Speaking at the Tradewinds Shipowners Forum at Posidonia 2014 Rodgers said the Chapter 11 which was designed to protect major US employers and the economy was being abused by shipping which is a people light and capital intensive business, leading to a destruction of the competitive environment.
“Chapter 11 is being misused to destroy capital and allow competitiveness to succeed at levels that unsupportable even return of debt to banks unsupportable,” he charged.
Rodgers cited the example of New York-listed Overseas Shipholding Group (OSG), which filed for Chapter 11 in November 2012.
“So our partners in business OSG went bankrupt and for two years in the worst market didn’t even have to pay their operating expenses. How can we compete with that? Where’s the advantage to us? That is a recipe that drives the road to hell.
“We’re being shafted by the market and the way the vetting system works, and shipowners who aren’t competitive and who don’t have the edge get protection from the courts and write off capital hugely at expense of the banks and the shareholders,” he stated to spontaneous applause from the audience.
As the industry seeks billions in new capital for scrubbers and other innovations he questioned where the money would come from when the previous round of newbuildings had not even been paid for.
“I don’t know where you think you’re going to get capital for new ships because you haven’t paid for what you ordered 10 years ago.”
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