Parakou Tankers, the tanker-owning branch of the late CC Liu’s shipowning group, has taken its final bow after shipowner Por Liu filed articles of dissolution with the Marshall Islands corporate registry.
That leaves Canada’s Third Eye Capital trying to collect on some $11m in arbitration awards in the closing chapter of its misadventure in alternative ship finance.
In several US, Marshall Islands and Singapore court actions, Third Eye is targeting Trafigura Group with subpoenas. Lawyers for the Canadian financier have told US judges they believe Parakou retains an undisclosed ownership interest in eight ships ostensibly sold to Chinese leasing companies.
They think Trafigura as charterer of five Parakou MR2 tankers knows something about it.
“[Although] Parakou Tankers has purportedly sold many of its shipping vessels, Petitioner believes [it] has retained beneficial ownership over these assets,” wrote Third Eye’s lawyers DLA Piper.
But Trafigura is fighting back, with a motion before the Southern District of Texas federal court to quash a subpoena.
Toronto-based Third Eye was the innocent backer of fraudster Todd Capser, who posed as a Montana cattle baron and got some $43m in funding in 2016, based on fake documents.
In a sale-and-leaseback deal, Capser’s Wayfare paid $20.4m of Third Eye’s money for each of the 51,200-dwt Cygnus and Sextans (both built 2007), with brokers Affinity and Banchero Costa representing buyer and seller, respectively.
Parakou bareboated them back for $8,500 per day, and time-chartered them to International Shipholding at $13,500 per day.
In May 2017, founder CC Liu died. Later that year, Parakou began falling behind in hire.
The missing instalments were what eventually exposed Capser, as he was forced to seek more funding and counterparties took a closer look at his fictitious cattle.
By December 2018, after Wayfare had failed to get an expected refinancing from New York-based Black Rock, Parakou Shipping director Peter Bell sent Por Liu and other colleagues an email with a title line “Rodents”, beginning: “Guys, I am smelling a rat here, with Wayfare.”
Third Eye soon stepped in as assignee of the owner’s rights.
In May 2019, FBI agents arrested Capser.
Meanwhile, according to London arbitrators’ 143-page explanation of their reasoning, Parakou Tankers remained millions behind on bareboat hire despite International Shipholdings’ regular remittance of time-charter hire. Third Eye proposed a buyout of the ships (then valued by Simpson Spence and Young at $14.5m to $14.75m) for $47m, the outstanding amount of the loan. That solution did not appeal to Parakou.
In March 2020, after months of negotiations towards a resolution, Third Eye arrested the Sextans in Galveston and the Cygnus in the Panama Canal, as TradeWinds reported at the time.
Parakou has opposed Third Eye’s damage claims on the basis that the arrests constituted a repudiation of the charters.
But in October last year, London arbitrators Stephen Hofmeyr, Michael Baker-Harber and Adam Fenton decided Parakou was liable to Third Eye for lost hire, crew wages and repatriation, and costs of third-party arrests. After credits for bunkers on board and 10 days’ hire owed on one of the ships, the bill came to some $10.65m plus $314,000 in arbitration costs, with interest still running.
Three weeks later, Por Liu filed articles of dissolution with the Marshall Islands.
The October 2021 arbitration awards remained unpaid as of this month, when Judge Julien Xavier Neals of the New Jersey district court issued an order granting Third Eye’s petition to confirm the arbitration in the US, in a parallel action to the Texas lawsuit seeking information.
Voluntary liquidation
This is not the first voluntary liquidation of a shipping company under the Parakou umbrella.
In 2012, the late CC Liu placed a forerunner company in liquidation as a result of a long-running fight with Hong Kong neighbour Jinhui Shipping & Transportation. Jinhui pursued Parakou entities and ships and Liu’s personal assets for many years to collect on an arbitration award over the collapsed 2008 charter of the 52,500-dwt Jin Kang (now named Bao Lai, built 2003).
Parakou Tankers — of which Por Liu was chairman, chief executive and sole shareholder — is not related to Hong Kong-based Parakou Shipping, the dry bulk shipping company owned by Por Liu’s brother, John Lau.
Efforts to contact Por Liu and other Parakou Tankers officials have been unsuccessful, and the company’s website is no longer active.
A Trafigura spokesman told TradeWinds that the company had no comment. Third Eye said it was not commenting on the litigation.
