Item 1.03. Bankruptcy or Receivership.
On January 29, 2018, Rand Logistics, Inc. (the “
Company
”)
and certain of its U.S. subsidiaries (collectively, the “
Debtors
”), filed voluntary petitions (the “
Bankruptcy
Petitions
”) under chapter 11 (“
Chapter 11
”) of title 11 of the United States Code (the “
Bankruptcy
Code
”) in the United States Bankruptcy Court for the District of Delaware (the “
Court
”). The Company’s
Chapter 11 case is being administered under the caption
In re: Rand Logistics, Inc
. (Case No. 18-10175). The Debtors have
filed a motion with the Court seeking to administer all of the Debtors’ Chapter 11 cases (the “
Bankruptcy Cases
”)
jointly under the caption
In re: Rand Logistics, et al
. The Debtors will continue to operate their businesses as “debtors
in possession” under the jurisdiction of the Court and in accordance with the applicable provisions of the Bankruptcy Code
and orders of the Court. During the Bankruptcy Cases, the Debtors intend, subject to Court approval, to pay all trade vendors,
suppliers and customers in the ordinary course of business.
The subsidiary Debtors in the Chapter 11 cases are Rand Finance
Corp., Rand LL Holdings Corp., Grand River Navigation Company, Inc., Lower Lakes Transportation Company, Black Creek Shipping Company,
Inc. and Black Creek Shipping Holding Company, Inc. None of the Company’s Canadian subsidiaries have filed petitions for
bankruptcy protection either in the United States or Canada, and they will continue their operations in the ordinary course of
business. The holders of the Company’s secured debt have agreed to forbear from taking any action with respect to the Canadian
subsidiaries during the expected timeline of the Bankruptcy Cases.
The Bankruptcy Cases were filed in order to effectuate the Debtors’
pre-packaged plan of reorganization (the “
Plan
”), as originally reported by the Company in its Current Report
on Form 8-K filed on November 22, 2017. As contemplated by the Plan, Lightship Capital LLC (“
Lightship
”) (an
affiliate of American Industrial Partners), the holder of 100% of the Debtors’ second lien debt, has agreed to convert all
of the second lien debt into 100% of the new common stock of the reorganized Company (subject to dilution by shares to be issued
under an equity incentive plan for management and directors). Prior to filing the Bankruptcy Cases, the Debtors received a ballot
from Lightship, the only creditor impaired under the Plan and entitled to vote to accept or reject the Plan, voting in favor of
the Plan. The transactions contemplated by the Plan will materially de-lever the Company’s balance sheet, eliminating approximately
$92 million in outstanding debt and resulting in Lightship becoming the owner of substantially all of the Company’s new common
stock upon its emergence from Chapter 11.
Pursuant to the Plan, subject to Court approval, all holders
of claims against the Debtors (except for the second lien debt held by Lightship) will be unimpaired; the Debtors’ trade
creditors and vendors are expected to be paid in full in the ordinary course of business. All outstanding shares of preferred and
common stock issued by the Company will be canceled with no recovery under the Plan.
The Debtors are targeting a hearing before the Court in late
February to approve the Plan. Assuming Court approval of the Plan in late February, the Debtors expect to consummate the transactions
contemplated by the Plan and emerge from Chapter 11 shortly thereafter.
The Debtors will enter into a $25 million “debtor in possession”
financing facility with Lightship upon the commencement of the Bankruptcy Cases (subject to Court approval) to ensure adequate
liquidity to fund their operations during the Bankruptcy Cases. The Debtors have also received a commitment from Ally Bank for
exit financing to replace the Debtors’ existing revolving credit facility and enable them to emerge from Chapter 11 with
adequate liquidity upon consummation of the Plan.
This Form 8-K is not a solicitation to accept or reject the
proposed Plan (as defined below) referred to herein or an offer to sell or a solicitation of an offer to buy any securities of
the Debtors.