Genco asks court to disband equity holder committee or cap expenses

By Kali Hays

New York, May 14 - Genco Shipping & Trading Ltd. is seeking the disbandment of its appointed official committee of equity security holders, according to a Tuesday motion with the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, U.S. trustee Michael K. Harrington appointed the committee on May 9.

Genco claims that equity holders are capable of representing their interests without a committee and said that the three members of the committee, OZ Domestic Partners, LP, Aurelius Capital Management, LP and Mohawk Capital LLC, are "bankruptcy-savvy" investment funds that had retained experienced bankruptcy counsel by the time of Genco's first day motions.

"The equity committee appears to consist largely, if not entirely, of shareholders who invested with the intent to litigate with the debtors over valuation and other aspects of the prepack plan. Their evident ability to pursue that strategy themselves - with experienced law firms that are already up to speed - demonstrates that the equity committee is no more than a vehicle to shift litigation costs of its well-capitalized members onto the debtors' estates and its creditors," the motion stated.

The company also said that its independently controlled board of directors elected by shareholders "has represented and continues to represent the interests of equity."

If the court does not order the committee disbanded, Genco asked that the fees and expenses of committee professionals should be capped "to protect the estates from excessive litigation."

A hearing is scheduled for June 3.

Genco, a New York-based transporter of iron ore, coal, grain, steel products and other drybulk cargoes, filed bankruptcy on April 21. The Chapter 11 case number is 14-11108.

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