Maritime attorney and Offshore Winds contributor Robert J. Stefani is quoted in today’s Baton Rouge edition of The Advocate explaining a unique aspect of maritime bankruptcies.
Stefani explains that much of what would usually be unsecured debt in a nonmaritime context may be secured via a maritime lien, depending on whether the vessels have an
Due to their increasing size, specialization and technological sophistication, today’s vessels present attractive “big-ticket” financing opportunities. However, commercial vessels, regardless of type, will inevitably incur maritime liens, which are priority claims that arise by operation of law, and are enforceable against the vessel in rem. Lenders therefore must be cognizant of, and account for, the special attributes of maritime liens in evaluating and documenting these types of transactions, whether structured as loans or leases.
This article discusses the characteristics of maritime liens, the priority of these liens in relation to the desired first-priority secured position of a lender or lessor, and prudent practices for assessing and mitigating the risks posed by such liens. The focus of this article is on transactions involving commercial (as opposed to recreational or fishing) vessels documented under the laws of the United States.
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