Nautical Solutions: Term lenders object to cash collateral use

By Sarah Lizee

Olympia, Wash., Jan. 30 – Nautical Solutions, LLC’s access to cash collateral drew an objection from an informal group of term loan lenders, according to documents filed Friday with the U.S. Bankruptcy Court for the Southern District of Texas.

The court authorized the debtors to use cash collateral for 20 days through an interim order, and the debtor is now seeking final approval to access the cash collateral on the same terms.

The term loan lender group said the company had wrongly charactered to the court that its access to cash collateral is consensual.

“The debtors continue to argue that the court should treat their use of cash collateral as ‘consensual’ despite the fact that the governing loan documents clearly and unambiguously set forth requirements for consent to use of cash collateral that the debtors (and the collateral agent) admit have not been met,” the term lender group said in its objection.

The group also said the debtors acknowledge that the secured creditors’ collateral is at risk of diminution in value but offer no real protection against such loss and offer no evidence as to how the secured creditors could possibly be adequately protected.

“In addition to the actual and likely future collateral diminution, the debtors are prosecuting a fatally flawed plan of reorganization that forces all secured creditors to take a reduction in excess of $100 million in principal amount of their claims while allowing existing equity to retain all of its interest in exchange for nothing,” the group said.

“This makes clear that the term lender group’s constitutionally protected property interests are not being respected.”

Nautical Solutions is a deepwater drilling servicer based in Dallas. The company filed bankruptcy on Jan. 9 under Chapter 11 case number 23-90002.

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