Ezra Holdings Ltd. operates a marine base in Singapore, lists its shares on the Singapore Exchange and has creditors based mostly in Asia and Norway. It also maintains offices in White Plains. And that”™s enough to qualify as a U.S. place of business.
On March 18, the energy and marine services company filed for Chapter 11 reorganization in U.S. Bankruptcy Court in White Plains. It was the third mega-bankruptcy case filed with the court since December by an international company with a small local presence.
Ultrapetrol (Bahamas) Ltd., a worldwide river barge company, filed on Feb. 7. Roust Corp., a European vodka maker, filed on Dec. 30.
Liberal bankruptcy laws make it easy for foreign corporations and multinational corporations to liquidate in the U.S. The Southern District of New York is particularly popular, local bankruptcy attorney Linda Tirelli said, in part because it has excellent judges, including one in White Plains whom she considers the best in the country.
Ezra Holdings filed for bankruptcy protection, claiming $500 million to $1 billion in assets and up to $500 million in liabilities. The holding company and two subsidiaries have offices at 75 S. Broadway and 777 Westchester Ave. A third subsidiary, based in Birmingham, England, filed in Houston.
Three years of weak and volatile energy markets have hurt the company, according to a declaration by Robin Chiu, chief restructuring officer. A prolonged decline in exploration and development has made it difficult for gas and oil field service operators to raise money. Oversupply of offshore supply vessels and an influx of new vessels have depressed charter rates.
The Ezra Group recorded a net loss of $850 million last fiscal year.
Deteriorated finances and difficulty raising money have caused a “cash crunch and an inability to pay their debts as they come due,” Chiu said.
Ultrapetrol and 30 subsidiaries operate hundreds of river barges and other vessels worldwide. Its principal office is in Nassau, Bahamas, and it has an office at 445 Hamilton Ave. in White Plains.
The company cited deteriorating market conditions in the energy and natural resource industries, particularly in South America.
It claimed $777 million in assets and $566,000 in liabilities in its Chapter 11 case.
It is asking the court to expedite a prepackaged reorganization plan. It wants to create a new entity that would be owned by affiliates of its largest shareholder. Creditors who hold more than $290 million in debt would receive about $84 million in cash.
The company said in a news release that all of its lenders and most of its bondholders approved the plan.
Roust Corp. is one of the world”™s largest vodka producers, with 3,500 employees working mostly in Poland and Russia. It has a small office at 777 Westchester Ave. in White Plains.
The company is controlled by Russian oligarch Roustam Tariko, owner of Russian Standard Group, a private company that includes a bank, an insurance business and other liquor enterprises.
One week after Roust filed a prepackaged plan, the bankruptcy court confirmed a $1.1 billion reorganization.
There are several advantages for foreign companies filing in the U.S. They can retain control as “debtor in possession,” rather than turning over to an outside trustee. They can get an automatic injunction barring creditors from enforcing claims in other courts. And they can disburse payments to critical vendors in the early stages to ensure continued operations.
From 2005 to 2012, foreign companies filed 316 cases in the U.S., according to a paper on bankruptcy tourism by researchers Stephen J. Lubben of Seton Hall University and Oscar Couwenberg of University of Groningen, Netherlands. Almost all were filed in two jurisdictions: 231 cases in the Southern District of New York and 64 in Delaware.
White Plains might be a good place for an office for bankruptcy purposes, Tirelli said, because leases are cheaper than in Manhattan and offices are more desirable than in the court”™s other location, Poughkeepsie.
Another reason might be Judge Robert D. Drain, to whom all three recent foreign cases were assigned. Drain has a reputation for handling “mega cases.”
He worked on Enron and WorldCom when he was in private practice. He joined the court in 2002, transferred to White Plains in 2009 and has presided over high-profile cases such as Delphi, Reader”™s Digest, A&P and Hostess Brands.
Drain has dabbled in writing. In 2013, his novel, “The Great Work in the United States of America,” was published. It is currently ranked 1,650,221 by Amazon.
More popular are his bankruptcy court opinions. He is prone to quoting pop culture and he manages to translate the arcana of bankruptcy law into well-thought-out rulings, Tirelli said. “He writes in a way that is enjoyable to read,” she said.
“His nickname is ”˜the smartest man in the room.”™ He doesn”™t always come up with the decision you want, but you always feel you got a fair shake,” she said.
