Default I

On the last day of the year, U.S. Shipping Partners filed an 8-K with the SEC announcing that it had failed to pay the interest and principal due under its senior credit facility ($332.6 million), which triggered an event of default. As a result of such failure, the lenders (CIBC, Lehman and Keybank) holding a majority-in-interest of the outstanding loans may declare all outstanding amounts immediately due and payable and to pursue their rights and remedies under the agreement. However in this instance the holders of a majority-in-interest had entered into a forbearance agreement the day before with the partnership pursuant to which they have agreed to forbear from taking any action or exercising any remedy permitted under the senior credit agreement as a result of the partnership’s failure to

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