The High Court of Singapore has ordered a second auction of an Oxygen Maritime Management product tanker after a prior judicial sale in October failed to conclude.
Athens-based Oxygen’s 36,900-dwt Megacore Honami (built 2010) will again be sold via a sealed-bid tender on 3 December. Bids are due in at the Sheriff of Singapore’s office at 3pm on that day.
The ship was widely suggested as being sold to undisclosed Greek interests, which offered $10.5m at the October auction. While it initially looked as if the bid would be accepted, the sale ultimately fell through.
Price too low?
Court officials declined to reveal why the auction was declared void. However, legal sources who have been following proceedings, suggest that TMF Trustee — the arresting party acting as agent for mortgage holders Bank of America and Burlington Loan Management — deemed the offer price as too low.
The Megacore Honami’s market value — as estimated by VesselsValue — was around $17m at the time the auction took place.
Despite being laid up for just over a year, a pre-auction survey conducted in July described the vessel as being in good condition, with class certificates valid until the end of February next year.
The Megacore Honami has been embroiled in an arduous two-year battle between TMF Trustee and Oxygen that has been fought in courts in the US, UK and Singapore.
TMF Trustee sought to arrest and sell the Megacore Honami, together with the 74,600-dwt LR1 product tanker Megacore Philomena (built 2010), claiming both were in breach of loan covenants as they had fallen below 125% of the outstanding loan value. The Megacore Philomena — now renamed Madison — was later sold by a US court to Interunity Management Corp of Greece for $19m.
Valuation figure disputes
But amid the fight, Oxygen managing director Charilaos Loukopoulos disputed the valuation figures from brokers Braemar ACM and BRS as failing to take account of the ships' high specifications.
Loukopoulos also argued that the lenders had put up financial obstacles to the vessels' profitable operation and made efforts to sell the ships while Oxygen was trying to save them.
The long-running legal saga took another twist earlier this month when UK commercial court Justice Stephen Phillips turned down the request by banks and their agents for a summary judgment to bring the legal action to a quick end by asking for a decision in their favour.
This bid was turned down, with the judge basing his decision on the "prevention principle", which says a party cannot be at fault for non-performance of a contract when the performance of it is prevented and rendered impossible by the wrongful act of the other contracting party.
The case will now head to trial, in which Oxygen aims to pursue a cross-claim.
