Reuters: Bankruptcy News: Italy's Deiulemar Shipping scuttling to avoid bankruptcy

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Italy's Deiulemar Shipping scuttling to avoid bankruptcy Jul 27th 2012, 11:04 Fri Jul 27, 2012 7:04am EDT * Lawyers seek to wind up firm to pre-empt bankruptcy * More casualties expected, shipping sector in crisis By Silvia Antonioli and Jonathan Saul LONDON, July 27 (Reuters) - Lawyers for Deiulemar Shipping, a major Italian dry freight group, are seeking to wind up the company to pre-empt formal bankruptcy after prosecutors seized more than half of its fleet. Last week Italian prosecutors arrested and charged some members of families who own the group over the recent bankruptcy of a re lated company, Deiulemar Compagnia di Navigazione. The company is a casualty of prolonged weakness in a shipping sector that is reeling from a four-year s lump due to a glut of ships, ordered when times were good, that cannot find enough business during the current global financial turmoil. Deiulemar Shipping on Tuesday filed a debt restructuring proposal that would include the liquidation o f the company and the sale of all its assets to partially satisfy its creditors, lawyer Astolfo Di Amato told Reuters. "It's an attempt to save the company from bankruptcy," Di Amato, who is representing Deiulemar Shipping, said. "This is the situation: there are about 500 million euros ($606 million) in debt and 150 million in credit. The situation has become extremely precarious after the bankruptcy of Deiulemar Compagnia so we think this is the best way to safeguard the creditors." Deiulemar Compagnia di Navigazione, a once thriving company founded in 1969 by the Della Gatta, Iuliano and Lembo families, was declared bankrupt in May, owing about 860 million euros. A few days later, co-founder and former CEO Michele Iuliano, 88, one of the central figures in the case, died of heart attack during a police search of his villa in Torre del Greco. The bankruptcy arose after thousands of bondholders, rattled by the company's declining business performance, began early this year to demand to be repaid for their investments that they said were not reflected in the company's balance sheet. The firm had irregularly issued around 700 million euros of bonds, while selling off its ships to Deiulemar Shipping, a company formed in 2005 by the sons of the owners of Deiulemar Compagnia di Navigazione. Italian police on July 16 announced they had seized assets amounting to 323 million euros, which included 10 vessels belonging to Deiulemar Shipping, and arrested nine members of the founding families in connection with the bankruptcy of Deiulemar Compagnia di Navigazione. The court of Torre Annunziata, which is investigating the case, charged them with criminal conspiracy leading to fraudulent bankruptcy, aggravated fraud against the state, fake tax returns, money laundering and illegal collection of investments. TIP OF THE ICEBERG Lawyer Giuseppe Colapietro, who represents a group of b ondh olders i n Deiulemar Compagnia di Navigazione, said Deiulemar Shipping's liquidation proposal was a bid to avoid the imminent extension of the bankruptcy from the older company to the sons' firm, as there clear link between the two. Deiulemar Shipping says the two companies are different entities and its purchase of the vessels was regular but Italian prosecutors viewed the handover of the fleet as a "distractive act", lawyer Di Amato said. Ship industry sources said the shipping community did not view Deiulemar Shipping and Deiulemar Compagnia di Navigazione as really distinct companies. "Although creditors cannot touch Deiulemar Shipping directly, for the group it's all the same ... charterers, banks and suppliers perceive the whole group is in trouble," another ship industry source said. Shipping companies worldwide ordered large numbers of new vessels between 2007 and 2009, when rates to carry cargo such as coal, grain and iron ore hit record highs. Now there is a surplus, rates have crashed and banks hesitate to lend, so the sector is struggling. Another ship industry source said banks with shipping exposures were hesitant to liquidate these assets, fearing they would not recoup their investments as values slump, but added that they would eventually be forced to act. "It (Deiulemar) is a symptom," the source said. "The sector is just waiting for the volcano to erupt and the big problem is the amount of debt being carried across the whole shipping industry and banks do not want to liquidate their assets." (Editing by Anthony Barker) Link this Share this Digg this Email Reprints

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