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Commitments and Contingencies | 9 Months Ended
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Sep. 30, 2017
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | Commitments and Contingencies Vessel Sales and Leasebacks Accounted for as Capital Leases The Company's fleet includes one vessel financed under a sale and leaseback financing arrangement accounted for as a capital lease. The selling price of the vessel to the new owner (lessor) was $21.0 million and the fair value of the vessel at the inception of the lease was $24.0 million. The difference between the selling price and the fair value of the vessel was recorded as prepaid rent and is being amortized over the 25 year estimated useful life of the vessel. Prepaid rent is included in vessel under capital lease on the consolidated balance sheet at September 30, 2017. Minimum lease payments fluctuate based on three-month LIBOR and are payable quarterly over the seven year lease term, with a balloon payment of $11,200,000 due with the final lease payment in January 2024. Interest is floating at LIBOR plus 2.75% (3.85% including the margin, at inception of the lease). The Company will own this vessel at the end of the lease term. The Company's fleet also includes one vessel financed under a sale and leaseback (bareboat charter) accounted for as a capital lease. The selling price was $7,000,000 and the fair value is estimated to be the same. The lease is payable at $3,500 per day every fifteen days over the five year lease term, and a balloon payment of $4,000,000 is due with the final lease payment in June 2022. Interest is fixed at 11.83%. The Company will own this vessel at the end of the lease term. Long-term Contracts Accounted for as Operating Leases On July 5, 2016, the Company entered into five-year bareboat charter agreements with the owner of two vessels (which were then renamed the m/v Bulk Power and the m/v Bulk Progress). Under a bareboat charter, the charterer is responsible for all of the vessel operating expenses in addition to the charter hire. The agreement also contains a profit sharing arrangement. Scheduled increases in charter hire are included in minimum rental payments and recognized on a straight-line basis over the lease term. Profit sharing is excluded from minimum lease payments and recognized as incurred. The rent expense under these bareboat charters (which are classified as operating leases) totals approximately $365,000 per annum. The Company leases office space for its Copenhagen operations. The lease can be terminated with six months prior notice after June 30, 2018. Future minimum lease payments under capital leases and operating leases with initial or remaining terms in excess of one year at September 30, 2017 were:
| Capital Lease |  | Operating Leases
2018 | $ | 3,278,295 |  |  | $ | 585,717 |
2019 | 3,278,295 |  |  | 420,514 |
2020 | 3,278,295 |  |  | 365,446 |
2021 | 3,278,295 |  |  | 285,348 |
2022 | 6,858,295 |  |  | — |
Thereafter | 14,227,441 |  |  | — |
Total minimum lease payments | $ | 34,198,916 |  |  | $ | 1,657,025 |
Less amount representing interest | 6,967,515 |  |  |
Present value of minimum lease payments | 27,231,401 |  |  |
Less current portion | 1,759,303 |  |  |
Long-term portion | $ | 25,472,098 |  |  |
The Company is subject to certain asserted claims arising in the ordinary course of business. The Company intends to vigorously assert its rights and defend itself in any litigation that may arise from such claims. While the ultimate outcome of these matters could affect the results of operations of any one year, and while there can be no assurance with respect thereto, management believes that after final disposition, any financial impact to the Company would not be material to its consolidated financial position, results of operations, or cash flows. In April 2017, the Company entered into a settlement agreement related to a litigation action. The Company was indemnified by third parties related to this matter and recovered approximately $462,000 that was reserved at the time the action was initiated which is included in other income (expense) in the consolidated statements of operations for the nine months ended September 30, 2017.

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