Case Document 115 Filed in TXSB on 08/08/11 Page 1 of 7

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1 Case Document 115 Filed in TXSB on 08/08/11 Page 1 of 7 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION IN RE: BAYTOWN NAVIGATION INC., et al., 1 DEBTORS. Case No Jointly Administered Chapter 11 DEBTORS MOTION FOR AUTHORITY TO ASSUME EXECUTORY AUDITING AGREEMENT WITH ERNST & YOUNG (HELLAS) CERTIFIED AUDITORS - ACCOUNTANTS S.A. PURSUANT TO BANKRUPTCY CODE 365(a) IF YOU WANT A HEARING, YOU MUST REQUEST ONE IN WRITING AND YOU MUST RESPOND SPECIFICALLY TO EACH PARAGRAPH OF THIS PLEADING. YOU MUST FILE YOUR RESPONSE WITH THE CLERK OF THE BANKRUPTCY COURT WITHIN TWENTY ONE (21) DAYS FROM THE DATE YOU WERE SERVED AND GIVE A COPY TO THE PERSON WHO SENT YOU THE NOTICE; OTHERWISE, THE COURT MAY TREAT THE PLEADING AS UNOPPOSED AND GRANT THE RELIEF. IF A PARTY REQUESTS EMERGENCY CONSIDERATION, THE COURT MAY ACT EXPEDITIOUSLY ON THE MATTER. IF THE COURT ALLOWS A SHORTER RESPONSE TIME THAN TWENTY ONE (21) DAYS, YOU MUST RESPOND WITHIN THAT TIME. IF THE COURT SETS AN EMERGENCY HEARING BEFORE THE RESPONSE TIME WILL EXPIRE, ONLY ATTENDANCE AT THE HEARING IS NECESSARY TO PRESERVE YOUR RIGHTS. IF AN EMERGENCY HEARING IS NOT SET, YOU MUST RESPOND BEFORE THE RESPONSE TIME EXPIRES. A HEARING HAS BEEN SET ON THIS MOTION ON AUGUST 29, 2011, AT 2:00 P.M. IN COURTROOM 403, 515 RUSK, HOUSTON, TEXAS The Debtors in these chapter 11 cases are Omega Navigation Enterprises, Inc.; Galveston Navigation Inc.; Beaumont Navigation Inc.; Carrolton Navigation Inc.; Decatur Navigation Inc.; Elgin Navigation Inc.; Fulton Navigation Inc.; Orange Navigation Inc.; Baytown Navigation Inc.; and Omega Navigation (USA) LLC. 1

2 Case Document 115 Filed in TXSB on 08/08/11 Page 2 of 7 Omega Navigation Enterprises, Inc. ("Omega") et al., the above-captioned debtors and debtors-in-possession (together, the "Debtors"), by and through their undersigned proposed attorneys, hereby file this Motion for Authority to Assume Auditing Agreement With Ernst & Young (Hellas) Certified Auditors - Accountants S.A. Pursuant to Bankruptcy Code 365(a) (the "Motion"). In support thereof, the Debtors would show as follows: I. JURISDICTION 1. The Court has jurisdiction over this matter pursuant to 28 U.S.C and 157. This is a core proceeding within the meaning of 28 U.S.C Venue is proper in this Court pursuant to 28 U.S.C and II. BACKGROUND A. Business Background 2. On July 8, 2011 (the Petition Date ), the Debtors filed voluntary petitions for relief under chapter 11, Title 11 of the United States Code (the Bankruptcy Code ) in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the Court ). Pursuant to sections 1107(a) and 1108 of the Bankruptcy Code, the Debtors are operating their businesses and managing their property as debtors-in-possession. Joint administration of these cases has been granted. No trustees or examiners have been appointed in these cases. No official committees have been appointed in these cases. 3. Omega is an international provider of marine transportation services focusing on seaborne transportation of refined petroleum products. Omega was founded in 2005 and its corporate headquarters is in Athens, Greece. Omega is the parent company of the Debtors and is incorporated in the Marshall Islands. Together, the Debtors wholly own a fleet of eight high specification product tankers. 2

3 Case Document 115 Filed in TXSB on 08/08/11 Page 3 of 7 B. Auditing Agreement 4. On March 21, 2011, prior to the Petition Date, Debtor Omega Navigation Enterprises, Inc. entered into an agreement (the Auditing Agreement or the Agreement ) with Ernst & Young (Hellas) Certified Auditors - Accountants S.A. ( E&Y ), pursuant to which E&Y agreed to audit and report on Omega s consolidated financial statements for the year The auditing agreement is attached hereto as Exhibit A. 5. E&Y commenced work under the Auditing Agreement prepetition. In accordance with the payment schedule included in the Agreement, this Court has authorized payment to E&Y in its Final Order (I) Authorizing Debtors to Use Cash Collateral of Existing Secured Lenders, and (II) Granting Adequate Protection for the Use Thereof [Docket No. 101]. Total payments under the Auditing Agreement are estimated to be 200,000, plus reasonable and customary out-of-pocket expenses of 5%. Of this total amount, approximately 77,000 was earned prepetition and paid postpetition as explained to, and authorized by, the Court at the Debtors' first day hearings. Therefore, all remaining sums due under the Auditing Agreement will be earned and paid on a postpetition basis. 6. This Motion is related to the Debtors motion to retain and pay professionals utilized in the ordinary course of business, which is to be filed in connection herewith, and pursuant to which E&Y seeks to be retained in the ordinary course of the Debtors business. RELIEF REQUESTED 7. By this Motion, the Debtors seek entry of an order (the Order ) pursuant to Bankruptcy Code 365 authorizing the assumption of the Auditing Agreement with E&Y. Under Bankruptcy Code 365 a debtor-in-possession may subject to the Court s approval... assume or reject any executory contract and unexpired lease of the debtor. 11 U.S.C. 365(a). 3

4 Case Document 115 Filed in TXSB on 08/08/11 Page 4 of 7 8. Whether an executory contract or unexpired lease should be assumed or rejected is a question left to a debtor s business judgment. See Richmond Leasing Co. v. Capital Bank, N.A., 762 F.2d 1303, 1309 (5th Cir. 1985); see also, Lifemark Hospitals, Inc. v. Liljeberg Enters., Inc. (Matter of Liljeberg Enters., Inc.), 304 F.3d 410, 438 (5th Cir. 2002); Sharon Steel Corp. v. Nat l Fuel Gas Distr. Corp., 872 F.2d 36, 40 (3d Cir. 1989); In re Gardinier, Inc., 831 F.2d 974, 976 n.2 (11th Cir. 1987). In applying the business judgment standard, courts show great deference to the debtor s decision to assume or reject. See, e.g., Lubrizol Enters. Inc. v. Richmond Metal Finishers, Inc. (In re Richmond Metal Finishers, Inc.), 756 F.2d 1043, 1047 (4th Cir. 1985), cert. denied, 475 U.S (1985); Summit Land Co. v. Allen (In re Summit Land Co.), 13 B.R. 310, 315 (Bankr. D. Utah 1981). As long as assumption... appears to enhance a debtor s estate, court approval of a debtor-in-possession s decision to assume the [contract] should only be withheld if the debtor s judgment is clearly erroneous, too speculative, or contrary to the provisions of the Bankruptcy Code. Richmond Leasing Co., 762 F.2d at The act of assumption must be grounded, at least in part, in the conclusion that maintenance of the contract is more beneficial to the estate than doing without the other party s services. Matter of Liljeberg Enters., Inc., 304 F.3d at 438 (citing Century Indem. Co. v. Nat l Gypsum Co. Settlement Trust (In re Nat l Gypsum Co.), 208 F.3d 498, 505 (5th Cir.), cert. denied, 531 U.S. 871 (2000)). 9. In an exercise of their business judgment, the Debtors have determined that the Auditing Agreement should be assumed. E&Y has already completed a substantial portion of the work called for under the Auditing Agreement, and has developed familiarity with the Debtors and their businesses. Allowing E&Y to complete its audit will enable the Debtors to comply efficiently and expeditiously with their financial reporting requirements with minimal 4

5 Case Document 115 Filed in TXSB on 08/08/11 Page 5 of 7 disruption and expense. Additionally, as E&Y is not owed any prepetition amounts as of the filing of this pleading, so there is no cure cost associated with assuming the Auditing Agreement. 10. E&Y supports assumption of the Agreement. 11. Assuming the Auditing Agreement is a sound exercise of the Debtors business judgment, is in the best interests of the Debtors, their estate, creditors, and other parties in interest, and is necessary in order to maximize the value of the Debtors estate for the benefit of all stakeholders. PRAYER 12. Wherefore, premises considers, the Debtors respectfully request entry of an order authorizing the Debtors to assume the Auditing Agreement. Respectfully submitted, BRACEWELL & GIULIANI LLP By: /s/ William A. (Trey) Wood III William A. Trey Wood III, Texas Bar No Trey.Wood@bgllp.com Jason G. Cohen Texas Bar No Jason.Cohen@bgllp.com 711 Louisiana, Suite 2300 Houston, Texas Telephone: (713) Facsimile: (713) and Evan Flaschen Conn. Bar No Evan.Flaschen@bgllp.com Ilia M. O Hearn Conn. Bar No Ilia.Ohearn@bgllp.com Goodwin Square 225 Asylum Street, Suite 2600 Hartford, CT

6 Case Document 115 Filed in TXSB on 08/08/11 Page 6 of 7 Telephone: (860) Facsimile: (860) PROPOSED ATTORNEYS FOR THE DEBTORS 6

7 Case Document 115 Filed in TXSB on 08/08/11 Page 7 of 7 CERTIFICATE OF SERVICE The undersigned certifies that on August 8, 2011, a true and correct copy of this document was served on all parties on the attached master service list by electronic means as listed on the court s ECF noticing system, by electronic mail as indicated, and/or by United States first class mail, postage prepaid. /s/ Jason G. Cohen Jason G. Cohen 7

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