Houston offshore shipping company files for bankruptcy with hundreds of Louisiana creditors who owed money | Company
Houston-based Companies Epic and its subsidiaries filed for bankruptcy protection in Texas in late August, leaving a $30 million trail of unsecured creditors that included hundreds of businesses in Louisiana.
To raise funds to pay creditors, the company is expected to be auctioned on Oct. 22, according to court records.
Companies Epic has total debt between $100 million and $500 million, with assets between $10 million and $50 million. It has between 200 and 999 creditors, records show.
In July, Epic Companies defaulted on two loans worth $115 million held by White Oak Global Advisors. Within days, it laid off 400 employees. It is unclear how many worked in Louisiana, since the company did not file a Worker Adjustment and Retraining Notification Act with the State.
The offshore oil well maintenance, diving, marine services, heavy lift barge and offshore construction services company has four Louisiana offices in Broussard, Belle Chasse, Houma and Golden Meadow. The bankruptcy includes subsidiaries Epic Alabama Steel, Epic Applied Technologies, Epic Diving & Marine Services, Epic San Francisco Shipyard, Epic Specialty Services and Zuma Rock Energy Services.
In early August, disgruntled contractors had tried to force Epic Companies to file for Chapter 7 bankruptcy in Louisiana, but the company filed for Chapter 11 protection in Houston and demanded that the Louisiana case be consolidated there. . A Chapter 11 filing usually leads to a reorganization or sale of a business.
“Like many in their industry, lower oil and natural gas prices and other industry-related challenges have negatively impacted the liquidity position of accounts receivable,” Epic Companies said in its filing. bankrupt on August 26.
His biggest unsecured creditor is Houston fuel company Dan Bunkering, which owes $2.2 million. Goliath Offshore Holdings, represented by Phelps Dunbar in New Orleans, owes $1.1 million.
The largest Louisiana-based creditor is Taylors International Services, which owes $913,179. The Lafayette-based company declined to comment.
Half a dozen other Morgan City businesses in New Iberia each owe between $224,000 and $353,400, records show.
For example, Epic Companies owes Houma-based company Offshore Technical Solutions $277,400. The company was founded in 2011 and sells abrasive water cutting services for disused offshore oil rigs in the Gulf of Mexico.
“We’re not a big company, so any success like this matters, but we can recover,” said Richard Burgo, managing director of Offshore Technical Solutions.
The company was a big customer of the offshore services division of Tetra Technologies, which was acquired by Epic Companies in 2018. Offshore Technical Solutions is also a creditor of Montco Offshore Inc., a similar Houston-based company that filed for bankruptcy. in 2017.
“Montco did the same and they owed us more,” Burgo said, and he doesn’t expect to be reimbursed any time soon.
“I’m not counting on it,” he said. “We are a contractor and contractors are usually the ones who pay the price.”
Outstanding debt resulting from Montco’s bankruptcy prevented the Houma Company from paying its employees’ bonuses that year, and it has still not been paid by Montco Offshore. But overall, the business has remained stable since there has been a demand for dismantling services.
“We’ve been busy and had great deals every year except 2015,” Burgo said.
It’s unclear how many contractors can receive money from Epic Companies because the passive to active ratio is so high. A unique aspect of a maritime bankruptcy is that much of what would typically be unsecured debt is secured in a way depending on whether ships have outstanding mortgages or not, said Robert Stefani, a lawyer at the firm of attorneys King & Jurgens LLC in New Orleans who is not involved in the case.
Companies that supply fuel or even perform repairs on ships often have what’s called a maritime lien, which allows companies the right to have the ship seized by the US Marshals’ office if the bills aren’t paid. Companies Epic has already had several of its vessels seized from Lake Charles in Port Fourchon.
“A lot of these providers will be secured, but they may be behind the mortgagees, so they end up being unsecured in a sense,” Stefani said.
During a bankruptcy, these ships are usually sold to raise funds to pay creditors. But the market for the offshore oil exploration industry has been in decline for several years, so these sales may not yield much.
“With the price of oil being so low that few rigs are operating, there are more vessels in financial difficulty. This affects the value of these assets,” Stefani said. “If they sell these ships in a depressed market, it will affect everyone who gets paid. That’s the reality everyone has to face.”
Once the ships are sold, the first line creditor to be paid is the mortgagee, if there is one. Creditors in Texas do not have priority over those in Louisiana simply because the bankruptcy proceedings are taking place there. Companies Epic has hired G2 Capital Advisors, a Boston-based consultant, which has appointed a chief restructuring officer in recent days.
Sometimes contractors end up getting paid in full in the best of times, but that’s unlikely.
“I’ve been involved in cases where all maritime lien claimants are paid 100 cents on the dollar and I’ve seen cases where they were unsecured creditors and get what is normal in a bankruptcy, which is very little,” Stefani said.
Three Houma-based companies are seeking to force Epic Companies, a Houston-based shipping company, into Chapter 7 bankruptcy.