Offshore Specialty Fabricators, LLC
17-35623
Bankr. S.D. Tex.Dec 28, 2017Background
- Debtor Offshore Specialty Fabricators, LLC (OSF) operates derrick barges and entered a Management Services Agreement (MSA) with Alliance Heavy Lift, LLC giving Heavy Lift sole authority to manage OSF operations for a 5% fee.
- Alliance Special Ventures Fund, LLC (Alliance) filed a proof of claim in the bankruptcy asserting a secured maritime lien against OSF vessels Swing Thompson and William Kallop for $270,293.78 of a $320,507.77 claim.
- The claim comprised (1) amounts originally owed to Rouse Enterprises for groceries/supplies (assigned to Alliance), (2) unpaid chartering invoices owed to Alliance Offshore (assigned to Alliance), and (3) pre-filing court costs and custodia legis expenses (not contested by OSF).
- OSF objected, arguing Alliance (and its principals) were joint venturers with OSF when the debts were incurred and thus not strangers to the vessel, disqualifying them from maritime liens.
- The Court held a hearing to estimate the claim for credit-bidding and requested additional briefing on the joint venture issue.
- Ruling: the Court denied maritime-lien treatment for amounts attributable to Alliance Offshore (insider/joint-venture); allowed the Rouse-assigned necessaries claim and the uncontested court/custodia costs as secured maritime liens.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Alliance is a stranger to the vessel and thus entitled to maritime liens | Alliance: corporate form and assignments make it a creditor entitled to liens | OSF: Alliance and its principals ran OSF operations (through MSA and shared personnel) and were joint venturers, so not strangers | Court: Alliance Offshore portion is not a maritime lien (insider control); Rouse-assigned necessaries are liens because Rouse was a stranger when supplying necessaries |
| Whether the Management Services Agreement creates a joint venture | Alliance: MSA makes Heavy Lift an independent manager/contractor, not a partner | OSF: overlapping personnel and control indicate joint venture | Court: MSA shows sole management control and fee-for-service (no profit/loss sharing), so MSA alone does not establish joint venture |
| Whether assignment of a valid maritime lien defeats lien status | Alliance: assignee steps into assignor's rights and can enforce lien | OSF: acquisition by Alliance taints lien if Alliance insiders caused the debt | Court: maritime liens are freely assignable; assignment does not destroy Rouse's valid lien when assignor was a stranger |
| Whether principals’ overlapping roles defeat lien status for amounts they caused | OSF: individuals (Williams, Trosclair) held positions in both entities and used insider access to incur debts | Alliance: disputes existence of joint venture/insider misuse | Court: overlapping management roles gave insiders access and control; amounts traceable to Alliance Offshore are not entitled to maritime-lien protection |
Key Cases Cited
- Comar Marine Corp. v. Raider Marine Logistics, LLC, 792 F.3d 564 (5th Cir.) (maritime liens are strictly construed and limited to historically recognized classes)
- Sasportes v. M/V Sol de Copacabana, 581 F.2d 1204 (5th Cir.) (joint venturers are not strangers to the vessel and cannot claim maritime liens)
- Piedmont & George's Creek Coal Co. v. Seaboard Fisheries Co., 254 U.S. 1 (Sup. Ct.) (historical limits on maritime liens)
- Mullane v. Chambers, 438 F.3d 132 (1st Cir.) (purpose of maritime liens is to secure credit for strangers to a vessel)
- Beech v. FV Wishbone, 113 F. Supp. 3d 1203 (S.D. Ala.) (insiders with control denied maritime liens)
- Hinson v. MV Chimera, 661 F. Supp. 2d 614 (E.D. La.) (creditors must be strangers to vessel to claim lien protection)
- Barcliff, LLC v. MV Deep Blue, 876 F.3d 1063 (11th Cir.) (maritime liens are assignable and assignees assume assignor's rights)
- Cotemar S.A. de C.V. v. Beaufort, 190 F. Supp. 3d 577 (E.D. La.) (recognizing assignability of maritime liens)