KRAMER LEVIN NAFTALIS & FRANKEL LLP
Kenneth H. Eckstein
Adam C. Rogoff
Douglas H. Mannal
Stephen D. Zide
1177 Avenue of the Americas
New York, New York 10036
Telephone: (212) 715-9100
Facsimile: (212) 715-8000
Counsel for the Debtors
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
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| In re: | : | Chapter 11 |
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GENERAL MARITIME CORPORATION, et al., | : | Case No. 11-15285 (MG) |
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| Debtors. | : | Jointly Administered |
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CONSOLIDATED MONTHLY OPERATING REPORT
FOR THE PERIOD OF JANUARY 1, 2012 THROUGH JANUARY 31, 2012
Global Notes to the Debtors’ Monthly Operating Report
1. Introduction.
On November 17, 2011 (the “Petition Date”) General Maritime Corporation (“General Maritime”), and its affiliated debtors in the above-referenced chapter 11 cases (collectively, the “Chapter 11 Cases”), as debtors and debtors-in-possession (collectively, the “Debtors”), filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). The Debtors are operating their business and managing their property as debtors-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. On November 29, 2011, the United States Trustee for the Southern District of New York appointed a statutory committee of unsecured creditors pursuant to section 1102(a)(1) of the Bankruptcy Code.
2. Consolidated Reports.
On November 18, 2011, the Bankruptcy Court entered an order directing procedural consolidation and joint administration of these Chapter 11 Cases [Docket No. 22] (the “Joint Administration Order”). Pursuant to the Joint Administration Order, the Debtors are authorized to file their monthly operating reports on a consolidated basis.
For financial reporting purposes, the Debtors and their non-debtor affiliates (the “Non-Debtors”) historically prepared consolidated financial statements. Unlike the consolidated financial statements, and pursuant to the Joint Administration Order, this Monthly Operating Report reflects the Debtors’ reasonable efforts to report financial information and the disbursements of each of the Debtors on a non-consolidated basis, and does not include financial information relating to the Non-Debtors.
The disbursements reported on MOR-1 reflect the Debtors’ reasonable efforts to report disbursements made on behalf of a Debtor by another Debtor or Non-Debtor as if such a disbursement was actually made by the Debtor on whose behalf the disbursement was made. For example, payments relating to a vessel owned by one Debtor may have been made by a Non-Debtor or another Debtor and, as such, the payment has been listed as if made by the vessel-owning Debtor. Nothing herein constitutes an admission that the Debtor entity is the obligor of such payment, and the Debtors reserve all rights to reclassify any disbursement, payment, or obligation as belonging to another entity.
3. GAAP.
The financial statements and supplemental information contained herein are preliminary, unaudited, and may not comply with generally accepted accounting principles in the United States of America (“GAAP”) in all material respects. In addition, the financial statements and supplemental information contained herein represent the condensed, combined information for all Debtor entities only and exclude all non-Debtor affiliates. The financial statements and supplemental information contained herein are currently being reviewed for and remain subject to year-end audit and other adjustments.
The unaudited combined financial statements have been derived from the books and records of the Debtors. This information, however, has not been subject to certain procedures that would typically be applied to financial information in accordance with GAAP, and upon application of such procedures (such as tests for asset impairment), the Debtors believe that the financial information could be subject to changes, and these changes could be material. The information furnished in this report includes primarily normal recurring adjustments but does not include all adjustments that would typically be made for financial statements in accordance with GAAP.
4.Prepetition Financial Reporting.
General Maritime is a publicly-held corporation, the common shares of which traded prior to the Petition Date on the New York Stock Exchange under the symbol “GMR” and currently trade in the over-the-counter markets under the symbol “GMRRQ.” For financial reporting purposes, General Maritime prepares consolidated quarterly and annual financial statements, including the Debtors and the Non-Debtors, that are filed with the U.S. Securities and Exchange Commission (the “SEC”). The quarterly financial statements are unaudited and the annual financial statements are audited. Unlike the consolidated financial statements, the financial information reported in this Monthly Operating Report has not been prepared in accordance with GAAP and does not include financial information regarding the Non-Debtors (except to the extent a disbursement has been made by a Non-Debtor on behalf of a Debtor). In addition, this Monthly Operation Report does not include information that may be relevant to the time period covered by this Monthly Operation Report but is currently unknown to the Debtors and may become known in the future. Accordingly, the financial statements contained in this Monthly Operating Report do not purport to be prepared in accordance with GAAP, nor are they intended to fully reconcile to or be comparable with the financial statements filed by General Maritime with the SEC.
5. General Methodology.
The Debtors prepared this Monthly Operating Report relying primarily upon the information set forth in their books and records. Consequently, certain transactions that are not identified in the normal course of business in the Debtors’ books and records may not be included in this Monthly Operating Report. Nevertheless, in preparing this Monthly Operating Report, the Debtors made reasonable efforts to supplement the information set forth in their books and records with additional information concerning transactions that may not have been identified therein.
6.Past Performance.
The results of operations reported in this Monthly Operating Report are not necessarily indicative of results which may be expected for any other period or for the full year and may not necessarily reflect the consolidated results of operations and financial position of the Debtors in the future.
7. Prepetition vs. Postpetition Liabilities.
The Debtors allocated liabilities between the prepetition and postpetition periods based on the information available and research conducted in connection with the preparation of this Monthly Operating Report. As additional information becomes available and further research is conducted, the Debtors’ allocation of liabilities between the prepetition and postpetition periods may change. The liability information, except as otherwise noted, is listed as of the close of business as of the end of the month. Accordingly, the Debtors reserve all rights to amend, supplement or otherwise modify this Monthly Operating Report as necessary and appropriate, but shall be under no obligation to do so.
The Debtors have paid certain pre-petition liabilities in accordance with orders approved by the Bankruptcy Court authorizing such payments. The Debtors believe that all undisputed post-petition accounts payable have been and are being paid according to agreed-upon terms specific to each vendor and/or service provider. Any aged amounts represent items subject to valid disputes, and certain items which have been paid subsequent to the end of the reporting period.
In addition, the liabilities reported in this Monthly Operating Report do not reflect any analysis conducted by the Debtors regarding potential claims under section 503(b)(9) of the Bankruptcy Code. Accordingly, the Debtors reserve any and all of their rights to dispute or challenge the validity of any claims asserted under section 503(b)(9) of the Bankruptcy Code or the characterization of the structure of any transaction, document or instrument related to any creditor’s claim.
8. Net Book Value of Assets.
It would be prohibitively expensive, unduly burdensome and an inefficient use of estate assets for the Debtors to obtain current market valuations of all of their assets. Accordingly, unless otherwise indicated, the values for assets contained in this Monthly Operating Report are net book values as of the end of the month. Consequently, amounts ultimately realized from the disposition of the Debtors’ assets may materially vary from the stated net book value. Thus, unless otherwise noted, this Monthly Operating Report reflects the carrying values of the assets as recorded on the Debtors’ books and records as of the end of the month and are not based upon any estimate of their current market value. The Debtors reserve their right to amend or adjust the value of each asset or liability set forth herein.
9. Intercompany Transactions.
Intercompany transactions among the Debtors, as well as between the Debtors and the Non-Debtors, include intercompany cash sweep arrangements, intercompany financing arrangements and investments in subsidiaries. The intercompany balances due to/from Debtor entities have been eliminated in the accompanying combined balance sheet. Intercompany transactions between the Debtor entities have similarly been eliminated in the accompanying interim condensed, combined statement of operations.
10. Payments to Insiders.
In addition to the payments to insiders disclosed on MOR-6, the Debtors may make distributions to creditors that have (i) common directors with the Debtors, and/or (ii) directors and officers that are immediate family of the Debtors’ directors and officers (collectively, the “Associated Entities”) during the relevant reporting period. In preparing the Schedules and Statements, the Debtors endeavored to identify all such Associated Entities. The Associated Entities consist of the following entities: Aegean Marine Petroleum Network, Skuld, Mid-Atlantic Bulk Carriers Ltd., Genco Shipping & Trading Limited, Baltic Trading Limited, and Det Norske Veritas. In addition, one of the Associated Entities does business with Kristenson Petroleum, Inc., one of the Debtors’ suppliers. Because the Associated Entities do not meet the definition of “insider” as defined in section 101(31) of the Bankruptcy Code, any payments to the Associated Entities are not disclosed on MOR-6.
11. Payments to Professionals.
The Debtors have disclosed amounts billed by professionals compensated by the Debtors’ estate on MOR-6 to the extent that the Debtors have received invoices for such services during the relevant reporting period. The Debtors have also included amounts relating to the reporting period that were invoiced after the reporting period to the extent such information was available during the preparation of this Monthly Operating Report. Amounts relating to the reporting period but that are invoiced after the preparation of this Monthly Operating Report will be reported in the next Monthly Operating Report after the receipt of such invoices.
12. Liabilities Not Subject to Compromise.
As a result of the commencement of these Chapter 11 Cases, the payment of pre-petition indebtedness is subject to compromise or other treatment under a chapter 11 plan. Generally, actions to enforce or otherwise effect payment of pre-commencement liabilities are stayed. Although payment of prepetition claims generally is not permitted, the Bankruptcy Court has entered several orders authorizing the Debtors to pay certain pre-petition claims in designated categories and subject to certain terms and conditions. This relief generally was designed to preserve the value of the Debtors’ businesses and assets. To the extent such claims have been categorized as “Liabilities Not Subject to Compromise,” the Debtors reserve their right to dispute their obligation to make such payments.
The Debtors have been paying and intend to continue to pay undisputed post-petition claims in the ordinary course of business.
13. Reservation of Rights.
Given the complexity of the Debtors’ business, inadvertent errors, omissions or over-inclusion of contracts or leases may have occurred. Accordingly, the Debtors hereby reserve all of their rights to dispute the validity, status, enforceability, or executory nature of any claim amount, representation or other statement in this Monthly Operating Report and reserve the right to amend or supplement this Monthly Operating Report, if necessary, but shall be under no obligation to do so.
Nothing contained in this Monthly Operating Report shall constitute a waiver of the Debtors’ rights or an admission with respect to these chapter 11 cases, including with respect to any issues involving the Debtors’ ownership interests, substantive consolidation, equitable subordination, defenses and/or causes of action arising under the provisions of chapter 5 of the Bankruptcy Code, and any other relevant non-bankruptcy laws.
2 - The Debtors reconcile their bank accounts on a monthly basis.
The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.
