US judge Erin Wirth has ruled that Mediterranean Shipping Co (MSC) must pay Pennsylvania-based furniture maker MCS Industries $944,655 as part of a long-running case over the shipping company’s alleged failure to meet contractual obligations after the cost of leasing a container soared from late spring 2020 onwards.
The judge issued the default decision against MSC, stating that it had failed to supply the correct documents in time to fight the legal action, which was first launched 18 months ago.
“Mediterranean Shipping has been warned multiple times that if it failed to produce the discovery, a default decision would be issued against it,” Judge Erin Wirth said.
MCS Industries had also filed a suit against Chinese carrier Cosco, but the latter settled with the furniture company during Q3 2021.
There have been a number of complaints from US importers against shipping companies alleging breach of advance-agreed contracts, and/or the imposition of conditions for future deals if the importer wanted past agreements to be fulfilled. The Federal Maritime Commission is investigating these complaints.
Ukrainian grain terminal owners’ assets frozen
Two American investment funds have acted to try to take control of Odesa-based grain terminal operator GN Terminals (GNT), one of Ukraine’s largest grain export terminals. The move was a result of an allegedly unpaid debt of more than $100m. In 2019, US emerging markets fund Argentem loaned $75m to GNT, but according to Argentem the loan started to go wrong way before Russia’s invasion in February 2022. In 2021 Argentem said that four times it had agreed to GNT’s requests to waive payment instalments. The loan had now been in default for 12 months, Argentem claimed. It said that the outstanding balance was now about $100m.
Another GNT creditor Innovatus, which says that it is owed $20m, is working with Argentem through a suit brought in the English High Courts against GNT’s top management. The companies allege that GNT officials were committing fraud, taking money out of GNT and transferring it to a foreign holding company.
John Patton, Portfolio Manager for EMEA & Asia at Argentem, said that “ACP and Innovatus have joined forces because of material failings of transparency and governance, and suspected large-scale asset dissipation and corporate wrongdoing. Since enforcement actions have begun, we have identified the transfer of members of the GNT Group which own silos to an entity in Switzerland which we understand is controlled by GNT Group’s Chief Financial Officer Dusan Denic”.
The court was reported to have granted a worldwide freezing order against Sergiy Groza and Volodymyr Naumenko, the owners of GNT Group, and Olimpex Coupe International, which is a GNT terminal operating company in Ukraine. The creditors are moving to take control of GNT, and, if successful in their attempt, said that they planned to keep it in operation to ensure the flow of agricultural products to foreign markets.
“Once GNT Group relinquishes control of the port to responsible operators, these issues will be resolved with minimal disruption to the grain corridor. We are determined to continue our broader commitment to invest in Ukraine,” said Patton.
GNT’s current management has denied the allegations. They say that the company “is prepared to meet its obligations to creditors.” The company has said that that the court actions were “unnecessary to solving the issue”. They have said that the move by the creditors was “indicative of an attempted hostile takeover.”
GNT says that it has handled nearly 10% of the export volume shipped out of Ukraine under the Black Sea corridor initiative, which began last August. The company has said that any enforced change in ownership could disrupt the operation of the corridor.