Mayhem Crude, Inc. v. Siva Ventures Limited et al

Filing 29

ORDER VACATING SEIZURE GRANTING 13 Opposed MOTION to Vacate 7 Order on Motion for Writ of Garnishment. Plaintiffs requests for discovery and a stay of this order are DENIED. (Signed by Judge Gray H Miller) Parties notified.(rkonieczny, 4)

United States District Court
Southern District of Texas

ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION

MAYHEM CRUDE, INC.,
Plaintiff,
V.
SIVA VENTURES LIMITED;
DALEWORLD LIMITED; SIVA
SHIPPING SINGAPORE PTE. LIMITED
OPAL CHEMICALS LIMITED; SIVA
INDUSTRIES AND HOLDINGS LIMITED
AND SARAVANA SIVASANKARAN,

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March 06, 2017
David J. Bradley, Clerk

CIVIL ACTION H-17-608

ORDER VACATING SEIZURE
On February 24, 2017, Plaintiff filed this action representing by verified complaint that it was
the owner of the Motor Tanker V8 STEALTH and that Siva Ships International Pte. Limited (“Siva
Ships”) was its charterer, as of 2011.1

In 2012, the performance of the bareboat charter was

guaranteed by Daleworld Limited, and Daleworld Limited’s performance was guaranteed by Siva
Ventures Limited.2 Those entities were substituted for the original guarantors based on the
representations of solvency by Martin Wong, a partner in KPMG International Cooperative and by
Saravana Sivasankaran, the director of Siva Ships and son of the founder of a shipping conglomerate
that included Siva Ventures Limited and Siva Industries and Holdings Ltd.3 Part of that solvency

1

See Doc. 1, Orig. Verified Compl. p. 2. The original charter party was J.B.
Ugland Shipping Singapore Pte. Ltd. and the original guarantor was J.B. Ugland Shipping AS,
Oslo. Id. p. 4. In October 2011, J.B. Ugland Shipping AS, Oslo was renamed Siva Shipping
Oslo AS. Id.
2

Id. p. 2.

3

Id. pp. 4-5.

were vessels owned by subsidiaries of Siva Shipping Oslo AS. Wong and Sivasankaran failed to
disclose to Plaintiff that the assets of Siva Shipping Oslo AS and its subsidiaries, including Siva
Ships and TACK Shipping S.A., the registered owner of the M/T JBU OPAL, would be transferred
to Siva Shipping Singapore Pte. Ltd, and placed under the corporate control of the Siva Group.4 The
effect of these corporate reorganizations was to strip assets from the guarantor entities, Daleworld
and Siva Ventures Limited.5
One of the assets transferred from Siva Shipping Oslo AS to another Siva entity was the
vessel under seizure, the M/T JBU Opal. That vessel was originally owned by TACK Shipping,
S.A., which in turn was owned by Siva Ships.6 The M/T JBU OPAL is currently owned by Opal
Chemicals, Ltd.7 Opal Chemicals, Ltd., had been indirectly owned by Siva Shipping Oslo AS, which
was in turn owned by Daleworld.8 At some point after the new guarantors were in place, the
ownership of Opal Chemicals, Ltd. was transferred to Siva Global Ships Limited, which in turn was
owned by Siva Shipping Singapore Pte. Ltd.9
Later, control of Siva Ships was assumed by Standard Chartered Bank, when a loan secured
by its shares was in default.10 The bank repudiated the charter party on December 18, 2016, and
4

Id. p. 14; see also Hearing Transcript (“Tr.”) p. 8.

5

Id. p. 15.

6

Tr. 9.

7

Id. p. 12.

8

Id. p. 7.

9

Id. p. 11-12.

10

Id. pp. 7-8. All subsidiary holdings of the defaulting party were placed in
receivership. Tr. 16.
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refused to make necessary repairs to the vessel.11 The vessel was redelivered to Plaintiff in a
damaged condition and Plaintiff turned to the charter party’s guarantor for payment of damages.12
The guarantors - Daleworld and Siva Ventures Ltd., have failed to respond to Plaintiff’s demands
for payment and are insolvent.13 In its complaint, Plaintiff alleged that these two entities are
dominated and controlled by Saravana Sivasankaran and his family, who have used their many
corporations to perpetrate a fraud on itself and other creditors.14 Plaintiff sought Rule B attachment
of the M/T JBU OPAL based on an alter ego and fraudulent transfer theory of control – that the
Vessel’s owner was Opal Chemicals Ltd. which was in turn owned by Siva Global Ships, which was
owned by Siva Shipping Singapore Pte. Ltd.15
On February 27, 2017, the court arrested the M/T JBU OPAL. On March 1, 2017, an
opposed motion to vacate the seizure was filed by Opal Chemicals Ltd. In its motion, Opal
Chemicals Ltd. admitted that it is the owner of the M/T JBU OPAL but denied it was related to any
of the other defendants named in the complaint.16 Opal Chemicals Ltd. averred that it was a wholly
owned subsidiary of Foreguard Shipping I Global Ships Ltd., an entity formerly known as Siva
Global Ships, Ltd., and that Foreguard Shipping I Global Ships Limited is a wholly owned subsidiary
of Foreguard Shipping I Singapore Pte. Ltd., formerly known as Siva Shipping Singapore Pte.

11

Id. p. 8.

12

Id.

13

Id. p. 16.

14

Id.

15

Id. pp. 3, 14.

16

See Doc. 13, Opal Chemical’s Mot. to Vacate, p. 3.
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Limited.17 Opal Chemicals Ltd. explained that the transfer of ownership occurred in November 2016
at a Receiver’s sale that had foreclosed on assets of Siva Group Shipping and Trading Projects Pte.
Ltd.18 Opal Chemicals Ltd. averred that it was not related to any Siva entity, or Siva principal, and
that no Siva entity or principal has an ownership interest in any Foreguard entity, including Opal
Chemicals Ltd., or any ownership or managing interest in the M/T JBU OPAL.19
On March 2, 2017, the court continued the post-arrest hearing until Monday, March 6, 2017
to give Plaintiff additional time within which to address the new evidence concerning the ownership
of Opal Chemicals Ltd.
On March 6, 2017, the post-arrest hearing was held before Magistrate Judge Johnson. The
court has reviewed all pleadings filed in this action and has reviewed the transcript of the hearing.
At the hearing, Plaintiff argued that it was not relying on an alter ego theory of ownership of the
vessel but instead argued that the fraudulent transfer of the ownership and assets of Siva Shipping
Oslo AS and its subsidiaries from the Daleworld/ Siva Ventures Ltd. branch of corporate ownership
to the Siva Shipping Singapore Pte. Ltd./Opal Chemicals Ltd. branch of ownership, entitled it to
seize the M/T JBU OPAL.20 Plaintiff also argues that the sale of Opal Chemicals Ltd. to Foreguard
Shipping I Global Ships Ltd. was a fraudulent transfer because it was negotiated by lawyers who
were operating under a conflict of interest, it was unclear who was signing on behalf of the

17

Id.; see also Doc. 13-2, Decl. of (Holly) Yuen Wai San pp. 1-2.

18

Id. pp. 3-4; see also Doc. 13-2, Decl. of (Holly) Yuen Wai San p. 2.

19

See Doc. 13-2, Decl. of (Holly) Yuen Wai San p. 3.

20

See Tr. pp. 22-23.
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Foreguard Shipping entity, and the contract did not have the look of a bona fide transaction.21
Under Rule B of the Supplemental Rules for Certain Admiralty and Maritime Claims (“Rule
B”), Plaintiff may take jurisdiction over a defendant not subject to service of process within the
district on an admiralty or maritime claim by attaching property of the defendant. See Submersible
Sys., Inc. v. Perforadora Cent., S.A. de C.V., 249 F.3d 413, 421 (5th Cir. 2001)(citing Great Prize,
S.A. v. Mariner Shipping Pty., Ltd., 967 F.2d 157, 159 (5th Cir. 1992)).
Plaintiff concedes that it has no direct admiralty claim against Opal Chemicals Ltd., as Opal
Chemicals Ltd. was not a party to the charter party or the guarantees at issue. Plaintiff does not argue
that Opal Chemicals Ltd. is the alter ego of either the charterer or a guarantor of the charter party.
Instead, Plaintiff relies on a fraudulent transfer theory of liability found in Swift & Co. Packers v.
Compania Colombiana Del Caribe, S.A., 339 U.S. 684 (1950) and Flame S.A. v. Freight Bulk Pte.
Ltd., 807 F.3d 573 (4th Cir. 2015).
In Swift & Co., cargo was lost when the M/V CALI was sunk off the coast of Grand Cayman
island. 339 U.S. at 685. The owner of the M/V CALI transferred ownership of another vessel to a
new company formed four days before suit was filed over cargo lost with the M/V CALI. Id. at 686.
The cargo owners attempted to attach the M/V CARIBE on the grounds that its transfer to another
company was fraudulent, and that the successor-owner of the M/V CARIBE was the alter ego of the
original vessel owner. Id. at 686. The Court found that the attachment based on the allegation of
a fraudulent transfer was permissible. Id. at 694-95. The Court stated, “The basis of admiralty’s
power is to protect its jurisdiction from being thwarted by a fraudulent transfer, and that applies

21

See Tr. pp. 20-21, 24-25.
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equally whether it is concerned with executing its judgment or authorizing an attachment to secure
an independent maritime claim.” Id.
In Flame S.A., the Fourth Circuit approved the Rule B attachment of a vessel owned by the
alter ego of the debtor company. Flame S.A., 807 F.3d at 578. There, the plaintiff was able to show
that the owner of the vessel was responsible for the other company’s debts and that there were
fraudulent transfers of funds and assets to evade creditors. Id.
In the present set of facts fraudulent transfer is not so clear as in the cases cited above. Here,
the owner of the vessel, Opal Chemicals Ltd., and its parent companies, have no relation to the
charterer or guarantors of the charter party. While the M/T JBU OPAL at one time may have been
transferred among Siva entities for less than adequate consideration or to defraud creditors, there is
no evidence to suggest that the sale of the vessel to the Foreguard entities was a fraudulent transfer
to avoid the obligations under the charter party or the related guarantees.
Accordingly, the court VACATES the seizure order and ORDERS that the Motor Tanker
JBU OPAL, IMO 9400409, International Call Sign V7IN4 be released from in rem seizure.
Plaintiff’s requests for discovery and a stay of this order are DENIED.
Signed at Houston, Texas on March 6, 2017.

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Gray H. Miller
United States District Judge

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