Epic Companies, LLC – With Vessels Subject to Arrest and Involuntary Bankruptcy Proceedings Filed, Maritime Oil and Gas Service Provider Files Chapter 11, Intends Sale to Credit-Bidding Pre-petition Secured Lender

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August 26, 2019 − Epic Companies, LLC and six affiliated Debtors (“Epic” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Southern District of Texas, lead case number 19-34752. The Debtors, a full-service provider to the global decommissioning, installation and maintenance markets, are represented by John F. Higgins of Porter Hedges LLP. Further board-authorized engagements include (i) S3 Advisors, LLC as restructuring advisor (and which will provide a Chief Restructuring Officer ("CRO")) and (ii) Epiq Corporate Restructuring as claims agent.

The Debtors’ lead petition notes between 200 and 1,000 creditors; estimated assets between $10.0mn and $50.0mn; and estimated liabilities between $100.0mn and $500.0mn. Documents filed with the Court list the Debtors’ three largest unsecured creditors as (i) Dan Bunkering ($2.2mn trade payable), (ii) McGriff, Seibels & Williams of Texas, Inc. ($1.2mn trade payable) and (iii) Goliath Offshore Holdings PTE ($1.1mn trade payable).

Chapter 11 Objectives

The Tonn Declaration (defined below) states, “The Debtors filed these Chapter 11 Cases to market and sell the Debtors' business as a going concern. For weeks prior to August 26,2019 (the ‘Petition Date’), the Debtors and their fiduciaries worked to secure postpetition financing to provide sufficient liquidity to support the Debtors' business, pay their employees and to protect their critical stakeholders during the marketing process. Had Epic's prepetition secured lenders not agreed to finance the Debtors' operations during the postpetition marketing period, the Debtors would have been forced to terminate operations, lay off their remaining employees and liquidate in the near term, thereby resulting in irreparable consequences for its stakeholders."

Sale Process

The Debtors have proposed a sale of substantially all of their assets in a 65-day sale process. White Oak Global Advisors, LLC ("White Oak") is the proposed stalking horse bidder and will credit bid $48,900,000 of its pre and postpetition debt and assume $40,000,000 of the indebtedness evidenced by the Prior Junior Loan Agreement (as defined below). A quick resolution to these cases is essential to the preservation of the value of the Debtors' assets and estates.

Upon closing the sale of the Purchased Assets, White Oak will then sell certain of the assets to Alliance Energy Services, LLC for a cash purchase price of $40 million and an assumption of $35 million of the indebtedness evidenced by the Prior Junior Loan Agreement, among other terms, in a separate transaction financed by White Oak, and is in discussions regarding the sale of other portions of the assets to other third parties on terms to be agreed.

Litigation Against the Debtors’ Vessels

The Debtors are involved in several lawsuits involving the Debtors' principal vessels and there are warrants outstanding for the arrest of the Derrick Barge Epic Hedron, the Derrick Barge Epic Arapaho and the EPIC Explorer.

Events Leading to the Chapter 11 Filing

In a declaration in support of the Chapter 11 filing (the 'Tonn Declaration'), Kelton C. Tonn, the Debtors' Legal Officer, detailed the events leading to Epic’s Chapter 11 filing. The Tonn Declaration states: "Like many in their industry, the downturn in oil and natural gas prices and other industry-related challenges negatively impacted the Debtors' liquidity position. As a result, on or around July 19, 2019, the Debtors defaulted under the Prior Senior Loan Agreement and Existing Junior Loan Agreement. On July 19, 2019, White Oak swept the Debtors' bank accounts and continue to sweep the accounts daily. Since that time, White Oak has made a number of protective advances which have been used to fund the Debtors' operations.

On July 10,2019, White Oak informed the Debtors' management that it would not provide any additional funding. As a result, on July 15, 2019, the Debtors terminated approximately 400 employees.

On August 2,2019, Scurlock Electric, L.L.C., Preferred Sandblasting, L.L.C., and Top Drive Services, L.L.C. filed an involuntary chapter 7 petition against Epic in the United States Bankruptcy Court for the Eastern District of Louisiana, New Orleans Division (the 'Louisiana Bankruptcy Court'). Case No. 19-12086 (the 'Involuntary Case'). Epic is the only proposed debtor in the involuntary. Contemporaneously with the filing of the Debtors' voluntary petitions, EPIC filed a motion to dismiss the Involuntary Case, or, in the alternative, requesting the Louisiana Bankruptcy Court to transfer venue of the EPIC Involuntary Case to this Court. As of the Petition Date, the Louisiana Bankruptcy Court has not entered an order for relief on the Involuntary Case."

Debtors' Pre-petition Capital Structure

Obligation

Priority Against Debtors

Amount

Restated Senior Loans

First Lien

$50,295,463.

Restated Junior Loans 

Second Lien

$65,340,299.28

Trade and Other Secured Claims

Secured/Unsecured

$30,000,000

Key Shareholders

  • Oakridge Energy Partners LLC: 50%
  • Orinoco Natural Resources, LLC: 50%

About the Debtors

From the Debtors website: "The Debtors are a full-service provider to the global decommissioning, installation and maintenance markets. EPIC is an aggregation of the following synergistic and well known business units:

  • Heavy Lift
  • Diving and Marine
  • Well Services
  • EOT Cutting
  • TSB Offshore

EPIC’s project management team is exemplary in their ability to provide customers with a creative set of solutions based on industry leading experience. Furthermore, EPIC is unique in its ability to provide a suite of integrated services proven to create customer value with seamless, safe and efficient operational deployment.

Safely executing complex projects is a functional cornerstone for EPIC and they continue to be a leader in safety performance, progression of standards, and communication of safety.

As a private company backed by a substantial investment fund, EPIC is able to continue to offer the same quality services as it has for 12 years with the enhanced ability to provide additional customer value as EPIC continues to grow."

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