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Aegean Litigation Trust loses case against ex-staff of Aegean Marine Petroleum Network

15 Jul 2020

The Aegean Litigation Trust (ALT), which represents several creditors acting against the now defunct Aegean Marine Petroleum Network Inc. (Aegean), have lost its case against the bunkering firm’s former Directors and Officers at the United States District Court for the Southern District of New York on 8 July 2020, according to the judgement document obtained by Manifold Times.

ALT on 12 September 2019 filed a complaint against E. Nikolas Tavlarios, Peter C. Georgiopoulos, John P. Tavlarios, and George Konomos to the U.S. court over alleged breach of fiduciary duty.

The alleged breach ultimately resulted in Aegean Founder Dimitris Melisanidis’ misappropriation of over USD 300 million in funds.

The Melisanidis-owned consultancy OilTank Engineering and Consulting (OilTank) was involved in a project to build a storage facility in Fujairah where $58 million of the project’s $221.9 million cost remain unaccounted for, claimed ALT.

OilTank also received at least $68 million in satisfaction of allegedly fraudulent consulting invoices relating to the Fujairah oil storage project, it further claims.

An alleged fake trade receivables scheme which took place after the completion of the Fujairah oil storage project saw Aegean transfer $186 million to OilTank between June 2015 and January 2018 through $200 million of overstate accounts receivables at Aegean.

Melisanidis used a subsidiary of Aegean to enter 40 fake contracts with four shell entities (representing approximately 8.05 million metric tons of fuel oil) to accumulate the $200 million to conceal the transfers.

Standard of Review

U.S. District Judge Naomi Reice Buchwald noted the former Directors and Officers defended themselves from claims by dismissing the ALT complaint for “failure to state a claim upon which relief can be granted”.

She agreed, and stated such pleading: “requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.”

Duty of Care

ALT’s complaint centred around an alleged failure by Aegean’s former Directors and Officers to monitor the company; it accused the group of breaching fiduciary duties, including duty of care.

However, the Judge found ALT’s asserted breach of fiduciary duty claim to be a Caremark claim, which implicates only a breach of the duty of loyalty.

She listed six purported ‘red flags’ of Melisanidis’ alleged fraud activities which included a criminal history before founding Aegean in 2005, the unaccounted $58 million in the OilTank project and the 40 fake contracts to several shell companies.

However, she stated the developments does not mean the former Directors and Officers knowing of such activities when they occurred.

“Directors and officers, however, cannot consciously disregard purported red flags of which they are unaware,” she explained, while adding, “the Court accordingly concludes that plaintiff has failed to state his Caremark claim against defendants.”

“Defendants’ motion to dismiss is granted, and plaintiff’s request for leave to amend is denied. The Clerk of Court is respectfully directed to terminate all motions pending in this case and to close it,” she concludes.

A timeline organised list of events preceding the current development have been recorded by Manifold Times below:

Related: Former Aegean Directors and Officers face $300 million lawsuit
RelatedMinerva Bunkering appoints Tyler Baron as Chief Executive Officer
RelatedAegean Marine Petroleum Network reorganises as Minerva Bunkering
RelatedAegean: U.S. Bankruptcy Court clears Mercuria Energy take over
RelatedAegean: Bankruptcy Court approves disclosure statement, procedures
RelatedAegean: ‘Significant milestones’ achieved in restructuring progress
RelatedAegean Chapter 11: Judge authorises restructuring activity to start
RelatedAegean Chapter 11: Mercuria counters Oaktree/Hartree proposal plan
RelatedAegean Chapter 11: Bondholders object Mercuria’s $532 million DIP Facility
RelatedAegean Chapter 11: Creditor list shows exposure of 30 parties
RelatedAegean files for Chapter 11, Mercuria to be ‘stalking horse bidder’
RelatedAegean auditors alleges up to $300 million ‘misappropriated’
RelatedAegean: Forensic auditors target investigations on four companies
RelatedPresident of Aegean to leave, effective November 15
RelatedRumours: Alleged changes at Aegean’s management
RelatedMercuria starts ‘sole lender’ arrangement with Aegean
RelatedAegean establishes new management committee
RelatedMercuria bails Aegean out with $1 billion credit
RelatedOcean Intelligence comments on Aegean credit downgrade
RelatedAegean shares down 71%, to face legal investigations
RelatedAegean audit uncovers $200 million account discrepancy
RelatedAegean unfolds several business developments
RelatedAegean drops founder, elects new board members
RelatedAegean requests for ‘additional time’ to file annual report
RelatedAegean welcomes new Chief Financial Officer
RelatedLawsuit filed against Aegean’s H.E.C. acquisition
RelatedAegean to offer ‘one-stop-shop solution’ with H.E.C. acquisition
RelatedAegean in $367 million acquisition of port reception facilities services group
RelatedAegean shareholders ‘gravely concerned’ over board’s silence
RelatedShareholders nominate ‘highly qualified’ candidates to Aegean board
RelatedAegean Marine Petroleum Network under shareholder pressure

 

Published: 15 July, 2020

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