Torch Offshore files voluntary Chapter 11 petitionNews // January 21, 2005
In conjunction with the filing, the company has received a commitment for US$6.9 million in new debtor-in-possession (DIP) financing from Regions Bank and Export Development Canada.
In addition, the banks have agreed to provide a discretionary facility of up to US$2.0 million for bonding and letters of credit.
Upon Bankruptcy Court approval and execution of definitive agreements, the DIP financing will provide funding for the company's ongoing operations.
"The company has been operating with a highly leveraged balance sheet for some time now, mostly due to the conversion efforts associated with Midnight Express," said Lyle G Stockstill, Torch Offshore Chairman and Chief Executive Officer.
"Our liquidity issues were worsened by the competitive marketplace in which we operate as the Gulf of Mexico offshore construction industry remained very competitive in 2004, with an extremely tight pricing structure."
In late December 2004, the company announced that three of its vessels, Midnight Express, Midnight Wrangler and Midnight Eagle, had been arrested by US Marshals based upon actions taken by certain creditors of the company.
"When we determined that it would be difficult to have the vessels released so that they could go back to work, it was concluded that Chapter 11 reorganisation was the best course of action," said Stockstill. "The decision to seek protection under Chapter 11 will allow the company to restructure its balance sheet while we continue to operate our fleet of vessels."
During the Chapter 11 proceedings, Torch will continue to operate in the ordinary course of business. The Company said that it intends to request Court approval to, among other things, continue payment of pre-petition and post-petition wages, salaries, incentive plans, and medical, disability, vacation and other benefits. The company intends to do business with customers and vendors in the same manner as before.