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
Related: Minerva Bunkering appoints Tyler Baron as Chief Executive Officer
Related: Aegean Marine Petroleum Network reorganises as Minerva Bunkering
Related: Aegean: U.S. Bankruptcy Court clears Mercuria Energy take over
Related: Aegean: Bankruptcy Court approves disclosure statement, procedures
Related: Aegean: ‘Significant milestones’ achieved in restructuring progress
Related: Aegean Chapter 11: Judge authorises restructuring activity to start
Related: Aegean Chapter 11: Mercuria counters Oaktree/Hartree proposal plan
Related: Aegean Chapter 11: Bondholders object Mercuria’s $532 million DIP Facility
Related: Aegean Chapter 11: Creditor list shows exposure of 30 parties
Related: Aegean files for Chapter 11, Mercuria to be ‘stalking horse bidder’
Related: Aegean auditors alleges up to $300 million ‘misappropriated’
Related: Aegean: Forensic auditors target investigations on four companies
Related: President of Aegean to leave, effective November 15
Related: Rumours: Alleged changes at Aegean’s management
Related: Mercuria starts ‘sole lender’ arrangement with Aegean
Related: Aegean establishes new management committee
Related: Mercuria bails Aegean out with $1 billion credit
Related: Ocean Intelligence comments on Aegean credit downgrade
Related: Aegean shares down 71%, to face legal investigations
Related: Aegean audit uncovers $200 million account discrepancy
Related: Aegean unfolds several business developments
Related: Aegean drops founder, elects new board members
Related: Aegean requests for ‘additional time’ to file annual report
Related: Aegean welcomes new Chief Financial Officer
Related: Lawsuit filed against Aegean’s H.E.C. acquisition
Related: Aegean to offer ‘one-stop-shop solution’ with H.E.C. acquisition
Related: Aegean in $367 million acquisition of port reception facilities services group
Related: Aegean shareholders ‘gravely concerned’ over board’s silence
Related: Shareholders nominate ‘highly qualified’ candidates to Aegean board
Related: Aegean Marine Petroleum Network under shareholder pressure
Published: 15 July, 2020
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