Case Document 75 Filed in TXSB on 07/20/11 Page 1 of 14

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1 Case Document 75 Filed in TXSB on 07/20/11 Page 1 of 14 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 DEBTORS APPLICATION PURSUANT TO 11 U.S.C. 327(a) AND FED. R. BANKR. P FOR ORDER AUTHORIZING AND APPROVING RETENTION AND EMPLOYMENT OF BRACEWELL & GIULIANI LLP AS ATTORNEYS FOR THE DEBTORS IF YOU WANT A HE ARING, YOU MUST REQUES T ONE IN WRITING AND YOU MUST RE SPOND S PECIFICALLY TO EACH PARAGRAPH OF THIS PLEADING. YOU MUST FILE YOUR RESP ONSE WITH THE CLERK OF THE BANKRUPT CY COUR T WITHIN TWENTY O NE (21) DAYS FROM THE DAT E YOU WERE SERVED AND GIVE A COPY TO THE PERSON WHO SENT YOU THE NOTICE; OTHERWISE, TH E COURT M AY TREAT THE PLEADI NG AS UNOPP OSED AND GRANT THE RELIEF. IF A PARTY REQUEST S E MERGENCY CONS IDERATION, THE COURT MAY ACT EXPEDI TIOUSLY ON THE MATTE R. IF THE COURT ALLOWS A SHORTE R RESP ONSE TIME THAN TWENTY ONE (21) DAYS, YOU MUST RESPO ND WITHIN THAT TIME. IF THE COURT S ETS AN E MERGENCY HE ARING BEFO RE THE RESPONS E TIME WILL EXPI RE, ONLY ATTE NDANCE AT THE HEARING IS NECESSARY TO PRESE RVE YOUR RIGHTS. IF AN EME RGENCY HEARING IS NOT SET, YOU MUS T RESPO ND BEFO RE THE RESPONSE TIME EXPIRES. A HEARING HAS BEEN SET ON THIS MOTION FOR AUGUST 22, 2011, AT 2:00 P.M. IN COURTRO OM 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

2 Case Document 75 Filed in TXSB on 07/20/11 Page 2 of 14 Omega Navigation Enterprises, Inc. ( Omega ) 2 et al., the above-captioned debtors and debtors-in-possession (together, the Debtors or Company ), by and through their proposed undersigned attorneys, file this Application Pursuant to 11 U.S.C. 327(a) and Fed. R. Bankr. P for Order Authorizing and Approving Retention and Employment of Bracewell & Giuliani LLP ( Bracewell ) as Attorneys for the Debtors in these chapter 11 cases (the Application ). In support of the Application, the Debtors rely on the affidavit of William A. (Trey) Wood III attached hereto as Exhibit A (the Wood Affidavit ). In further support of the Application, the Debtors respectfully represent as follows: I. JURISDICTION AND VENUE 1. This Court has jurisdiction over these matters pursuant to 28 U.S.C. 157 and This is a core proceeding pursuant to 28 U.S.C. 157(b). Venue of these Chapter 11 cases in this District is proper pursuant to 28 U.S.C and The statutory predicates for the relief requested in this Application are 327, 328, 330, and 331 of the Bankruptcy Code and Rules 2014 and 2016 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules ). II. BACKGROUND Business Description 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 2 Capitalized terms used but not otherwise defined in this Application have the meanings ascribed to such terms in the Declaration of Gregory McGrath (the First Day Declaration ), Chief Financial Officer of Omega Navigation Enterprises, Inc., filed on the Petition Date and incorporated herein by reference

3 Case Document 75 Filed in TXSB on 07/20/11 Page 3 of 14 businesses and managing their property as debtors-in-possession. The Debtors motion for joint administration of these chapter 11 cases has been granted. No trustees or examiners 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, is incorporated in the Marshall Islands, and completed its initial public offering in April Omega s Class A Common Shares were traded on the NASDAQ National Market under the symbol ONAV (but were recently delisted due to the chapter 11 filing) and are also listed on the Singapore Exchange Securities Trading Limited under the symbol ONAV Together, the Debtors wholly own a fleet of eight high specification product tankers. Each wholly-owned vessel is owned by a separate Debtor entity (each a Vessel Owner ), all of which are wholly-owned by Omega. The vessels have a combined cargo capacity of 512,358 deadweight tons (dwt). All vessels in the Omega fleet are double hull in order to meet the International Maritime Organization regulations banning all single hull tankers by 2010 or 2015, depending on the port or flag state. Omega s product tankers are designed to transport several different refined petroleum products simultaneously in segregated, coated cargo tanks. These cargoes typically include gasoline, jet fuel, kerosene, naphtha, gas oil and heating oil. 5. Omega generates revenues by employing its fleet of vessels on time charters as well as in the spot market. For all of the wholly-owned vessels, Omega provides the commercial management in-house through the wholly-owned non-debtor subsidiary Omega Management,

4 Case Document 75 Filed in TXSB on 07/20/11 Page 4 of 14 Inc. This management includes obtaining employment for the vessels, negotiating charters, and managing relationships. 6. Technical management of the vessels (e.g. managing day-to-day vessel operations, performing general vessel maintenance, ensuring regulatory and classification society compliance, oil majors vetting procedures, supervising the maintenance and general efficiency of vessels, arranging hire of qualified officers and crew, arranging and supervising drydocking and repairs, purchasing supplies, spare parts and new equipment for vessels, appointing supervisors and technical consultants and providing other technical support) is provided by the non-debtor Omega Management, Inc. for six of the vessels, and the remainder of the vessels are technically managed by a third party. Omega is responsible for the strategic management of the fleet, including locating, obtaining financing for, purchasing and selling vessels and formulating and implementing overall business strategies. Description of Secured Debt 7. Omega is a borrower pursuant to that certain senior secured Facilities Agreement for a US $242,720, Term Loan dated April 7, 2006 (as amended, modified and supplemented), whereby HSH Nordbank AG is, among other things, appointed agent, security agent and trustee, and HSH Nordbank AG, Credit Suisse, The Governor and Company of the Bank of Scotland, and Dresdner Bank AG are lenders (the Senior Facility ). Approximately $ million is currently outstanding under the Senior Facility. The Senior Facility is secured by, among other things, Vessel Owners guarantees, first priority mortgages, first priority assignment of insurances in respect to the vessels, and first priority assignment of each of the vessels earnings

5 Case Document 75 Filed in TXSB on 07/20/11 Page 5 of Importantly, prior to initiating these bankruptcy proceedings, Omega filed two lawsuits in the Courts of the Hellenic Republic (the Greece Litigation ) against the lenders under the Senior Facility (the Senior Lenders ), and Omega reserves its right to seek further damages or enforce the present lawsuits by the filing of additional suits. 9. In the first suit, Omega asserts, among other things, that the Senior Lenders are in material breach of an agreement whereby they promised to extend the time for repayment of principal under the Senior Facility for three years from the original due date (i.e. extend to April 12, 2014). The Senior Lenders have not honored their agreement and have refused to extend the repayment under the Senior Facility. Omega also asserts, among other things, that the Senior Lenders have engaged in abusive exploitation of the relationship of financial dependence between the Debtors and the Senior Lenders and such conduct is opposite to the good faith and contractual ethics required by European standards of competition, and therefore such actions are invalid. The claims of Omega for abusive exploitation of their dominant position are based on Article 82 of the European Convention and the related European Commission Regulation 1/2003, which are applicable in Greece, as well as pursuant to Greek Law 703/ In the second lawsuit, Omega asserts, among other things, that Omega has been and continues to be seriously damaged by, among other things, the Senior Lenders breach and abusive actions. Such damages amount to approximately $570,000, (plus interest) at the time of filing the second suit, and, via the second suit, Omega seeks indemnification for such damages. 11. Based on the Greece Litigation and the allegations therein, Omega disputes the obligations under the Senior Facility and the claims of the Senior Lenders, as well as the interests granted under the security documents related to the Senior Facility

6 Case Document 75 Filed in TXSB on 07/20/11 Page 6 of Omega is also a borrower pursuant to that certain Junior Secured Loan Agreement for a loan of up to US$42,500, (as amended, modified and supplemented), whereby by The Bank of Tokyo-Mitsubishi UFJ, Ltd, New York Branch ( BTM ) and NIBC Bank N.V. are swap banks, NIBC Bank N.V. is appointed agent, and BTM and NIBC Bank N.V. are lenders (the Junior Credit Agreement, and together with the Senior Facility, the Prepetition Indebtedness ). Approximately $36.2 million is outstanding under the Junior Credit Agreement. The Junior Credit Agreement is secured by, among other things, Vessel Owners guarantees, second priority mortgages, second priority assignment of insurances in respect to the vessels, and second priority assignment of each of the vessels earnings. 13. Omega is also the borrower under a $5,250, secured demand convertible promissory note between Omega and One Investments, Inc. dated July 16, 2010 (the Promissory Note ). The Promissory Note is due on demand at any time after its first anniversary. The Promissory Note is secured by a pledge of all shares of Omnicrom Holdings Ltd. and a guarantee by Omnicrom Holdings Ltd. Georgios Kassiotis is the president of One Investments, Inc. Mr. Kassiotis is also an officer of each of the Debtors and a director of each of the Debtors (except for Omega Navigation (USA) LLC, which is member managed). 14. Additional background relating to the Debtors commencement of these chapter 11 cases is set forth in detail in the First Day Declaration. III. RELIEF REQUESTED 15. Pursuant to the Application, the Debtors seek authority to employ and retain Bracewell as their lead counsel to perform the legal services that will be necessary during these chapter 11 cases. 16. The Debtors respectfully request that the Court approve the employment and retention of Bracewell effective as of the Petition Date

7 Case Document 75 Filed in TXSB on 07/20/11 Page 7 of 14 IV. BASIS FOR RELIEF 17. Section 327(a) of the Bankruptcy Code provides: the trustee, with the court s approval, may employ one or more attorneys... that do not hold or represent an interest adverse to the estate, and that are disinterested persons, to represent or assist the trustee in carrying out the trustee s duties under this title. 11 U.S.C. 327(a). Furthermore, this Court has granted similar relief in other complex chapter 11 cases. See, e.g., In re Lack s Stores, Incorporated, et al., Case No , Dk. No. 183 (Bankr. S.D. Tex. Dec. 15, 2010); In re Energy Express Services Operating, LP, et al., Case No , Dk. No. 122 (Bankr. S.D. Tex. Nov. 17, 2009) (granting retention of debtor s counsel pursuant to 11 U.S.C. 327(a)). V. BRACEWELL S QUALIFICATIONS 18. The Debtors seek to retain Bracewell for the following reasons, among others: (a) Bracewell has extensive experience and knowledge in the field of debtors and creditors rights and business reorganizations under chapter 11 of the Bankruptcy Code. Bracewell has expertise, experience, and knowledge practicing before bankruptcy courts in districts throughout the country. Bracewell s appearance before this Court for the matters in these chapter 11 cases will be efficient and cost effective for the Debtors estates. (b) Bracewell is a full-service law firm with experience and expertise in almost all other legal areas that will have an impact on the Debtors day-to-day operations and their reorganization under chapter 11 of the Bankruptcy Code. 19. In addition, Bracewell was engaged prior to the Petition Date to provide advice concerning financial restructuring and pre-bankruptcy planning to the Debtors. As a result, Bracewell has expended significant resources over the past few months working with the Debtors to prepare for the possibility that these chapter 11 cases might be filed. In the process, Bracewell has become familiar with the Debtors business operations and financial affairs and many of the legal issues that will likely arise in the context of these chapter 11 cases. If the Debtors are forced to retain counsel other than Bracewell, the Debtors estates would incur

8 Case Document 75 Filed in TXSB on 07/20/11 Page 8 of 14 additional expenses and delays associated with familiarizing new counsel with the intricacies of the Debtors financial affairs and business. VI. SERVICES TO BE RENDERED 20. The Debtors contemplate that Bracewell will render specialized legal services to the Debtors as needed throughout these cases. Generally, the legal services that Bracewell will render may be summarized, in part, as follows: (a) Advising the Debtors of their rights, powers and duties as debtors-inpossession under the Bankruptcy Code; (b) Performing all legal services for and on behalf of the Debtors that may be necessary or appropriate in the administration of these chapter 11 cases and the Debtors businesses; 3 (c) Advising the Debtors concerning, and assisting in, the negotiation and documentation of financing agreements and debt restructurings; (d) Counseling the Debtors, if necessary, in connection with the formulation, negotiation, and consummation of a sale of the Debtors assets; (e) Reviewing the nature and validity of agreements relating to the Debtors interests in real and personal property and advising the Debtors of their corresponding rights and obligations; (f) Advising the Debtors concerning preference, avoidance, recovery, or other actions that the Debtors may take to collect and to recover property for the benefit of the estates and their creditors, whether or not arising under chapter 11 of the Bankruptcy Code; (g) Preparing on behalf of the Debtors all necessary and appropriate applications, motions, pleadings, draft orders, notices, schedules, and other documents and reviewing all financial and other reports to be filed in these bankruptcy cases; (h) Advising the Debtors concerning, and preparing responses to, applications, motions, complaints, pleadings, notices, and other papers that may be filed and served in these chapter 11 cases; (i) Counseling the Debtors in connection with the formulation, negotiation, and promulgation of a plan of reorganization and related documents or liquidation of the estates; 3 The two primary exceptions to this are that the Debtors will be seeking retention of Seward & Kissel LLP as special maritime, corporate and securities counsel and Holman Fenwick Willan LLP and Hill Dickinson LLP as ordinary course UK counsel

9 Case Document 75 Filed in TXSB on 07/20/11 Page 9 of 14 (j) Working with and coordinating efforts among other professionals to attempt to preclude any duplication of effort among those professionals and to guide their efforts in the overall framework of the Debtors reorganization or liquidation; and (k) Working with professionals retained by other parties in interest in this bankruptcy case to attempt to structure a consensual plan of reorganization, liquidation, or other resolution for the Debtors. 21. The services described above are essential to the Debtors successful reorganization. VII. COMPENSATION 22. Subject to Court approval, and in accordance with 330(a) of the Bankruptcy Code, compensation will be payable to Bracewell on an hourly basis, plus reimbursement of actual, necessary expenses incurred by Bracewell. The fee ranges for the Bracewell attorneys and paralegals that may be designated to represent the Debtors and their current, standard hourly rates are as follows: (a) Partners $710-$1,050 per hour (b) Associates $315-$600 per hour (c) Paralegals $215-$255 per hour 23. The primary bankruptcy counsel working on this case will be Mr. William A. (Trey) Wood III (at $710 per hour) and Mr. Evan D. Flaschen (at $1,050 per hour). Consistent with historical firm practice, the hourly rates set forth above are subject to adjustments on November 1st of each year to reflect economic and other conditions (subject to client approval and Court approval, if necessary). From time to time, other attorneys and paralegals from Bracewell may serve the Debtors in connection with the matters for which Bracewell will be retained. 24. The hourly rates set forth above are set at a level designed to fairly compensate Bracewell for the work of its attorneys and paralegals and to cover fixed and routine overhead

10 Case Document 75 Filed in TXSB on 07/20/11 Page 10 of 14 expenses. It is Bracewell s policy, in all areas of practice, to charge its clients for all additional expenses incurred in connection with the client s case. The expenses charged to clients include, among other things, bulk mail and express mail charges, special or hand delivery charges, certain document processing, photocopying charges, travel expenses, expenses for working meals, computerized research, and other expenses. Bracewell will charge the Debtors for these expenses in a manner and at rates consistent with charges made generally to Bracewell s other clients and consistent with applicable Guidelines for Reviewing Applications for Compensation & Reimbursement of Expenses Filed Under 11 U.S.C. 330 adopted by the Executive Office for United States Trustees (the Guidelines ). Bracewell does not charge clients for facsimile charges or for long distance charges other than when an outside service is used (such as InterCall). 25. Bracewell currently holds a retainer on behalf of all of the Debtors in the amount of $10, for work to be performed by Bracewell in connection with these chapter 11 cases, which retainer has been placed in Bracewell s trust account. Any portion of such retainer that was not applied against prepetition fees and expenses rendered by Bracewell may be credited towards Bracewell s postpetition fees and expenses, as permitted by the Court in connection with Bracewell s interim fee applications to be filed in these chapter 11 cases. 26. Bracewell was paid a total of $1,010, for services rendered in the twelve months prior to the Petition Date. 4 No promises have been made or received by Bracewell, nor any partner, counsel, nor associate thereof, as to compensation in connection with these cases other than in accordance with the provisions of the Bankruptcy Code. Bracewell has no 4 Of necessity, the final prepetition application of the retainer was based on estimated fees and expenses since the prior application. After a postpetition reconciliation of the actual fees and expenses through July 7, 2011 (the day before the Petition Date), an additional $9, was applied out of the retainer; $2, was written off so that the ongoing retainer did not drop below the $10,000 represented to the Court at the "first day" hearings

11 Case Document 75 Filed in TXSB on 07/20/11 Page 11 of 14 agreement with any other entity to share with such entity any compensation received by Bracewell in connection with these cases. VIII. BRACEWELL S DISINTERESTEDNESS 27. To the best of the Bracewell s knowledge, information and belief, Bracewell has no connection with the Debtors, their creditors, the United States Trustee for the Southern District of Texas, any person employed in the Office of the United States Trustee for the Southern District of Texas, any other party-in-interest in these chapter 11 cases, or their respective attorneys or accountants, except as may be set forth in the Wood Affidavit. 28. Because Bracewell operates an international law firm having collectively over 450 lawyers in ten offices worldwide and the Debtors have numerous creditors and other relationships, despite the efforts described in the Wood Affidavit to identify and disclose Bracewell s connections with parties-in-interest in these chapter 11 cases, Bracewell is unable to state with certainty that every client representation or other connection has been disclosed. In this regard, if Bracewell discovers additional information that requires disclosure, Bracewell will file a supplemental disclosure with the Court as promptly as possible. 29. Based upon the Wood Affidavit and the Debtors knowledge of these cases thus far, Bracewell does not represent or hold any interest adverse to the Debtors, their estates, creditors, equity security holders, or affiliates in the matters upon which Bracewell is to be engaged, and is a disinterested person within the meaning of 101(14) of the Bankruptcy Code, as modified by 1107(b) of the Bankruptcy Code, and as required by 327(a) of the Bankruptcy Code. Bracewell s employment is necessary and in the best interests of the Debtors estates. 30. For the purpose of notice and mailing related to Bracewell, the following contact information should be used:

12 Case Document 75 Filed in TXSB on 07/20/11 Page 12 of 14 William A. (Trey) Wood III Bracewell & Giuliani LLP 711 Louisiana, Suite 2300 Houston, Texas Telephone: (713) Facsimile: (713) and- Jason G. Cohen 711 Louisiana, Suite 2300 Houston, Texas Telephone: (713) Facsimile: (713) and- Evan D. Flaschen Goodwin Square 225 Asylum Street, Suite 2600 Hartford, Connecticut Telephone: (860) Facsimile: (860) Bracewell s compliance with the requirements of 327, 329, 330, and 504 of the Bankruptcy Code, and Bankruptcy Rules 2014 and 2016, is set forth in detail in the Wood Affidavit. [The remainder of this page was intentionally left blank.]

13 Case Document 75 Filed in TXSB on 07/20/11 Page 13 of 14 WHEREFORE, the Debtors respectfully request that the Court (i) approve this Application, (ii) authorize the Debtors to employ and retain Bracewell as counsel in these chapter 11 cases as requested in this Application, effective as of the Petition Date, and (iii) grant the Bracewell any other relief that is just and proper. Respectfully submitted, BRACEWELL & GIULIANI LLP By: _/s/ William A. (Trey) Wood III William A. (Trey) Wood III Texas Bar No Jason G. Cohen Texas Bar No Louisiana, Suite 2300 Houston, Texas Telephone: (713) Facsimile: (713) and- Evan D. Flaschen Conn. Bar No Ilia M. O Hearn Conn. Bar No Ilia.OHearn@bgllp.com Goodwin Square 225 Asylum Street, Suite 2600 Hartford, CT Telephone: (860) Facsimile: (860) PROPOSED COUNSEL FOR THE DEBTORS AND DEBTORS-IN-POSSESSION

14 Case Document 75 Filed in TXSB on 07/20/11 Page 14 of 14 CERTIFICATE OF SERVICE The undersigned certifies that on July 20, 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 by United States first class mail, postage prepaid. /s/ Jason G. Cohen Jason G. Cohen

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28 Case Document 75-2 Filed in TXSB on 07/20/11 Page 1 of 2 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION In Re: BAYTOWN NAVIGATION INC., et al., 1 Case No Debtors. Jointly Administered ORDER AUTHORIZING AND APPROVING EMPLOYMENT AND RETENTION OF BRACEWELL & GIULIANI LLP AS ATTORNEYS FOR THE DEBTORS Upon consideration of the Application Pursuant to 11 U.S.C. 327(a) and Fed. R. Bankr. P for Order Authorizing and Approving Retention and Employment of Bracewell & Giuliani LLP ( Bracewell ) 2 as Attorneys for the Debtors (the Application ), filed by the above-captioned debtors and debtors-in-possession (the Debtors ), and upon consideration of the Affidavit of William A. (Trey) Wood III (the Wood Affidavit ) in support of the Application; the Court finds that: (i) it has jurisdiction over the matters raised in the Application pursuant to 28 U.S.C. 1334(b); (ii) this is a core proceeding pursuant to 28 U.S.C. 157(b); (iii) the relief requested in the Application is necessary and in the best interests of the Debtors and their respective estates, creditors, and other parties-in-interest; (iv) proper and adequate notice of the Application and hearing on the Application has been given and that no other or further notice is necessary under the circumstances; (v) Bracewell represents no interest adverse to the Debtors estates or their creditors or other parties-in-interest with respect to the matters 1 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. 2 Capitalized terms used but not otherwise defined in this Order have the meanings ascribed to such terms in the Application

29 Case Document 75-2 Filed in TXSB on 07/20/11 Page 2 of 2 upon which they are to be engaged; and (vi) Bracewell is a disinterested person as that term is defined under section 101(14) of the Bankruptcy Code, as modified by section 1107(b) of the Bankruptcy Code and as provided and disclosed in the Application and the Wood Affidavit. Therefore, it is hereby ORDERED, that the Application and all relief requested therein is GRANTED as provided herein; and it is further ORDERED, that, pursuant to section 327(a) of the Bankruptcy Code, the Debtors are authorized to retain and employ Bracewell, effective as of the Petition Date to serve as the Debtors attorneys in the above-captioned cases; and it is further ORDERED, that Bracewell shall be compensated in accordance with the procedures set forth in sections 328, 330 and 331 of the Bankruptcy Code, the applicable Federal Rules of Bankruptcy Procedure, the Local Rules, and such other procedures as may be fixed by order of this Court; and it is further ORDERED, that this Court shall retain jurisdiction to hear and determine all matters arising from the implementation of this Order. Dated: UNITED STATES BANKRUPTCY JUDGE