Eagle Bulk Shipping filed for bankruptcy on Wednesday, the latest in a string of shipping companies to make a Chapter 11 filing, and said it reached agreement with its lenders to cut its debt by $975 million.
The U.S. company said in a statement that creditors who hold more than 85 percent of its loans have voted in favor of a proposed reorganization plan.
Getting creditor support for a "prepackaged" plan before filing for Chapter 11 can dramatically cut the time a company spends in bankruptcy. Eagle Bulk filed in Manhattan's U.S. Bankruptcy Court.
Under the plan, lenders would receive nearly all the stock in the company in return for what they are owed.
If approved by the court, the reorganization plan would cancel the company's current stock, which trades on the Nasdaq. Shareholders will receive 0.5 percent of the stock in a reorganized Eagle Bulk, plus warrants to acquire an additional 7.5 percent.
Shareholders almost always lose their entire investment in a bankruptcy.
Eagle Bulk shares were up 4 percent at $1.32 in early trading on Wednesday.
The company said Sophocles Zoullas will remain Eagle Bulk's chairman and chief executive after it reorganizes.
Eagle Bulk follows a string of shipping companies into Chapter 11, as new ships entered the market and created a glut of capacity, depressing rates. Genco Shipping & Trading, Overseas Shipholding Group, Excel Maritime Carriers and Nautilus Holdings Ltd have filed for bankruptcy in recent years.
The case is In Re: Eagle Bulk Shipping Inc, U.S. Bankruptcy Court, Southern District of New York, No. 14-12303
(Reporting by Tom Hals in Wilmington, Delaware; Editing by Paul Simao)