30 August 2006


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Business Today



Malta Shipyards’ claim for Lm345,000 upheld

James Debono

Following the sale by auction of the MV Maltese Falcon on the request of the former Sea Malta sailors, a second vessel formerly owned by Sea Malta, the MV Zebbug will be sold by auction next Thursday, this time on the request of Malta Shipyards Limited.
Following a court decision on 28 June, Malta Shipyards Limited has joined the list of creditors making claims on Sea Malta’s former assets.
The civil court upheld its claims for Lm345,220 spent on repair works, repairs and services rendered by the shipyard on the vessel MV Zebbug.
This sum was never paid by Sea Malta Ltd, which has since been liquidated by the government.
The list of creditors already includes Sea Malta’s former sea-based employees whose claim for Lm1,043,876 million was upheld by the law courts. Bank of Valletta is also a major creditor.
So far the court has not yet established the ranking according to which creditors will be paid by Sea Malta’s liquidators.
But following court cases instituted by the seafarers the court had banned the liquidators from selling the Sea Malta’s ships privately without resorting to a public auction.
The money collected from the auctions of the MV Zebbug and the Lm1.7 proceeds from the MV Maltese Falcon will be deposited in court until the court decides on the order of ranking according to which creditors will be finally paid.
The court had also previously upheld the seafarers’ claim that the ships should be disposed off according to the Merchant Shipping Act rather than according to the company’s act.
The Merchant Shipping Act states that wages and other sums owed to seamen are secured by special privilege on the vessel.
The same law also states that money due to creditors for repairs on the ship “previously to the departure of the ship on her last voyage” are also considered as privileged credit.
Sources close to the seafarers told Business Today that since proceeds collected from the court auction of the MV Maltese Falcon would be enough to meet their Lm1.1 million claim they had no interest in applying to hold a public auction of the MV Zebbug.
On 31 May, just a day before the MV Maltese Falcon was auctioned to Grimaldi, the seafarers instituted legal procedures against the MV Maltese Falcon to ensure that their claims are paid directly from the Lm1.7 million proceeds from the sale of the ship.
The seafarer’s previous cases, which were all upheld, were instituted against Sea Malta Ltd.
Malta Shipyards Ltd is not making any claims on the MV Maltese Falcon as its court case was directly instituted against the MV Zebbug.

Sea Malta’s dockyard expense
The claim made by Malta Shipyards Ltd was instituted after Sea Malta failed to pay for repair works carried on the MV Zebbug. The ship had been dry-docked in October four months after the government had decided to privatise Sea Malta.
Effectively this expense served to increase Sea Malta’s debts by a further Lm345,220.
In January, a spokesperson for the ministry for investments justified Sea Malta’s decision to incur further debts claiming that the expense on the MV Zebbug was at the time considered necessary to ensure there was a fall back position to ensure the continuation of service in case the privatisation bid failed.
“The decision to dry-dock the Zebbug was taken because the privatisation process was at that time not yet completed. At that point, therefore, there was a possibility that the sale process would not succeed and the Government decided not to expose the local industry to a gap in the delivery of services,” the government’s spokesperson told Business Today.
As it turned out the privatisation process was wrecked after seafarers refused conditions offered by Grimaldi and Grimaldi decided to open a new service.
The MV Zebbug was no longer needed and Malta Shipyards had to resort to court to get its dues back.
In the meantime, Malta Shipyards Ltd - a government owned company - will only be able to fully recover its debt if its claims are given precedence over other creditors, which include Bank of Valletta in which the government also has a stake as a shareholder.

jdebono@mediatoday.com.mt



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