Shipping & Commodities
| The client financed shipments of raw material for a total amount of $26,000,000 for a steel and metal manufacturing group ("the Group").
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Industry – Shipping& Commodities

Territory – Swiss, Greece, France, Italy, Poland

Client – European bank

Case – The client financed shipments of raw material for a total amount of $26,000,000 for a steel and metal manufacturing group (“the Group”). The parties agreed upon the following terms:

  • The raw material shipments would be used as collateral.
  • The Bill of Lading would indicate that the client is the “consignee”.
  • The raw material would be stored in bonded warehouses, until full payment by the Group.

The Group collapsed and filed for bankruptcy. The client discovered that the raw materials related to unpaid shipments were missing from the bonded warehouses. A. Yakim was hired to conduct fraud examination related to the missing shipments and possible avenues to recover the client’s losses.   Actions – Our experts used Rapid Case Assessment (RCA) procedure that revealed the following conclusions:

  • The Group collapsed following fraudulent activities committed by its executives.
  • The client was classified as a non-secured debtor and could not benefit from proceeds of the Group’s liquidated assets due to preference of secured debtors.
  • The raw material shipments were transferred to the Group on a direct delivery basis, from cargo vessels to the Group’s warehouse and were used for production.
  • Despite the fact that the client was the consignee, shipping agencies were instructed by cargo shipping companies to release the raw material to the Group.
  • Cargo shipping companies and shipping agencies failed to comply with Hague“ Visby Rules.
  • Rapid legal action is required due to Hague “ Visby Rules that limit the liability of cargo shipping companies and shipping agencies for 12 months from date of shipments delivery.

Conclusions with suggested action plan was presented and confirmed by the client, based on the following principles:

  • Participation in liquidation process would be a waste of the client’s resources and would not cover the damages whether in full or partially.
  • Legal procedures against shipping companies and shipping agencies, based on evidence gathered during RCA, should be initiated immediately, taking into consideration time constrains issues.
  • An international operation for vessels arrest should be initiated, in order to establish solid financial securities to cover future compensation for damages should it be awarded in court.

During a period of three months, our experts succeeded to arrest several vessels in Greece, Italy and France. Each and any arrest followed by a court hearing during which our experts presented evidence that proved liability of cargo shipping companies. The Courts’ findings were consistent with our conclusions. Later, vessels were released against solid financial securities provided by ship owners.

Outcome – We assisted the client in preparation of legal procedures that were conducted in multiple jurisdictions. Expert testimony was provided in trial. The Courts found the shipping companies liable for damages and awarded our client with compensations for damages plus interest and expenses.