OW Bunker, ING May Break Cash Collection Deadlock

ING is asserting its right to direct payment from OW Bunker debtors

Dubai-based maritime lawyers Fichte & Co. (Fichte) has said it anticipates the signing of a Cooperation Agreement (CA) between OW Bunker and Dutch bank ING aimed at collecting outstanding debts of OW Bunker in liquidation, Marasi News reports.

According to Fichte, the CA may help break a deadlock surrounding the collection of debts from OW Bunker's debtors, but "there is some confusion as to whether the CA will be effective while the physical suppliers' demands remain."

Competing claims from OW Bunker's liquidators, creditors, and the company's financal backers ING which is claiming priority creditor status, has led to a deadlock in negotiations over collecting cash, said the lawyers.

In addition, those owing money to OW Bunker following the supply of bunkers have been reticent to pay any one entity as they face competing claims from various suppliers in the chain.

It is understood that the proposed CA would involve placing any recovered cash into an ING security account which would be protected from distribution pending a decision, either by the parties to the CA or by a court, regarding the question of to whom the cash rightfully belongs.

But physical suppliers, who actually delivered bunkers which were "sold" by OW Bunker and who have competing claims for payment over the same supplies, fear the CA will weaken their claim to payment, said the lawyers.

"The 'if' (and it is a huge 'if'), is whether the CA will actually achieve its desired effect, namely, to recover cash outstanding and owing from the shipowners," said Fichte.

A Huge "If" Remains

UAE physical suppliers holding Bunker Delivery Notes (BDNs) are likely still to assert their right to payment, added the lawyers, leaving shipowners no clearer as to who to pay.

In particular, Fichte said that UAE physical suppliers are likely to mount a legal challenge to the operation of any CA which weakens their claims "subject to funding by those interested in protecting the integrity and security of the UAE bunkering industry."

UAE physical suppliers "feel that because the underlying transaction was executed in the UAE, the liquidation is subject to UAE law and that the parties are in UAE, any such solution or agreement should be rooted in the UAE too."

Fichte said that cases brought against shipowners by physical suppliers are currently pending judgment in UAE courts and will give the first indication of how robust the claims of physical suppliers based on possession of BDNs are.

In March, OW Bunker trustees were said to be fighting banks, including ING, over ownership of revenue from the sale of oil worth $71.7 million.