US Bankruptcy Court rules Valero’s claims as creditor via maritime liens are invalid. In a shake up with potentially far reaching consequences the New York Southern District Court has ruled that Valero does not have legal standing via maritime liens on repayment for fuel deliveries to customers where a Valero partner reseller – OW Bunker (bankrupt)– received the customers’ order. The ruling is expected to shake up commercial maritime supply and financing as it has been commonly understood that if the buyer doesn’t pay, the supplier can arrest the vessel via the maritime lien. It is common for suppliers to finance receivables based on security provided by maritime liens*. Valero is appealing the ruling. If the ruling stands, banks and insurers are more likely to constrain the amount of credit available to suppliers in instances where the supplier does not directly receive the order.
*Credit Eureka note: Unlike suppliers who relied on maritime liens for security on their sales, suppliers who purchased credit insurance on sales to OW Bunker – the reseller – have been paid out.