NVOCCs Win Big Victory Against Bankrupt Carrier
In a case spanning more than 9 years and involving claims of more than $8 million, GKG Law (Ed Greenberg’s firm) recently prevailed on behalf of more than 20 clients in the U.S. Court of Appeals for the Second Circuit. The Court affirmed the U.S. District Court for the Southern District of New York’s grant of summary judgment against The Containership Company (TCC).
The litigation began in 2011 after TCC, a steamship line, filed for bankruptcy in Denmark and then filed 77 adversary proceedings against Non-Vessel Operating Common Carriers (NVOCCs) and beneficial cargo owners in the U.S. Bankruptcy Court for the Southern District of New York. The adversary proceedings alleged breach of the various service contracts and sought liquidated damages plus interest and attorneys’ fees. Essentially, the TCC bankruptcy trustee sought to collect liquidated damages due to the failure of those parties to satisfy their respective minimum contract requirements. In 2016, the bankruptcy court, relying on pleadings that GKG and other law firms filed, granted summary judgment against TCC on the basis that TCC itself had materially breached those contracts by reducing sailings and eliminating an import origin port in China. That decision by the bankruptcy court was then affirmed by the District Court in 2019 and more recently by the Second Circuit two weeks ago.
Throughout the course of litigation, many of the NVOCCs and BCOs opted to settle, but GKG Law encouraged its clients to continue litigation based on the strength of their defenses. In its October 8, 2020 decision, the Second Circuit affirmed the District Court’s finding that TCC failed to provide service and accordingly itself breached the relevant service contracts. As a result, those companies that stayed the course are not liable to TCC for any damages.
GKG Law principals Ed Greenberg and Brendan Collins served as lead counsel for the firm's clients in this matter.