Singapore

THE fallout from the collapse of beleaguered Danish marine fuel supplier OW Bunker continues.

Its Singapore subsidiary, Dynamic Oil Trading (DOT), filed for liquidation on Tuesday, less than two weeks after OW itself filed for insolvency in Denmark.

DOT has appointed professional services firm KPMG as its provisional liquidator. Liquidation enables companies with claims against DOT to file proof of these claims, which the provisional liquidator will see to, a KPMG spokesman said.

OW's other Singapore subsidiary, OW Bunker Far East, already filed for liquidation last week. It will hold a meeting with KPMG - also its provisional liquidator - on Dec 4 to discuss its outstanding debt, Reuters reported. The meeting will begin the process of winding down OW in Singapore and receiving a list of creditors and their claim amounts.

OW's collapse, arising out of a reported fraud by two senior DOT employees in Singapore amounting to US$125 million and risk-management loss of US$150 million, has hit the bunkering industry in Singapore and globally.

OW itself has reportedly run up about US$1.5 billion in debts globally because of this, with creditors starting to make their claims. Of this amount, OW owes banks, pension funds and other institutional financers an estimated US$750 million; it is estimated that it owes another US$730 million to around 150 trading counterparties for outstanding fuel bills, Reuters said.

Among its global creditors, 20 firms account for nearly half the outstanding fuel payments; they include large energy companies such as BP, Statoil, Sinopec, Glencore, Aegean Marine Petroleum and Phillips 66, with each owed between US$10 million and US$35 million.

In Singapore, at least five companies have already proceeded with legal action against OW or its Singapore subsidiaries DOT and Ow Bunker Far East. The five, whose claims against the group exceed S$5 million, are Hin Leong Trading, Golden Island Diesel Oil Trading, Bunker House Petroleum, Equatorial Marine Fuel Management Services and Panoil Petroleum.

Two South Korean refiners, SK Innovation and GS Caltex Corp, have disclosed that they are considering legal action against the group.

As a result of this legal action, it was revealed on Tuesday that seven of OW's vessels have been seized in Singapore by law firm Rajah & Tann Singapore LLP. Six of those ships were seized on behalf of Phillips 66 between Nov 15 and 17, following the seizure of the first vessel last week.

A Thomson Reuters research report last week indicated that former wharf suppliers in Singapore have a total exposure of US$500 million to OW, with individual exposure amounting to between US$10 million and US$40 million.

In a closed-door meeting last week held by the Maritime and Port Authority of Singapore (MPA) and the International Bunker Industry Association, it was revealed that companies can expect to be asked to pay 100 per cent of debts they owed OW, but could not expect to be returned any money owed to them by OW.

Under the hierarchy of payments from OW, KPMG will be paid its fee as liquidator first. Tax payments to the government are next in line, followed by banks and financial institutions with staff salary payments coming next. All other creditors come only after that, raising the possibility that there may not be enough payments to settle their claims.