A claim in Dubai of close to USD 1 million against Endofa will likely disappear because the bunker company is now closing its company in the desert state, says a local lawyer specialized in shipping. The claim stems from a failed oil transaction in Africa.
Danish bunker company Endofa could be stuck with a disputed million dollar claim in Dubai even though the group is now shutting down its business in the desert state.
ShippingWatch has recently reported that Endofa is closing its offices in Dubai and Copenhagen and is laying off several senior employees, as part of a downscale of the group’s global activities.
Going forward, Endofa will focus on niche markets for ship fuel and will operate its business out of Nice in France, Hamburg in Germany and Boston on the US East Coast, where founder and CEO Kenn Søndergaard is based.
“In the given scenario a claimant could at any point object to the de-registration process and ask the DMCC authority to suspend it” -Shehab Mamdouh, Lawyer, Fichte Legal.
However, the shutdown in Dubai could prove problematic, namely because Endofa’s subsidiary in the country, Endofa DMCC, is currently involved in a protracted and potentially costly trial at the local courts.
For a year and a half, Italian tanker carrier d’Amico Shipping has been trying to make Endofa pay just under USD 1 million for unpaid charter of a tanker vessel. The ship was party to a failed transaction involving African crude oil in 2015, which collapsed spectacularly and has since resulted in mutual accusations between the involved stakeholders.
The shutdown of the Dubai office casts uncertainty on this claim. Endofa has not responded to ShippingWatch’s inquiries, while a spokesman from d’Amico says that the carrier declines to comment.
But one thing is clear: the claim is not going away by itself just because Endofa is leaving the country, says a lawyer working at one of Dubai’s biggest law firms, who specializes in shipping.
Could block closure
Shehab Mamdouh, shipping lawyer at firm Fichte Legal, explains that it is very difficult to close a company in Dubai as long as said company is involved in ongoing court proceedings.
“According to the DMCC regulations, there are certain requirements for the company to close down or to de-register, such as i.e. a liquidator to be appointed, an audit report to be provided and the de-registration of the company to be published in the newspaper,” he says.
“Accordingly, in the given scenario a claimant could at any point object to the de-registration process and ask the DMCC authority to suspend it. Should the process have already started, it would be a must to involve the liquidator in the court proceedings,” Mamdou tells ShippingWatch.
It remains unknown how Endofa plans to close its company in Dubai, and whether d’Amico will resist the closure. Virtually all employees at the Dubai office, including Managing Director Mads Uldall Borggaard, have instead joined newly-established bunker company PSTV Energy, owned by Denmark’s Bunker Holding. The new company has opened on the same address as Endofa DMCC.
Failed transaction involving African oil
The claim against Endofa stems from a complex oil transactions which ShippingWatch has in the past covered. Endofa’s role in this oil transaction involved transporting a cargo of African oil from Ghana to Europe. During transit, doubts emerged about the ownership of the oil, enough to result in vessel Cielo di Milano sailing around for months with the cargo without being able to find a buyer.
This meant that charter hire for the vessel accumulated, but Endofa was never paid by its customer, Nordic Oil & Gas, which was represented by Danish businessman Jesper Øhlenschlæger, and as such, the company was unable to pay d’Amico.
“According to our experience, many shareholders in a similar situation. rather than going through the usual closing process, would simply empty the company’s bank account” -Shehab Mamdouh, Lawyer, Fichte Legal.
The dispute reached a preliminary conclusion in the summer 2016 when a UK court sentenced Endofa to pay USD 870,000 to d’Amico for chartering the vessel. The carrier is now trying to make this claim applicable in Dubai, where the figure has been raised to almost USD 1 million.
The lawsuit in Dubai was filed in November 2016 but has been idle since January 2017, because the court has been asked look into which jurisdiction the case belongs to. While this process has been going on, Endofa has opted to shut down its activities in Dubai, which were operated through Endofa DMCC, a subsidiary of parent group MTSL Holding A/S.
One way out
But even though the claim will not automatically be voided if Endofa’s Dubai unit closes, the bunker group could still dodge paying the money through a potential court ruling.
“However and according to our experience, many shareholders in a similar situation. rather than going through the usual closing process, would simply empty the company’s bank account and dispose of assets and valuable immovables etc., and then de facto closing the company by not renewing the license,” says shipping lawyer Mamdouh of firm Fichte Legal.
“In such case therefore, the legal identity of the company would still exist and court proceedings could be continued, but at the end of the case and once the claimant obtain a favorable judgment, they will not find any money or assets to recover the awarded amount as per the judgment,” he tells ShippingWatch, calling on creditors to file mortgage claims in a company’s assets when the filing lawsuit.
Endofa has previously informed that the company will file a damage claim against businessman Jesper Øhlenschlæger, who hired the bunker company to handle transport of the oil on behalf of Nordic Oil & Gas. ShippingWatch most recently spoke to Øhlenschlæger in October 2017, when he told that he had not yet heard from Endofa or the company’s lawyers.
This article is written by Niklas Krigslund and published in ShippingWatch