ITIC , the International Transport Intermediaries Club, is seeing an increasing number of ship agents becoming exposed to the fall-out from the bankruptcy of their principal.
In the normal course of business, the ship agent will settle a range of suppliers’ invoices on behalf of the principal and then recover these costs from the principal once the port call is complete. However, if the principal enters bankruptcy, trustees are increasingly demanding that agents re-pay these fees leaving the agent severely out-of-pocket.
ITIC doesn’t cover the amounts at stake but it does cover associated legal costs. Jurisdictions differ, but most say that payments made in the usual course of business and on usual terms cannot be recovered by the trustee in bankruptcy.