July 2, 2009
Bender Shipbuilding now in Chapter 11 bankruptcy
The U.S. Bankruptcy Court for the Southern District of Alabama yesterday granted a motion by Bender Shipbuilding and Repair to convert the involuntary Chapter 7 bankruptcy filing initiated by three creditors on June 9, to a Chapter 11 filing. The court has set a July 13, 2009 date for Bender to meet with Bankruptcy Administrator.
Among documents filed with the court yesterday were an EMERGENCY MOTION by Bender for use of cash collateral and to grant replacement liens that says that prior to the filing of the petition, Bender financed its daily business activities through the use of a factoring arrangement with Marquette Commercial Finance.Among other things, the motion seeks limited authorization to use cash collateral in order to operate its businesses. Bender requests that the Court authorize and approve its use of the proceeds of its accounts receivable as cash collateral in which Marquette holds a security interest. Bender seeks use of such collateral in an amount not exceeding $2,251,121.00 for the period from the date an order for relief is granted through July 15, 2009.
Another document filed yesterday was an APPLICATION by Bender to take an unsecured advance of $300,000 from the personal funds of its principal, Thomas J. Bender, Jr., to fund its July 2009 payroll.
The Chapter 11 filing comes after a June 24 filing by Bender of a "verified complaint for injunctive relief" against Seacor Marine LLC and Nations Bank. It sought to enjoin Seacor Marine LLC pursuing a June 22, 2009 presentment for payment of a $5 million letter of credit, and enjoining Regions Bank from honoring the presentment.
Bender said it would be "irreparably harmed" if Seacor was to be allowed to draw on the letter of credit, subjecting Bender to liability to Regions Bank for immediate payment.
The bankruptcy court denied Bender's motion for relief on July 29.
In a press release yesterday Bender said it "had hoped to avoid bankruptcy, but the filing of the involuntary petition and the effects of that filing on the company forced it to realize that it is in the best interests of its customers, creditors and vendors to reorganize in Chapter 11. The company will continue to operate as a full service shipyard and, under Chapter 11, the company's customers will be protected as to existing and future contracts as well as to the company's performance under such contracts. Bender worked closely with its secured creditors prior to the filing of the Chapter 11 bankruptcy, and believes that they will continue to work with the company.
"The involuntary petition and the resulting Chapter 11 reorganization effort will result in the downsizing of the company's operations. However, the company currently has ship repair jobs in the yards and is optimistic its loyal customer base will send more work, allowing Bender to maintain a core employment of about 300 workers.
" 'I regret very much the impact this decision has on our employees and vendors and the community,' Tom Bender, the Company's President and CEO noted, 'but the involuntary petition gave us no choice. I will devote every waking minute to getting us through this process as quickly and painlessly as humanly possible. In the meantime, we will continue to provide our customers the quality service, quick turn-around and attractive prices they have come to expect from Bender over the years.' "