American Commercial Barge Line River Operations is being sued by MassMutuel Asset Finance for allegedly defaulting on an agreement to rent barges.
The suit, dating back to a 2008 barge lease agreement, was first reported by Law360.
Last year, American Commercial Barge Line, Jeffersonville, Ind., signed a deal to acquire AEP River Operations for $550 million. Under the terms of that deal, ACBL would acquire AEP River Operations by purchasing all the stock of AEP Resources, the parent company of AEP River Operations, and would assume all assets and liabilities of AEP River Operations.
According to Law360, MassMutual’s complaint says that AEP River Operations would have needed MassMutual’s permission to change ownership, and that the sale amounted to “an event of default” under a 2008 agreement to buy 17 barges and rent them to AEP River Operations.
“River Ops did not seek — and MassMutual did not provide — consent for the sale or transfer of River Ops to Commercial Barge,” the complaint reads.
The agreement in question was between AEP River Operations and SunTrust Equipment Finance & Leasing Corp., according to the Law360 report. Under the terms of the agreement, AEP River Operations was to pay $156,000 in rent payments every quarter from July 2008 through June 2027. MassMutual said it assumed the rights to the agreement in September 2014, about a year before the sale of AEP River Operations was announced.
According to Law360, the charter between MassMutual and AEP would be considered to be in default if AEP River Operations was sold, transferred, merged, or consolidated with another company that is not an affiliate and whose senior unsecured debt is not rated to be at least investment grade unless MassMutual signed off on the sale.
“River Ops is bound by the terms of the charter, which is valid and enforceable,” MassMutual said in the complaint.
The case is MassMutual Asset Finance LLC v. ACBL River Operations LLC, case number 1:2016cv01111 in the U.S. District Court for the Southern District of New York.
