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Federal court grants protection

Federal court grants protection
Armada (Singapore) Pte Ltd has won a respite in the US, with a federal court provisionally granting protection against attachments or arrests of the company?s assets in the US.

Armada (Singapore) Pte Ltd has won a respite in the US, with a federal court provisionally granting protection against attachments or arrests of the company"s assets in the US.

Armada (Singapore) Pte Ltd has won a respite in the US, with a federal court provisionally granting protection against attachments or arrests of the company"s assets in the US.

An order issued by Judge James Peck on Thursday has scheduled a hearing to consider the relief requested by Armada (Singapore) on February 18, until which time parties seeking relief are enjoined from commencing any judicial or quasi-judicial actions against Armada or enforcing any liens against its assets.

Judge Peck"s hearing will address a Chapter 15 petition filed simultaneously by Armada (Singapore) in New York earlier this month, as a supplement to the main proceeding in Singapore.

Chapter 15 provides an internationally recognised cross-border platform to protect US assets when bankruptcy proceedings are under way in other jurisdictions. Judge Peck"s order on Thursday provides provisional relief pending final recognition of the Singapore proceeding.

The main proceeding in the Singapore High Court seeks protection under Section 210 of the Singapore Companies Act.

Papers filed in this connection include an affidavit by Armada (Singapore) managing director Tommy Jensen Rathleff, which states that the company"s lawyers had advised of "imminent" arrests of the Armada fleet in the US as its financial woes multiply.

Mr Rathleff provides no details on this issue. His affidavit includes a raft of other worries as justification why the Singapore High Court should extend bankruptcy protection to the company while it restructures.

Mr Rathleff says his company"s problems caused by the collapsed freight markets and defaults by charterers were compounded when Nordea Bank discontinued its credit lines ?almost overnight?, despite no payment defaults by Armada (Singapore).

?This has seriously compromised the company"s cash flow required to meet its current outstanding obligations,? the affidavit states.

Armada (Singapore) is also worried that insurers would immediately revoke coverage on its fleet under standard clauses if it were to go bankrupt, which would add a new element of trouble.

Mr Rathleff has argued that almost $300m in ?unrealised profits? would be permanently lost to the company in the event of liquidation, including $171m on cape tonnage relets and $131 on panamax cargoes.

?From my 14 years of experience I verily believe these unrealised profits expected from ongoing contracts will never materialise in a liquidation scenario,? Mr Rathleff said.

While the February 18 hearing happens in New York, Mr Rathleff has until March 2 to come up with a restructuring plan in Singapore. If approved by the High Court, it is then to be presented to creditors for their approval.

www.TurkishMaritime.com.tr

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