John T. Carroll, III and Simon E. Fraser, both members of Cozen O’Connor’s Bankruptcy, Insolvency & Restructuring Practice, discuss in an article with the American Bankruptcy Institute, Secured Credit Committee the interpretation of the Commercial Instruments and Maritime Lien Act (CIMLA), which protects suppliers of goods by granting a maritime lien against any vessel to which the supplier provides “necessaries.” Two cases are examined in which U.S. District Courts in New York and Florida handled disputes between “a seller of fuel to certain ocean-going vessels and that seller’s subcontractors over which of them held maritime liens against the vessels to secure unpaid fuel charges.” Despite both cases factually being nearly identical, the New York District Court sided with the seller, and the Florida District Court sided with the subcontractor. The takeaway advice is that all suppliers to vessels need to be aware of the different interpretations of CIMLA, as such disputes are susceptible to either widely disparate interpretation of lien priority.
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