Opinion ID: 6082964
Heading Depth: 3
Heading Rank: 1

Heading: Sale of the C Whale

Text: Mega Bank filed a motion for relief from the automatic bankruptcy stay so it could sell the C Whale pursuant to the loan agreement. On March 28, 2014, the bankruptcy court authorized Mega Bank to sell the C Whale on behalf of the Lenders (“the Sale Order”). The Sale Order authorized the Lenders to submit a credit bid if no other party offered a cash bid that exceeded the existing debt. C Whale Corp. retained H. Clarkson & Co. Ltd. (“H. Clarkson”) to market the ship and serve as the broker of the sale. H. Clarkson advertised the C Whale via email and in trade journals. H. Clarkson received and responded to numerous inquiries, including twenty requests for further information and eight requests for inspection. Approximately one week into the sale process, Su informed the Lenders that he had applied for patents in Japan, Korea, and China for his design of the under-deck piping. Regardless of any patent protections, Su has acknowledged that C Whale Corp. had the right to use the under-deck piping “for free” and without royalty payments or licensing fees. No loan documents or other written or oral agreements between the parties discuss patents: Su admits that “[n]one of the loan documents contain a single word about patents, intellectual property, or related licenses.” During the sale process, Su resigned as president and manager of C Whale Corp. The bankruptcy court appointed Esben Christensen to oversee the sale process and run C Whale Corp.’s operations. Neither Su nor any other party contested this appointment. H. Clarkson received four cash bids for the C Whale, and after several rounds of bidding, H. Clarkson and C Whale Corp. determined that the highest purchase offer was $58.2 million. The purchase offer ($58.2 million) 3 Case: 21-20147 Document: 00516165644 Page: 4 Date Filed: 01/13/2022 No. 21-20147 was less than the vessel’s debt ($64.8 million) which then allowed the Lenders to submit a credit bid pursuant to the Sale Order. The Lenders submitted a credit bid for $58.45 million. C Whale Corp.’s debt was owned entirely by OCM Formosa Strait Holdings, an affiliate of Oaktree Capital Management L.P. (collectively, “Oaktree”). In the credit bid, Oaktree designated Pacific Orca Holdings, LLC (“Pacific Orca”), a single-purpose entity affiliated with Oaktree, to take title of the C Whale at closing. After bidding closed, two other entities submitted late bids but neither resulted in a qualified bid under the Sale Order. Regardless, C Whale Corp., Mega Bank, Oaktree, and Su agreed to reopen and extend the bidding process for fourteen (14) days to solicit higher bids—including from the two late bidders—but no additional bids were made during this time.