An LPG carrier listed under the management of Eletson Gas has been under arrest in India for nearly two weeks as a dispute rages between the founding family of Eletson Holdings and new creditor-owners installed by a US bankruptcy court.
The arrest warrant for the 35,000-dwt LPG carrier Symi (built 2012) in the port of Deendayal was issued by the High Court of Gujarat in Ahmedabad at the request of EMC Gas Corp.
It claims to have provided “financial management services” to Symi II Special Maritime Enterprise (SSME), the demise charterer of the Symi.
Marshall Islands-registered EMC Gas, a unit of the Piraeus-based Eletson Group, said it had been providing the services to the Symi since January 2020.
This was around the same time that SSME sold the ship to Oaktree Capital Management in a sale-and-leaseback deal.
The vessel arrest comes amid an “incredibly acrimonious” legal battle between the founders and Canadian hedge fund Murchinson for control of Eletson that went public in recent weeks, as reported by TradeWinds.
A federal bankruptcy court in New York on 25 October allowed Eletson to move out of Chapter 11 reorganisation under a financial plan backstopped by a special-purpose entity created by Murchinson. That ruling is now under appeal.
In the vessel arrest case, EMC Gas claims it has been denied reimbursements for expenses related to these management services since the end of April.
S&P Global’s International Ships Register indicates that the Symi has been under Eleston’s control throughout its life.
EMC Gas said that under an agreement with SSME, it would submit detailed monthly reports outlining the ship’s expected revenue, as well as the previous month’s expenses it had incurred while providing those services.
It would reimburse itself for these expenses by drawing the amount from a designated bank account in which revenue from the gas carrier’s employment was collected and deposited for the benefit of the SSME.
This practice continued until the end of April, when EMC Gas claimed access to the bank account was blocked by SSME, thus preventing it from reimbursing itself for expenses disbursed on behalf of the ship.
Lawyers acting on behalf of EMC Gas revealed in their court filings that it has entered into arbitration in London to recover about $1.25m it claims is owed to it by SSME.
The company arrested the Symi as security for this claim.
Indian maritime attorney Shashank Agrawal of SSA Legal told Tradewinds that seeking the arrest of a target vessel pending arbitration outside of India is common and perhaps the most efficient manner to secure the claim, as obtaining security directly in the arbitration may be difficult.
Agrawal said that having the claim secured in India through the courts is fast and can be done in a reasonably economical fashion.
The Symi remained at anchor off Deendayal on Monday.
