McKasson & Klein LLC


Interpleader; Lessons in OW Bunker

Neil Klein was featured on the panel at the November, 2017 Pacific Admiralty Seminar in San Francisco.

The collapse of OW Bunker, a worldwide supplier of fuel to ships, spawned litigation in many countries and throughout the United States. Providers of fuel, to whom OW had contracted supply of fuel to ships, were left unpaid; and ship owners and charterers faced lien claims for bills they thought they’d paid. Some who hadn’t yet paid found themselves with multiple demands for payment from physical suppliers, for example from the bank that had financed OW, and from OW itself, which filed a liquidation proceeding in Denmark and a related bankruptcy case in the United States.

Bunker purchasers (owners and charterers) filed interpleader actions and asked for injunctions against arrest of their ships. Of course, bunker suppliers (those who had contracts, down to the physical suppliers left holding the bag) objected. The entire process brought into focus the advantages and shortcomings of interpleader, Chapters 11 and 15 of the Bankruptcy Code, and the difficulties of reorganizing or liquidating an international maritime enterprise.

The panel discussed the circumstances under which a federal court would or would not enjoin proceedings in the U.S. and abroad. Neil presented the supplier’s position, and Keith Heard of New York presented the ship owners position. A lively debate!

By: Neil Klein

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