USE THE DOWNTIME FOR CORPORATE RESTRUCTURING TO CONTAIN LIABILITIES AND MANAGE RISKS

HOW WELL IS YOUR COMPANY STRUCTURE PROTECTING YOUR ASSETS ?

It is amazing how many shipowners continue to flirt with danger by housing all their major assets, especially vessels, under a single company. Essentially, you make all your assets available to creditors, in the event of an unfortunate incident or poor business deal, which may not even be your fault to start with. In many jurisdictions the concept of “sister-ship arrests” also makes all the vessels in the fleet targets, if one vessel causes damage or loss to a claimant. In other words, because you have all your ships under a single company, they all become sister-ships, and if ship A is involved in a collision and sinks, the other party to the collision will be able to arrest ship B, C or D in the same fleet as ship A, in order to secure their claim. In many instances the targeted vessel for arrest will be the youngest and most valuable.

The way around this is to ensure that all the ships are owned by single ship-owning companies. These may very well be ultimately owned by a common holding company, but as long as the individual companies have proper corporate governance, maintain proper accounts and pay all taxes and statutory dues, then the probability of the separate legal entity rule being pierced by lifting the corporate veil will be low. There are, of course some countries that recognize related company claim, but that is another story altogether.

CHARTERING-IN ACTIVITY – KEEP SEPARATE ENTITIES

The same issue can arise with ship-owning companies that also charter in tonnage using the same company. This is suicidal! The chartering activities and the owning activities must be carried out using different companies, so that any claims under the chaterparty is contained there. And of course, the chartering company should be an asset light company.

At Maritime-Partners, we have extensive experience in structuring and restructuring shipping companies so as to minimize legal risks, and reduce exposure to business interruptions.

As we all know, a large claim can wipe out years of hard earned profits and even cause closure. A small investment in corporate restructuring by speaking to a maritime advisory company like Maritime Partners can possibly save millions of dollars in the long run.

Maritime Partners is an independent advisory firm founded by partners with diverse maritime background and network.

We have extensive experience in Strategy, Operations, Shipowning, Finance and Risk Management through senior management positions with leading global and regional maritime companies and maritime start-ups.

We advise our Clients on strategic, financial, operational, organisational and risk issues, leveraging our industry expertise and using analytical rigor. Our aim is to help our Clients to make better decisions and meet their objectives earlier or better. Also, we are committed to take execution roles in our Client’s Company if required by the Client in order to achieve the desired results.

Our Clients include listed and private companies in the shipping & logistics industry, investors, financial institutions, P&I/underwriters and governments globally.