The Danish bunker company Endofa has lost two cases at a London court regarding unpaid charter hire for more than one million dollars.
Both cases start in West Africa, where the company was responsible for hiring vessels for two failed oil transports, which has resulted in two carriers filing lawsuits against the Danish company. Endofa has been sentenced to pay about USD 1.27 million in total in the cases, which were settled this summer.
The first case concerns tanker vessel MT Leon, owned by Tenka Inc. According to Endofa's own statements, the bunker company was sentenced to pay around USD 400,000 due to a dispute from 2013. That ruling has now been appealed.The other and somewhat more unusual case concerns the tanker vessel Cielo di Milano, owned by Italian carrier d'Amico Shipping.
In this case, Endofa must pay slightly more than USD 870,000 to the carrier for due hire of the vessels for an oil freight in which practically everything went wrong, and the bill therefore grew exponentially.
According to the ruling, which ShippingWatch is in possession of, Cielo di Milano was supposed to sail from Ghana to Poland last spring, but was rerouted to Hamburg, where a buyer was waiting for the crude oil. However, the vessel was never allowed to discharge in the German port.
Almost six months passed from when the deal was made to the oil finally being sold in the US. Before arrival, the vessel also changed its course many times and carried the cargo for months, which only happens rarely.
Neither Endofa nor d'Amico provided information before the deadline for this article about who were the original owners or intended buyers of the crude oil. Furthermore, it remains unclear why the tanker drifted around in European waters for extended periods of time without finding a buyer.
It is however certain that the lack of sale meant that the customer never paid Endofa for arranging the transport, and that the Danish company therefore never paid d'Amico for the hire of the vessel. This is why the Italian company ended up suing the Danish bunker company.
Does not expect losses
Endofa is now working to retrieve the money, which the company has been sentenced to pay in the case concerning Cielo di Milano, by suing the customer, which originally hired Endofa to transport the crude oil from Ghana to Poland. Meanwhile, the company expects to win the appeal case against Tenka.
According to Endofa, the two rulings will not affect the company's finances, as Endofa projects a profit for the full year of 2016 after losing almost USD 15 million over the past three years.
"We will not suffer losses," CFO Torben Okkels tells ShippingWatch, explaining that the company expects to be fully covered.
We will not suffer losses.
He also notes that Endofa is unhappy with the judge in London ruling in favor of d'Amico in the case relating to the expenses accrued from the oil transport.
After the chaotic series of events, d'Amico ended up selling the crude oil to a company called Sinsol for about USD 3.2 million in September 2015. Some of the money should have gone to covering the costs which Endofa is now sentenced to pay to the Italian carrier, according to the Danish company.
"The sales price they received would fully cover what costs existed from the full journey. For this reason, we are saying that they have not suffered losses and that we do not owe them anything. But through various legal quibbles, they succeeded in convincing the court in London to rule against us," says Torben Okkels.
Implemented risk management
The rulings in these two cases come at a time where Endofa has just completed a large cleanup of its business.
The group was founded in 2012-2013 by three break-aways from Danish bunker company Monjasa along with Kenn Søndergaard, who owns the company with his wife Maria Theresa Lysgaard Søndergaard through MTSL Holding A/S.
After three years of major losses and messy books, the company has worked extensively on getting its books under control and implementing stricter risk management. For this reason, there are no similar cases in the pipeline, Endofa states.
"We have implemented a due diligence process with which we will identify risks in all deals. And since we implemented this process, we have not had cases where things have gone wrong," says Torben Okkels.
It was not possible to get a comment from d'Amico before the editorial deadline.