New accusations of wrongdoing have been made in an ongoing case in London, in which Nikolaos Livanos is suing his relation Peter Livanos over historic forward freight agreements (FFAs).
Three companies controlled by Peter are facing litigation by Nikolaos over FFAs dating from 2007 that were allegedly structured unfairly.
Nikolaos' companies Kyla Shipping and Vega Carriers are pursuing the claim in the London High Court against Freight Trading Ltd (FTL), C Transport Panamax (CTP) and C Transport Maritime (CTM), which are ultimately controlled by Peter Livanos.
Nikolaos, who is Peter's second cousin once removed, is claiming $31.4m, equivalent to the net loss he incurred between February 2007 and November 2008 on FFA trades that he says were weighted in his cousin's favour.
The defendants have not yet filed any defence documents with the London court in response to the claim.
When approached for this story, Peter Livanos declined to comment but told TradeWinds: "We do not intend to litigate this matter in the press".
CTM also declined to comment on the matter.
Specific allegations
The claimants allege that the defendants used four techniques to structure the historic FFA trades to their own advantage, according to their amended particulars of claim, which was filed with the London High Court on 11 March but only recently made available publicly.
The alleged techniques were off-loading; “skimming”, setting up positions against associated entities, and deviation from market rates.
"FTL / CTM were using Kyla, without its knowledge or authorisation, to offload FTL's existing exposures to other counterparties for the benefit of FTL and thereby CTM," according to the amended claim.
The document alleges that FTL was "skimming" profits from "undisclosed and unauthorised" differences in contract rates between the FFAs it concluded with Kyla and those that concluded in the market.
"FTL was fronting transactions where in substance the associated companies, CTP and CTC [C Transport Capesize] were taking positions against Kyla," it continues.
"The Kyla-FTL FFAs were deliberately not concluded on terms, particularly as to contract rate, that CTM believed to be the best available."
Examples
This was done so that Kyla would absorb FTL's mark-to-market losses and to ensure that FTL made a profit on the spread between the contract rates under the earlier and later FFAs, the claim alleges.
The claim document gives multiple examples of trades that the claimants say exemplify the alleged behaviour.
One example of skimming, they claim, took place on 11 March 2008, when FTL bought a 91-day FFA from now-defunct Italian shipowner Deiulemar at $137,250 per day, while selling an "identical" FFA to Kyla at $145,000 per day.
The claimants claim that this enabled FTL to make a daily profit of $7,750 over the 91-day period or $705,250 in total.
The amended document includes a fresh claim for the losses incurred by Kyla “as a result of FTL’s positions being off-loaded to Kyla, and as a result of the contract rates under Kyla-FTL FFAs being distorted to allow FTL to skim profits".
The claimants say that the alleged actions constituted deliberate breaches of fiduciary duty that were intentionally concealed by the defendants.
The breaches could have only been discovered by disclosure of the defendants' internal documents or expert scrutiny of market prices, the claim alleges.
Settlement agreement
After racking up losses, Kyla Shipping and Vega Carriers signed a settlement agreement with FTL in May 2009 to settle the outstanding debt owed.
The claimants want the settlement agreement to be rescinded on the basis of "fraudulent misrepresentation" and is claiming restitution of all the sums that were paid under the agreement.
Kyla and Vega did not meet the payment schedule stipulated in the 2009 settlement agreement and ended up signing a termination agreement with FTL in May 2012.
The termination agreement superseded the previous deal and paid off $5.6m of the debt with cash and shares.
This amount is included in the total sum for which Kyla and Vega seek restitution because they claim the settlement was skewed in FTL’s favour.
TradeWinds contacted Nikolaos Livanos for comment but did not receive any response.
Separately, Nikolaos and his companies Vega Marine and Fortuneship are facing a $11.75m claim from DVB Bank and Nord/LB for debt that the banks claim is outstanding, as TradeWinds reported on Tuesday.
