Multinational Ocean Tanker Company Files for Bankruptcy Help
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Multinational Ocean Tanker Company Files for Bankruptcy Help

December 11, 2012


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Overseas Shipholding Group, which owns the second-largest fleet of independent tankers in the world, is looking for bankruptcy help, according to a Reuters report.

Business for independent ocean tanker companies "has been absolutely miserable for the last eight months," according to Morten Arntzen, the company’s chief executive officer.

Indeed, Overseas Shipholding has been struggling with excessive amounts of debt for nearly a year, as the United States and other wealthy countries have reduced their demand for imported oil, thanks to increasing amounts of domestic production.

Sources say that the company has failed to turn a profit for 13 straight quarters. In its bankruptcy filing, Overseas Shipholding also claims to have a remarkable $2.67 billion worth of debt. To be fair, the company is not alone.

In recent years, several international shipping companies that also depend on the transportation of crude oil have filed for bankruptcy, including Frontline, Deiulemar Shipping, and Sanko Steamship, according to sources.

But Arntzen claims his company’s struggles are unique because it is much larger than the other firms that sought financial restructuring through bankruptcy. The company is so large, in fact, that it still has enough cash on hand to continue its operations during bankruptcy.

In addition, Arntzen told reporters that his company will not have to take out a loan during the bankruptcy process. Moreover, the company believes that it has many "attractive assets," despite the fact that recent paperwork errors in the financial department have limited its ability to access new lines of credit.

The errors that caused much of the company’s current troubles happened in October, when the company discovered that it had been improperly reporting its taxes.

Company officials promptly reported the error to major creditors, but the tax problem is still being resolved, and it could linger indefinitely, according to sources.

This problem only adds more troubles to a company already burdened by global economic factors outside of its control.

Sources note that Overseas Shipholding’s case is the third-largest bankruptcy filing this year, as judged by the amount of assets held by a filer. Only Residential Capital LLC and Eastman Kodak Co. had more assets at the time of their filings.

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