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Singapore: Earlier court judgement between Hanwa and Harley Marine discharged

07 Apr 2020

A High Court of the Republic of Singapore judgement to prevent the risk of dissipation by former Singapore-based bunkering firm Harley Marine Asia (HMA) and holding company Harley Marine International Holdings (HMIH) has been discharged on 16 March 2020.

Japanese trading company Hanwa Co., Ltd (Hanwa) obtained the judgement through the Singapore International Arbitration Centre (SIAC) following an Emergency Arbitration application on 18 July 2018, showed court documents obtained by Manifold Times.

The judgement ordered HMA and HMIH not to remove company assets from Singapore, including bunker tanker Ocean Pioneer, up to the value of USD 2 million.

Background

In 2017, Hanwa, HMA and HMIH made arrangements to develop a bunkering business at Singapore port; this included interest payments from a loan agreement of USD 2 million from Hanwa to HMA guaranteed by HMIH.

However, HMA was unable to meet the Maritime and Port Authority of Singapore (MPA) requirement for the Bunker Supplier License and Bunker Craft Operator License which included achieving a minimum volume of marine gas oil (MGO) sales and the ownership or charter of a liquefied natural gas (LNG) dual fuelled vessel in 2018 or earlier.

The development led to MPA notifying HMA on 26 January 2018 that both licenses will not be renewed when they expire on 31 January 2018.

A personal appeal by Harley Vincent Franco, the owner of Harley Marine Group, led to MPA not renewing the Bunker Supplier License of HMA; the Bunker Craft Operator License still remains.

This negatively affected the bunkering business of HMA, leading to a note of default to Hanwa on 27 February 2018.

HMA did not pay Hanwa the USD 2 million loan agreement’s first interest payment of USD 30,116 on 13 February 2018 and the second interest payment of USD 39,077 by 30 June 2018.

Hanwa, fearing the risk of dissipation, claimed HMA and HMIH: “Were trying to avoid having to fulfil their payment obligations”.

It noted HMA and HMIH winding down their business in Singapore from late 2017 where the firms vacated their office premises and terminated employment contracts.

Both firms also ended secondments of Hanwa staff due to continue work throughout 2018, while marketing the sale of Ocean Pioneer. The bunker tanker is registered under Sea Samara Pte Ltd, a subsidiary of HMIH.

A HMA representative explained to the SIAC Arbitrator the decision to reduce overheads and cost were “steps taken in the ordinary course of business” to ensure operations continue and obligations are met.

However, the plan to sell the Ocean Pioneer, which the Bunker Craft Operator License of HMA still depends on “might amount to an evidence of a risk of dissipation”, considered the Arbitrator.

He further observed a “Lack of Candour” by HMA and HMIH as advertisement for the sale of Ocean Pioneer sale was only known to Hanwa from third parties, though the HMA representative also said the firm was prepared to place proceeds of the sale in an escrow account.

“However, it appears that any such escrow offer to Claimant must have been made after Claimant became aware of the sale efforts, not directly from Respondents, but through third parties,” stated the Arbitrator.

“This gives the sales attempts a somewhat covert character. Such sale attempts without notice to Claimant, especially the one in February 2018, do amount to solid evidence of conduct that might suggest a real risk of dissipation.”

A check by Manifold Times on Tuesday at the Singapore Accounting and Corporate Regulatory Authority (ACRA) found both HMA and HMIH are currently in liquidation under a creditors’ voluntary winding up operation.

Related: The total number of Singapore bunker suppliers just decreased
Related: Harley Marine Asia to hold creditors meeting at Singapore

 

Photo credit: Manifold Times
Published: 7 April, 2020

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