Hanjin could be “the 100­year flood in the container industry”

Admiralty law is old, fun and messy.

From CreditSights:

The order of claim seniority is cargo, crew, supplier, mortgage holder. What is unique is a claim against a company or vessel can be enforced against a different asset or bank account. This allows creditors greater scope but also can generate a blizzard of litigation.

In a typical but very simplified case: 1) a mortgage holder receives a judgment in local court for non payment; 2) checks to see where any debtor vessels are steaming; 3) goes to that port with a lawyer and replacement crew; 4) court accepts the judgment; 5) port sheriff, lawyer, and replacement crew “physically” arrest the vessel, pay off the existing crew, cover supplier claims, and deliver the cargo if the vessel is not empty. Problem is the mortgage holder now owns a ship, and that costs cash money every day. If the vessel is not marketable, there usually is an “as is” auction under port sheriff supervision.

Continue reading: Hanjin could be “the 100­year flood in the container industry”

Admiralty law is old, fun and messy.

From CreditSights:

The order of claim seniority is cargo, crew, supplier, mortgage holder. What is unique is a claim against a company or vessel can be enforced against a different asset or bank account. This allows creditors greater scope but also can generate a blizzard of litigation.

In a typical but very simplified case: 1) a mortgage holder receives a judgment in local court for non payment; 2) checks to see where any debtor vessels are steaming; 3) goes to that port with a lawyer and replacement crew; 4) court accepts the judgment; 5) port sheriff, lawyer, and replacement crew “physically” arrest the vessel, pay off the existing crew, cover supplier claims, and deliver the cargo if the vessel is not empty. Problem is the mortgage holder now owns a ship, and that costs cash money every day. If the vessel is not marketable, there usually is an “as is” auction under port sheriff supervision.

Continue reading: Hanjin could be “the 100­year flood in the container industry”