Overseas resolves $7.5 million claim related to drug investigation

By Kali Hays

New York, Aug. 8 – Overseas Shipholding Group, Inc. has reached a settlement between its subsidiary Aqua Tanker Corp. and Aqua Shipping Ltd. resolving $7.5 million of claims, according to a Thursday motion with the U.S. Bankruptcy Court for the District of Delaware.

Aqua Shipping entered into a charter agreement in 2007 with Aqua Tanker in which Aqua Tanker chartered a vessel from Aqua Shipping that included a crew and other technical management services.

Aqua Tanker placed the vessel under commercial management of Aframax International Pool and in February 2010 loaded a cargo of crude oil at Puerto Miranda, Venezuela, where authorities at the port discovered illegal drugs stored onboard the vessel.

In November 2010, while the vessel, crew and crude oil remained detained by the Court of First Instance of the Judicial Circuit of the State of Zulia, Aqua Shipping filed a lawsuit in England asserting that it was owed payment for the chartered vessel up to that point equaling over $7.5 million, according to the motion.

Aqua Tanker responded with counter claims in December 2010 asserting that the vessel had gone “off hire” under the charter agreement due to the legal action against the vessel and that the detention was a result of illegal activity by a crew under Aqua Shipping’s control and requested a reimbursement of $1.6 million.

Under the settlement agreement, both parties have agreed to termination of the legal proceedings on a “drop hands basis,” meaning each party will pay its own fees related to the arbitration and eliminate all claims, according to the motion.

Overseas said that the settlement is in the estates’ best interest as continued litigation presents risks and delays in closing its bankruptcy cases.

“If Aqua tanker were to have to pursue its claims against Aqua Shipping, it would have to contest forum and then stand ready to pursue fact and expert discovery and trial in the U.S., England, or both. In so doing, it would revive the stayed claims of Aqua Shipping and the contaminant risk of liability.”

A hearing to approve the agreement is set for Aug. 28.

Overseas Shipholding, a New York-based tanker company, filed for bankruptcy on Nov. 14, 2012 in the U.S. Bankruptcy Court for the District of Delaware. Its Chapter 11 case number is 12-20000.

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