The CIT Group, which holds mortgages on the Regent Sea and Regent Sun, can begin proceedings that will lead to the eventual sale of the ships, despite Regency Holdings' Chapter 11 status.
Waiting in the wings is a charter agreement for the Regent Sea with TransOcean of Germany to begin in June. However, the Sea must undergo refurbishment which are estimated at $3 to $5 million, and which includes SOLAS upgrades, prior to delivery to TransOcean.
A second charter for the Sun was inked last weekend with an unidentified operator, according to Regency lawyer Charles Simpson. The Sun will require about $1.5 million in SOLAS upgrades. Simpson noted that the two charters could generate around $9 million annually for up to 10 years.
In effect, the lift-of-stay motion was filed by CIT - along with a committee of unsecured creditors - asking the New York bankruptcy court overseeing the Regency case to lift an automatic stay (Section 362 of the bankruptcy code) on the sale of assets. The debtor, Regency, joined the motion at the last moment.
In the petition, CIT noted that it is owed about $45 million by the two Regency affiliates, Ridan and Regsun, which own the Sea and Sun, respectively. CIT also said it is costing the company $10,000 per day to keep the vessels under arrest in the Bahamas and that the ships are depreciating $250,000 per month. The ships have been under arrest since early November.
Okay to Sell
In response, the bankruptcy judge granted the lift stay request, but only pertaining to the two vessels, thus allowing other creditors to proceed with any legal actions against remaining Regency assets.
This ruling allows CIT to proceed with its foreclosure sales on the two vessels in the Bahamas. The move also bring Compass Partners, which has negotiated a number of successful company re-organization plans, into the picture.
One recent casualty of Regency's demise is Hallmark Food Services which filed for Chapter 11 on Jan. 12, 1996. Hallmark had provided food and beverage services to the Regent Rainbow, and had arrested the Rainbow in Tampa last October because Regency reportedly owed Hallmark $813,000. In closing, the judge noted that this action would help Regency focus on a re-organization plan, noting that Regency has been "hammered at every turn."