Debtors will be substantively consolidated for Plan purposes and certain affiliates of UBL s majority shareholder Southern Cross Latin America Private Equity Fund (collectively, Sparrow ) will purchase the River Business (free and clear of any and all claims, interests, liens, and encumbrances), for cash consideration in the amount of $73.0 million, and the Offshore Supply Business, comprised of non-debtor entities, for cash consideration in the amount of $2.5 million. The River and Ocean Business indebtedness owed to the holders of the 2021 Notes, IFC, and OFID of approximately $322.5 million will be satisfied by the payment of $73 million plus certain additional true-up amounts and the transfer of the proceeds from the sale of the Ocean Business; the Offshore Supply Business indebtedness owed by the Debtors non-debtor affiliates to the Offshore Lenders will be restructured out of court, the Offshore Lenders will receive a $10 million prepayment under the Offshore Loan Agreements ratably, and the guarantees by UBL of obligations to the Offshore Lenders will be canceled under the Plan. Other secured claims and general unsecured claims are unimpaired. Equity interests in UBL will be unimpaired; however, UBL may be dissolved after emergence from chapter Ultrapetrol believes that the Plan will achieve a substantial deleveraging of its balance sheet and avert the deterioration of value and disruptions to worldwide operations that 5

6 Pg 6 of 70 could otherwise result from a protracted and contentious chapter 11 case. With the significant support of Ultrapetrol s creditors, the Plan provides a fair and reasonable path for an expeditious restructuring and the preservation of Ultrapetrol s business and operations. Jurisdiction 11. This Court has jurisdiction to consider this matter pursuant to 28 U.S.C. 157 and This is a core proceeding pursuant to 28 U.S.C. 157(b). Venue is proper in this district pursuant to 28 U.S.C and Relief Requested 12. By this application, Ultrapetrol seeks entry of an order pursuant to section 327(a) of the Bankruptcy Code and Fed. R. Bankr. P. 2014(a), substantially in the form attached hereto, authorizing Ultrapetrol to employ and retain AlixPartners International, LLC ( AlixPartners ) nunc pro tunc to the Commencement Date, to provide financial advisory and restructuring consulting services to the Debtors under the terms of the Engagement Letter dated December 17, 2015, as modified by amendments dated December 24, 2015, September 30, 2016, and January 17, 2017 (collectively, the Engagement Letter ), attached to the proposed order as Exhibit 1, all as more fully described below. Scope of Services 13. The financial advisory and restructuring consulting services that AlixPartners will render are detailed in the Engagement Letter. Any references to or summaries of the Engagement Letter are qualified by the express terms of the Engagement Letter, which shall govern if there is any conflict. 14. Specifically, AlixPartners has agreed to provide, as applicable in these cases, the following financial advisory and restructuring consulting services to Ultrapetrol in these chapter 11 cases: 6

7 Pg 7 of 70 (a) Assist in negotiations with stakeholders and their representatives. (b) (c) (d) Manage the claims and claims reconciliation processes. Assist with the preparation of the statements of affairs, schedules and other regular reports required by the Bankruptcy Court as well as providing assistance in such areas as testimony before the Bankruptcy Court on matters that are within AlixPartners areas of expertise. Assist with such other matters as may be requested that fall within AlixPartners expertise and that are mutually agreeable. AlixPartners Qualifications 15. Ultrapetrol has selected AlixPartners International, LLC to provide financial advisory and restructuring consulting services based upon AlixPartners extensive experience as restructuring advisors, with the resources, capabilities, and experience necessary to assist Ultrapetrol in matters that are crucial to the administration of the chapter 11 cases. Restructuring advisors, such as AlixPartners, perform critical services that complement the services provided by other professionals involved in these chapter 11 cases. 16. Ultrapetrol is familiar with the professional standing and reputation of AlixPartners. Ultrapetrol understands that AlixPartners has a wealth of experience in providing restructuring advisory services, including financial advisory and general consulting services, and enjoys an excellent reputation for services it has rendered in chapter 11 cases of this nature on behalf of debtors and creditors throughout the United States. On the basis of Ultrapetrol s experience and discussions with AlixPartners, Ultrapetrol understands the following. 17. AlixPartners LLP and several of its affiliates, including AlixPartners International, LLC, have assisted, advised, and provided strategic advice to debtors, creditors, bondholders, investors, and other entities in numerous chapter 11 cases. Since its inception in 7

8 Pg 8 of , AlixPartners, LLP and its affiliates have provided restructuring or crisis management services in numerous cases. See, e.g., In re Nautilus Holdings Ltd., Case No (RDD) (Bankr. S.D.N.Y. June 23, 2014); TMT USA Shipmanagement LLC, Case No (MI) (Bankr. S.D. Tex. June 20, 2013); In re Residential Capital, LLC, Case No (MG) (Bankr. S.D.N.Y. Aug. 10, 2012); In re Eastman Kodak Company, Case No (ALG) (Bankr. S.D.N.Y. Jan. 19, 2012); In re Nebraska Book Company, Inc., Case No (PJW) (Bankr. D. Del. July 21, 2011); In re American Safety Razor Co., LLC, Case No (MFW) (Bankr. D. Del. Aug. 24, 2010); In re Neff Corp., Case No (SCC) (Bankr. S.D.N.Y. July 16, 2010); In re U.S. Concrete, Inc., Case No (PJW) (Bankr. D. Del. May 21, 2010); In re The Reader s Digest Association Inc., Case No (RDD) (Bankr. S.D.N.Y. Oct. 6, 2009); In re Gen. Growth Prop., Inc., Case No (ALG) (Bankr. S.D.N.Y. July 13, 2009); In re Charter Communications, Inc., Case No (JMP) (Bankr. S.D.N.Y. Apr. 15, 2009); In re Metro Fuel Oil Corp., Case No through (ESS) (Bankr. E.D.N.Y. Sept. 27, 2012); In re ACG Holdings, Inc., Case No (CSS) (Bankr. D. Del. Aug. 11, 2008); In re Tropicana Entm t, LLC, Case No (KJC) (Bankr. D. Del. May 30, 2008). 18. Since its retention on December 17, 2015, AlixPartners International, LLC has provided prepetition services to Ultrapetrol in preparation for its restructuring efforts. 2 AlixPartners International, LLC professionals have worked extensively with Ultrapetrol s management and directors to fully understand Ultrapetrol s business and operations. As a result of this prepetition work, AlixPartners International, LLC has acquired significant knowledge of Ultrapetrol and its businesses and is familiar with Ultrapetrol s financial affairs, capital structure, 2. Some AlixPartners personnel have previously worked with the Debtors pursuant to an engagement letter between the Debtors and AlixPartners International, LLC, an affiliate of AlixPartners. 8

9 Pg 9 of 70 operations, and related matters that will aid Ultrapetrol in these chapter 11 cases. In providing prepetition services to Ultrapetrol, AlixPartners International, LLC has worked closely with Ultrapetrol s other professionals and senior management and is familiar with the other major stakeholders that will likely be involved in these chapter 11 cases. Accordingly, AlixPartners International, LLC has developed the relevant experience and expertise regarding Ultrapetrol that (i) will make AlixPartners International, LLC a natural choice to serve as Ultrapetrol s restructuring advisor, providing financial advisory and restructuring consulting service, within chapter 11 and (ii) will assist AlixPartners International, LLC in providing effective and efficient services in these chapter 11 cases. Professional Compensation 19. AlixPartners International, LLC s retention by Ultrapetrol is conditioned upon its ability to be retained in accordance with its customary terms and conditions of employment, compensated for its services, and reimbursed for the out-of-pocket expenses it incurs in accordance with its customary billing practices. 20. Ultrapetrol is advised that AlixPartners International, LLC intends to apply for compensation for professional services rendered and reimbursement of expenses incurred in connection with these chapter 11 cases, subject to this Court s approval, in accordance with the proposed terms of compensation and reimbursement set forth in the Engagement Letter (all such proposed terms, the Fee and Expense Structure ), to which Ultrapetrol respectfully refers this Court for a full recitation, and in compliance with General Order M-412 (Order Establishing Procedures for Monthly Compensation and Reimbursement of Expenses of Professionals, dated December 21, 2010 (Gonzalez, C.J.)), Administrative Order M- 447 (Amended Guidelines for Fees and Disbursements for Professionals in Southern District of 9

10 Pg 10 of 70 New York Bankruptcy Cases, dated January 29, 2013 (Morris, C.J.)), and the U.S. Trustee Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses Filed Under 11 U.S.C. 330 (Appendix A to 28 C.F.R. 58) (collectively, the Fee Guidelines ), sections 330 and 331 of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, and any further orders of the Court (the Orders ), both in connection with this application and the interim and final fee applications to be filed by AlixPartners International, LLC in these chapter 11 cases. Moreover, Ultrapetrol is advised that AlixPartners International, LLC will, to the best of its ability, comply with the Office of the United States Trustee for the Southern District of New York s requests for information and additional disclosures as set forth in the Fee Guidelines. 21. The current standard hourly rates, subject to periodic adjustments, charged by AlixPartners International, LLC in respect of the professionals anticipated to be assigned to these chapter 11 cases are as follows: Title Hourly Rate Managing Director $960 $1,135 Director $745 $910 Vice President $550 $660 Associate $380 $520 Analyst $135 $365 Paraprofessional $250 $270 10

11 Pg 11 of 70 AlixPartners Personnel Name Description Hourly Rate Commitment Full or Part Time Rebecca Roof Managing Director $1,110 Part-time Stephen Spitzer Managing Director $985 Part-time Peter Baldwin Vice President $660 Part-time Jon Bryant Analyst $380 Part-time 22. Ultrapetrol is advised that AlixPartners International, LLC reviews and revises its billing rates on January 1 of each year. AlixPartners International, LLC typically works for compensation that includes hourly-based fees and performance-based contingent incentive compensation earned upon achieving meaningful results. In these chapter 11 cases, however, AlixPartners International, LLC has not required contingent incentive compensation. 23. Under the Engagement Letter, if AlixPartners International, LLC finds it desirable to augment its professional staff with independent contractors (each, an Independent Contractor ) in these chapter 11 cases (a) AlixPartners International, LLC will file, and require the Independent Contractor to file, declarations indicating that such Independent Contractor has reviewed the list of interested parties in this case, disclosing the Independent Contractor s relationships, if any, with the interested parties, and indicating that the Independent Contractor is disinterested, (b) the Independent Contractor will remain disinterested during the time that the Independent Contractor is involved in providing services on behalf of Ultrapetrol, and (c) the Independent Contractor will represent that he or she will not work for Ultrapetrol or other parties in interest in these chapter 11 cases during the time AlixPartners International, LLC is involved in providing services to Ultrapetrol, except as an Independent Contractor of AlixPartners 11

12 Pg 12 of 70 International, LLC. AlixPartners will charge Ultrapetrol for an Independent Contractor s services at the rate charged to AlixPartners International, LLC by such Independent Contractor. 24. In connection with each of its engagements, AlixPartners International, LLC may use employees from each of its U.S. and non-u.s. subsidiary affiliates, depending on the needs of the engagement. To the extent AlixPartners International, LLC uses employees from other non-u.s. subsidiary affiliates of AlixPartners during this engagement, AlixPartners International, LLC will charge standard non-u.s. hourly rates for each such employee, converted without mark-up to U.S. dollars on the invoice date. To the extent AlixPartners International, LLC uses employees of other U.S. subsidiary affiliates during this engagement, AlixPartners International, LLC will charge standard U.S. hourly rates for each such employee. 25. In addition to compensation for professional services rendered by AlixPartners International, LLC personnel, AlixPartners International, LLC will seek reimbursement for actual and necessary expenses incurred in connection with this chapter 11 case, including reasonable transportation costs, lodging, and meals. 26. AlixPartners International, LLC will maintain time records of its professionals in 1/10th of an hour increments and provide a description of the efforts devoted by them in rendering the services. AlixPartners International, LLC will also maintain detailed records of any actual and necessary costs and expenses incurred in connection with the services provided to Ultrapetrol during these cases. 27. Ultrapetrol is advised that the Fee and Expenses Structure is consistent with, and typical of, compensation arrangements entered into by AlixPartners and other comparable firms that render similar services under similar circumstances. Ultrapetrol believes that the Fee and Expense Structure is reasonable, market-based, and designed to fairly 12

13 Pg 13 of 70 compensate AlixPartners International, LLC for its work and to cover fixed and routine overhead expenses. Indemnification Provisions 28. The Engagement Letter contains standard indemnification language with respect to AlixPartners International, LLC services including, without limitation, an agreement by Ultrapetrol to indemnify AlixPartners International, LLC, its affiliates, and its partners, directors, officers, owners, employees, and agents from and against all claims, liabilities, losses, expenses, and actual damages arising out of or in connection with the engagement of AlixPartners International, LLC that is the subject of the Engagement Letter. 29. The terms and conditions of the Engagement Letter, including the indemnification provisions and other aspects of the Fee and Expense Structure, were negotiated by Ultrapetrol and AlixPartners International, LLC at arm s length and in good faith. Ultrapetrol and AlixPartners International, LLC respectfully submit that such terms and conditions are customary and reasonable for financial advisory engagements, both out of court and within chapter 11 cases. Specifically, the indemnification provisions in the Engagement Letter (and as reflected in the proposed Order) contain the qualifications and limitations that are customary in this district and other jurisdictions. Further, when viewed in conjunction with the other terms of AlixPartners International LLC s proposed retention, such indemnification provisions are reasonable and in the best interests of Ultrapetrol, its creditors, and all parties in interest. Accordingly, as part of this application, Ultrapetrol requests that this Court approve the terms of the Engagement Letter, including the indemnification provisions as set forth therein and reflected in the proposed Order. 13

14 Pg 14 of Ultrapetrol believes that this Fee and Expense Structure, which is similar to fee arrangements authorized in other chapter 11 cases in which AlixPartners or its affiliates have rendered services, is reasonable in light of industry practice, market rates both in and out of chapter 11 proceedings, the experience of AlixPartners and its affiliates in reorganizations, and the scope of work to be performed pursuant to its retention. Ultrapetrol believes that given the nature of the services to be provided, the above described Fee and Expense Structure is both fair and reasonable. 31. Ultrapetrol believes that AlixPartners International, LLC is eminently qualified to serve Ultrapetrol in this case, and that the retention of AlixPartners International, LLC is in the best interest of Ultrapetrol, its estates, creditors and shareholders. Payments Prior to the Petition Date 32. AlixPartners International, LLC received an advance retainer payment aggregating $100, (the Retainer ). Pursuant to the Engagement Letter, invoiced amounts have been offset against the Retainer and payments on the invoices have been used to replenish the retainer. During the ninety days prior to the commencement of these chapter 11 cases, Ultrapetrol paid AlixPartners International, LLC a total of approximately $640, incurred in providing services to Ultrapetrol in contemplation of, and in connection with, prepetition restructuring activities. AlixPartners International, LLC s current estimate is that it received unapplied advance payments from Ultrapetrol in excess of prepetition billings of approximately $152,666.35, which is subject to final determination after all prepetition billings and collections are reconciled. 33. Due to the ordinary course and unavoidable reconciliation of fees and submission of expenses immediately prior to, and subsequent to, the Commencement Date, 14

15 Pg 15 of 70 AlixPartners International, LLC may have incurred but not billed fees and reimbursable expenses that relate to the prepetition period. Approval is sought from this Court for AlixPartners International, LLC to apply the Retainer to these amounts. To the extent AlixPartners International, LLC incurred any unbilled fees or reimbursable expenses in excess of the Retainer, AlixPartners International, LLC has agreed not to seek payment of such amounts and to waive any claim against Ultrapetrol for such amounts. Accordingly, Ultrapetrol will not owe AlixPartners International, LLC any sums for prepetition services. 34. Any balance of the Retainer will constitute an evergreen retainer as security for postpetition services and expenses. An evergreen retainer is appropriate in these chapter 11 cases. First, evergreen retainer agreements reflect normal business terms in the marketplace. Second, AlixPartners International, LLC and Ultrapetrol are sophisticated business entities that have negotiated the Retainer at arm s length. As such, Ultrapetrol respectfully requests that approval of the proposed evergreen retainer is warranted. AlixPartners Disinterestedness 35. To the best of Ultrapetrol s knowledge, and as disclosed in the declaration of Rebecca A. Roof, attached hereto as Exhibit 2 (the Roof Declaration ) and incorporated herein by reference, (a) AlixPartners, LLP, its affiliates and its professionals are disinterested within the meaning of section 101(14) of the Bankruptcy Code, as modified by section 1107(b) of the Bankruptcy Code and as required by section 327(a) and referenced by section 328(c) of the Bankruptcy Code, and neither hold nor represent any interest adverse to Ultrapetrol and its estates with respect to the matters for which AlixPartners International, LLC is to be employed and (b) AlixPartners, its affiliates and its professionals have no connection to Ultrapetrol, its creditors, or its related parties herein except as disclosed in the Roof Declaration. The Roof 15

16 Pg 16 of 70 Declaration contains information available to date on AlixPartners connections with other parties in interest, in accordance with Bankruptcy Rule 2014(a). 36. Ultrapetrol has been informed that AlixPartners will conduct an ongoing review of its files to ensure that no disqualifying circumstances arise, and if any new relevant facts or relationships are discovered, AlixPartners will supplement its disclosure to the Court. No Duplication of Services 37. Ultrapetrol intends that the services of AlixPartners International, LLC will complement and not duplicate the services rendered by any other professional retained in these chapter 11 cases. AlixPartners International, LLC will not be performing any CRO or traditional public accounting or auditing services, including the preparation of annual federal and state tax returns related to Ultrapetrol s financial statements. AlixPartners International, LLC understands Ultrapetrol has retained and may retain additional professionals during the term of its engagement, and agrees to work cooperatively with such professionals to seek to avoid duplicative work conducted by the professionals on behalf of Ultrapetrol. The Relief Requested Should be Approved by the Court 38. Section 327(a) of the Bankruptcy Code authorizes a debtor to employ professionals that do not hold or represent an interest adverse to the estate, and that are disinterested persons. 11 U.S.C. 327(a). 39. As discussed above, to the best of Ultrapetrol s knowledge, AlixPartners is a disinterested person within the meaning of section 101(14) of the Bankruptcy Code, and does not hold or represent an interest adverse to Ultrapetrol s estates. 40. Further, the Fee and Expense Structure appropriately reflects the nature and scope of the financial advisory and restructuring consulting services, AlixPartners 16

17 Pg 17 of 70 substantial experience and expertise in the provision of such services in chapter 11 cases, and the compensation arrangement typically agreed to by AlixPartners and other leading professional services firms for engagements of this nature. 41. AlixPartners International, LLC intends to apply for compensation for professional services rendered and reimbursement of expenses incurred in connection with these chapter 11 cases, subject to the Court s approval and in compliance with sections 330 and 331 of the Bankruptcy Code and applicable Bankruptcy Rules, Local Bankruptcy Rules, and any other applicable procedures and Orders of the Court, with certain limited modifications. 42. Denying the relief requested herein would deprive Ultrapetrol of the assistance of a highly qualified professional services firm. Ultrapetrol would be forced to engage a new financial advisory and restructuring consulting services firm that would lack the same understanding of its businesses and restructuring initiatives both already in progress and soon to be implemented. Forcing Ultrapetrol to engage a new financial advisory and restructuring consulting services firm would therefore require additional time and resources, and would disadvantage Ultrapetrol and all parties in interest. Accordingly, Ultrapetrol respectfully submits that the Financial Services provided by AlixPartners International, LLC are vital to the success of these chapter 11 cases and requests that the Court approve the Engagement Letter in substantially the form attached hereto. Notice 43. Notice of this application is being provided to (i) the Office of the United States Trustee for the Southern District of New York, (ii) counsel to the trustee under the Indenture for Ultrapetrol s 2021 Notes, (iii) counsel to the informal committee of unaffiliated holders of Ultrapetrol s 2021 Notes, (iv) counsel to IFC and OFID, (v) counsel to the agents under the Offshore Loan Agreements, (vi) counsel to Sparrow, (vii) the holders of the ten largest 17

18 Pg 18 of 70 secured claims against Ultrapetrol (on a consolidated basis), (viii) the holders of the forty largest unsecured claims against Ultrapetrol (on a consolidated basis), (ix) counsel to Copernico Argentina Fund, (x) the Securities and Exchange Commission, and (xi) all parties having filed requests for notices in these cases pursuant to Fed. R. Bankr. P Ultrapetrol submits that, in view of the facts and circumstances, such notice is sufficient and no other or further notice need be given. 44. No previous application for the relief sought herein has been made to this or to any other court. 18

19 Pg 19 of 70 WHEREFORE Ultrapetrol respectfully requests entry of an order granting the relief requested herein and such other and further relief as is just. Dated: February 6, 2017 ULTRAPETROL (BAHAMAS) LIMITED, (for itself and on behalf of its whollydirect and indirect subsidiaries, as owned Debtors and btors in Possession) Name: M ia Cecilia Yad Title: ief Financial Officer

20 Pg 20 of 70 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK x In re : Chapter 11 Case No. ULTRAPETROL (BAHAMAS) LIMITED, et al., : 17- ( ) x Debtors. 1 : (Joint Administration Pending) ORDER AUTHORIZING THE EMPLOYMENT AND RETENTION OF ALIXPARTNERS INTERNATIONAL, LLC TO PROVIDE FINANCIAL ADVISORY AND RESTRUCTURING CONSULTING SERVICES TO THE DEBTORS NUNC PRO TUNC TO THE COMMENCEMENT DATE A hearing having been held on February, 2017 (the Hearing ), to consider the application, dated February 6, 2017 (the Application ), 2 of Ultrapetrol (Bahamas) Limited ( UBL ) and certain of its wholly-owned direct and indirect subsidiaries, as debtors and debtors in possession in the above-captioned chapter 11 cases (collectively with UBL, Ultrapetrol or the Debtors ), pursuant to section 327(a) of title 11 of the United States Code (the Bankruptcy Code ) and Rule 2014(a) of the Federal Rules of Bankruptcy Procedure, for entry of an order authorizing Ultrapetrol to employ and retain AlixPartners International, LLC nunc pro tunc to the Commencement Date to provide financial advisory and restructuring consulting services, 1. The Debtors in these chapter 11 cases are the following entities: Ultrapetrol (Bahamas) Limited, Arlene Investments, Inc.; Brinkley Shipping Inc.; Cedarino S.A.; Compañia Paraguaya De Transporte Fluvial S.A.; Dampierre Holdings Spain, S.A.; Danube Maritime Inc.; Dingle Barges Inc.; Eastham Barges Inc.; General Ventures Inc.; Hallandale Commercial Corp.; Longmoor Holdings, Inc.; Marine Financial Investment Corp.; Massena Port S.A.; Oceanpar S.A.; Parabal S.A.; Parfina S.A.; Princely International Finance Corp.; Regal International Investments S.A.; Riverpar S.A.; Riverview Commercial Corp.; Thurston Shipping Inc.; UABL Barges (Panama) Inc.; UABL Limited; UABL Paraguay S.A.; UABL Towing Services S.A.; UABL S.A.; Ultrapetrol S.A.; UPB (Panama) Inc.; UP River (Holdings) Ltd. (Bahamas); and UP River Terminals (Panama) S.A. The foreign equivalent of an EIN, if any, for each Debtor is set forth in its chapter 11 petition. 2. Capitalized terms not otherwise herein defined shall have the meanings ascribed to such terms in the Application.

21 Pg 21 of 70 pursuant to the terms set forth in the Application; and upon consideration of the Declaration of Rebecca A. Roof in support of this Application (the Roof Declaration ); and the Court having jurisdiction to consider the Application and the relief requested therein in accordance with 28 U.S.C. 157 and 1334 and Amended Standing Order of Reference M-431, dated January 31, 2012 (Preska, C.J.); and consideration of the Application and the relief requested therein being a core proceeding pursuant to 28 U.S.C. 157(b); and venue being proper before this Court pursuant to 28 U.S.C and 1409; and due and proper notice of the Application having been provided to (i) the Office of the United States Trustee for the Southern District of New York, (ii) counsel to the trustee under the Indenture for Ultrapetrol s 2021 Notes, (iii) counsel to the informal committee of unaffiliated holders of Ultrapetrol s 2021 Notes, (iv) counsel to IFC and OFID, (v) counsel to the agents under the Offshore Loan Agreements, (vi) counsel to Sparrow, (vii) the holders of the ten largest secured claims against Ultrapetrol (on a consolidated basis), (viii) the holders of the forty largest unsecured claims against Ultrapetrol (on a consolidated basis), (ix) counsel to Copernico Argentina Fund, (x) the Securities and Exchange Commission, and (xi) all parties having filed requests for notices in these cases pursuant to Fed. R. Bankr. P. 2002, and it appearing that no other or further notice need be provided; and upon the Application, the papers in support thereof and the responses thereto, if any, the Roof Declaration, the record of the Hearing, and all of the proceedings had before the Court; and this Court having determined that the legal and factual bases set forth in the Application and at the Hearing establish just cause for the relief granted herein; and this Court having found that AlixPartners neither holds nor represents any interest adverse to Ultrapetrol s estates; and this Court having found that AlixPartners International, LLC is a disinterested person as that term is defined in section 101(14) of the Bankruptcy Code and that the legal and factual bases set forth in the 2

22 Pg 22 of 70 Application establish just cause for the relief granted herein; and after due deliberation and sufficient cause appearing therefore, it is ORDERED that the Application is granted nunc pro tunc to the Commencement Date to the extent provided herein; and it is further ORDERED that pursuant to sections 327, 330, and 331 of the Bankruptcy Code and Fed. R. Bankr. P. 2014, Ultrapetrol is authorized to employ and retain AlixPartners International, LLC to provide financial advisory and restructuring consulting services in accordance with the terms and provisions of the Engagement Letter; and it is further ORDERED that the terms and conditions of AlixPartners International, LLC s employment as provided in the Engagement Letter are reasonable and are hereby approved. Further, the Fee and Expense Structure as set forth in the Engagement Letter is approved and AlixPartners International, LLC shall be compensated and reimbursed subject to sections 330 and 331 of the Bankruptcy Code in accordance with the terms of the Engagement Letter, subject to the procedures set forth in the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, the Local Bankruptcy Rules, and any other applicable orders of this Court; and it is further ORDERED that the terms of the Engagement Letter are approved in all respects except as limited or modified herein; and it is further ORDERED that AlixPartners International, LLC shall file fee applications for interim and final allowances of compensation and reimbursement of expenses pursuant to the procedures set forth in sections 330 and 331 of the Bankruptcy Code; and it is further ORDERED that AlixPartners International, LLC is authorized to apply the Retainer to satisfy any unbilled or other remaining prepetition fees and expenses AlixPartners International, LLC becomes aware of during its ordinary course billing review and 3

23 Pg 23 of 70 reconciliation. The remaining balance of the Retainer held by AlixPartners International, LLC shall be treated as an evergreen retainer and be held by AlixPartners International, LLC as security throughout these chapter 11 cases until AlixPartners International, LLC s fees and expenses are fully paid; and it is further ORDERED that, prior to any increases in AlixPartners rates, AlixPartners shall file a supplemental affidavit with the Court and provide ten business days notice to Ultrapetrol, the U.S. Trustee, and any official committee, which supplemental affidavit shall explain the basis for the requested rate increases in accordance with section 330(a)(3)(F) of the Bankruptcy Code and state whether Ultrapetrol has consented to the rate increase; and it is further ORDERED that all requests of AlixPartners International, LLC for payment of indemnity pursuant to the Engagement Letter shall be made by means of an application (interim or final, as applicable) and shall be subject to review by the Court to ensure that payment of such indemnity conforms to the terms of the Engagement Letter and is reasonable based upon the circumstances of the litigation or settlement in respect of which indemnity is sought; provided, however, that in no event shall AlixPartners International, LLC be indemnified in the case of its own bad faith, self-dealing, breach of fiduciary duty (if any), gross negligence, or willful misconduct; and it is further ORDERED that in no event shall AlixPartners International, LLC be indemnified if Ultrapetrol or a representative of the estate asserts a claim for, and a court determines by final order that such claim arose out of, AlixPartners International, LLC s own bad faith, self-dealing, breach of fiduciary duty (if any), gross negligence, or willful misconduct; and it is further ORDERED that in the event that AlixPartners International, LLC seeks reimbursement for attorneys fees from Ultrapetrol pursuant to the Engagement Letter, such 4

24 Pg 24 of 70 attorneys fees shall be sought solely in connection with indemnity claims made by or against AlixPartners International, LLC, and the invoices and supporting time records from such attorneys shall be included in AlixPartners International, LLC s own applications (both interim and final) and such invoices and time records shall be subject to the approval of the Bankruptcy Court under the standards of sections 330 and 331 of the Bankruptcy Code without regard to whether such attorney has been retained under section 327 of the Bankruptcy Code and without regard to whether such attorneys services satisfy section 330(a)(3)(C) of the Bankruptcy Code; and it is further ORDERED that, notwithstanding anything to the contrary herein, the United States Trustee and any other statutory committee appointed in these cases retain all rights to object to AlixPartners International, LLC s interim and final fee applications (including expense reimbursement and any request for counsel fees) based upon the reasonableness standard of section 330 of the Bankruptcy Code; and it is further ORDERED that to the extent that there is any inconsistency between the terms of the Application, the Engagement Letter, or this Order, the terms of this Order shall govern; and it is further ORDERED that Ultrapetrol is authorized and empowered to take all actions necessary to implement the relief granted in this Order in accordance with the Application; and it is further ORDERED that notwithstanding anything contained in the Engagement Letter to the contrary, this Court shall retain jurisdiction to hear and determine all matters arising from or related to this Order. 5

25 Pg 25 of 70 Dated: White Plains, New York February, 2017 United States Bankruptcy Judge 6

26 Pg 26 of 70 Exhibit 1 Engagement Letter

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46 Pg 46 of 70 Exhibit 2 Roof Declaration

47 Pg 47 of 70 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK x In re : Chapter 11 Case No. ULTRAPETROL (BAHAMAS) LIMITED, et al., : 17- ( ) x Debtors. 1 : (Joint Administration Pending) DECLARATION OF REBECCA A. ROOF IN SUPPORT OF DEBTORS APPLICATION FOR AUTHORITY TO EMPLOY AND RETAIN ALIXPARTNERS INTERNATIONAL, LLC TO PROVIDE FINANCIAL ADVISORY AND RESTRUCTURING CONSULTING SERVICES TO THE DEBTORS NUNC PRO TUNC TO THE COMMENCEMENT DATE Pursuant to 28 U.S.C. 1746, I, Rebecca A. Roof declare, under penalty of perjury, that: 1. I am a Managing Director of AlixPartners, LLP ( AlixPartners ) 2, which has a place of business at 40 West 57th Street, 29th Floor, New York, New York, I am duly authorized to execute this Declaration on behalf of AlixPartners and in support of the Application, dated February 6, 2017, (the Application ) 3 of the above-captioned debtors and debtors in possession (collectively, the Debtors ) in the above-captioned chapter 11 cases for entry of an order pursuant to section 327(a) of the Bankruptcy Code and Fed. R. Bankr. P. 1. The Debtors in these chapter 11 cases are the following entities: Ultrapetrol (Bahamas) Limited, Arlene Investments, Inc.; Brinkley Shipping Inc.; Cedarino S.A.; Compañia Paraguaya De Transporte Fluvial S.A.; Dampierre Holdings Spain, S.A.; Danube Maritime Inc.; Dingle Barges Inc.; Eastham Barges Inc.; General Ventures Inc.; Hallandale Commercial Corp.; Longmoor Holdings, Inc.; Marine Financial Investment Corp.; Massena Port S.A.; Oceanpar S.A.; Parabal S.A.; Parfina S.A.; Princely International Finance Corp.; Regal International Investments S.A.; Riverpar S.A.; Riverview Commercial Corp.; Thurston Shipping Inc.; UABL Barges (Panama) Inc.; UABL Limited; UABL Paraguay S.A.; UABL Towing Services S.A.; UABL S.A.; Ultrapetrol S.A.; UPB (Panama) Inc.; UP River (Holdings) Ltd. (Bahamas); and UP River Terminals (Panama) S.A. The foreign equivalent of an EIN, if any, for each Debtor is set forth in its chapter 11 petition. 2. AlixPartners International, LLC is a wholly owned subsidiary of AlixPartners, LLP. 3. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Application.

48 Pg 48 of (a), authorizing Ultrapetrol to employ and retain AlixPartners International, LLC nunc pro tunc to the Commencement Date. 2. I submit this Declaration as evidence of the qualifications of AlixPartners International, LLC to serve as financial advisors and restructuring consultants to the Debtors under section 327(a) of chapter 11 of title 11, United States Code (the Bankruptcy Code ), and to make certain disclosures required under sections 329 and 504 of the Bankruptcy Code and Bankruptcy Rules 2014(a) and 2016(b). 3. Unless otherwise stated in this Declaration, I have personal knowledge of the matters set forth herein, and if called and sworn as a witness, I could and would testify competently thereto. To the extent any information disclosed herein requires amendment or modification upon AlixPartners completion of further review, or as additional party in interest information becomes available to it, a supplemental declaration will be submitted to the Court reflecting such amended or modified information. 4. Neither I, nor AlixPartners, nor any employee of AlixPartners represents any entity other than the Debtors in connection with these chapter 11 cases. In addition, except as set forth herein, to the best of my knowledge, after due inquiry, neither I, nor AlixPartners, nor any employee of AlixPartners represents any party in interest in these chapter 11 cases in matters related to these chapter 11 cases. AlixPartners Qualifications 5. AlixPartners, LLP and its affiliates provide restructuring advisory services to debtors in chapter 11 cases and out-of-court restructurings. AlixPartners is an internationally recognized restructuring and turnaround firm, has a wealth of experience in providing financial 2

49 Pg 49 of 70 advisory services, and enjoys an excellent reputation for services it has rendered in large and complex chapter 11 cases on behalf of debtors and creditors throughout the United States. 6. AlixPartners, LLP and several of its affiliates, including AlixPartners International, LLC have assisted, advised, and provided strategic advice to debtors, creditors, bondholders, investors, and other entities in numerous chapter 11 cases. Since its inception in 1981, AlixPartners, LLP and its affiliates have provided restructuring or crisis management services in numerous cases. See, e.g., In re Nautilus Holdings Ltd., Case No (RDD) (Bankr. S.D.N.Y. June 23, 2014); TMT USA Shipmanagement LLC, Case No (MI) (Bankr. S.D. Tex. June 20, 2013); In re Residential Capital, LLC, Case No (MG) (Bankr. S.D.N.Y. Aug. 10, 2012); In re Eastman Kodak Company, Case No (ALG) (Bankr. S.D.N.Y. Jan. 19, 2012); In re Nebraska Book Company, Inc., Case No (PJW) (Bankr. D. Del. July 21, 2011); In re American Safety Razor Co., LLC, Case No (MFW) (Bankr. D. Del. Aug. 24, 2010); In re Neff Corp., Case No (SCC) (Bankr. S.D.N.Y. July 16, 2010); In re U.S. Concrete, Inc., Case No (PJW) (Bankr. D. Del. May 21, 2010); In re The Reader s Digest Association Inc., Case No (RDD) (Bankr. S.D.N.Y. Oct. 6, 2009); In re Gen. Growth Prop., Inc., Case No (ALG) (Bankr. S.D.N.Y. July 13, 2009); In re Charter Communications, Inc., Case No (JMP) (Bankr. S.D.N.Y. Apr. 15, 2009); In re Metro Fuel Oil Corp., Case No through (ESS) (Bankr. E.D.N.Y. Sept. 27, 2012); In re ACG Holdings, Inc., Case No (CSS) (Bankr. D. Del. Aug. 11, 2008); In re Tropicana Entm t, LLC, Case No (KJC) (Bankr. D. Del. May 30, 2008). 7. If the Application is approved, several AlixPartners Personnel will work closely with the Debtors management and other professionals throughout the reorganization process. 3