The TMT Group, a global shipping company, has sought bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code in a Houston court after failing to restructure roughly $1.46 billion in debt.
The TMT filing includes 23 related entities. The company – whose 17 vessels transport oil, vehicles, and other large cargo items – cites the downturn of the shipping industry and difficulties managing debt and operating expenses as the primary causes of its financial turmoil, the Wall Street Journal reports.
In the last several years, TMT expended significant resources to build up its large fleet and optimize its operating capacity. Prior to the market downturn in 2008, freight rates soared to unprecedented levels, prompting many shipping companies to take similar measures and begin building up fleets. However, after the market tanked and the shipping industry began to struggle, a declining volume in business forced TMT into debt and left it with limited cash flow to cover its ordinary business costs.
“The arrested vessels are currently laid up in multiple ports, losing income, and accruing crew fees, arrest fees, and other expenses, rather than generating funds that would inure to the benefit of the debtors’ estates, creditors, and defendants themselves,” the company said in court papers.
The company listed $1.52 billion in assets and $1.46 billion in liabilities, and has requested court permission to hire a restructuring specialist to help it navigate the bankruptcy process, according to Reuters.
TMT filed a separate lawsuit in bankruptcy court against 12 banks, materials companies, and shipping companies to protect its interests in those vessels, Reuters adds. The company is considering requesting a restraining order against shipping companies and banks to protect its ships while it seeks to recover them.
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