Italy’s Moby Files U.S. Bankruptcy in Ongoing Reorganization Battle
Italian ferry operator Moby S.p.A. filed for bankruptcy in a U.S. Court on January 14 as the latest step in a drawn-out reorganization process in Italy. Controlled by Italy’s Onorato family, Moby has been working to gain acceptance of a reorganization plan that would permit the family to retain control of the operations.
In June 2020, the company reported that it would seek a court-guided reorganization citing the pressures of pandemic and travel restrictions on its operations. The company has a fleet of approximately 20 ferries sailing between Italy and the Mediterranean islands of Sardinia, Corsica, and the Isle of Elba. In 2015, the Onoratos also acquired another Italian ferry company, Tirrenia, and recently launched an operation in the Baltic with St. Peter Line. The company with its destinations to the popular tourist destinations in the Mediterranean was heavily impacted by travel restrictions, while operations in the Baltic were suspended in 2020 and 2021.
Moby and its subsidiary Compagnia Italiana di Navigazione have been seeking to reach an agreement with bondholders and other creditors to restructure the company’s debt. The bondholders and banks are reported owed more than 500 million euros. Initial negotiations for the refinancing were complicated by an improvement in the company’s financial results as operations recovered, especially during the summer of 2021 when travel restrictions were loosened and more people were traveling.
The case has played out like a drama in the courts with the Onorato family at times accusing a splinter group of creditors of seeking control of the company. The negotiations went through a series of back-and-forth developments. In the fall, the Onorato family said it had won support from a third of the bondholders for the reorganization, but late in the fall the court froze assets from the parent company valued at 20 million euro in a dispute with Tirrenia.
Italian media reports suggested recently that an agreement had been reached which calls for Moby to be split into an operating company that would continue under the control of the Onorato family. The ships and other assets along with the debt would be transferred to a new holding company, which would be recapitalized in part by selling some of the older ships, as well as a tugboat operation and other assets. Creditors were expected to forgive up to a third of the debt while also providing to recapitalize the new company in exchange for participation. Moby would operate the vessels under charter from the new company.
The Milan court has scheduled a hearing on the proposed reorganization plan for January 20. A deadline was set for April. The U.S. filing was made under Chapter 15 of the bankruptcy law. It provides for a foreign company to gain access to the U.S. courts as part of an existing foreign proceeding.
Moby has continued to operate during the drawn-out reorganization process while also taking steps to continue the modernization of its operations, In November 2021, the first of two new ferries was launched for the company in China. The Moby Fantasy, due to enter service this year, is one of the world’s largest cruise ferries and will be the largest operating in the Mediterranean. Along with its sister ship, the Moby Fantasy is being built to replace four older vessels. The new ships are being outfitted with the possibility of switching from traditional fuel to LNG, should that be required at a later date.