Australian supply chain finance provider Marketlend is suing its insurer, the Bond & Credit Company (BCC), for A$1.4mn (US$1mn) after it allegedly failed to honour a policy when a Singapore commodities trader went bust.
In a document filed in the Federal Court in Sydney on December 14, Marketlend says BCC failed to cover it for losses after trader Kams Singapore defaulted on 20 payments it owed the financier under a supply chain finance arrangement.
BCC, part of the Tokio Marine group, has not yet filed a defence and did not respond to a request for comment from GTR.
The suit is the latest in a string of claims against BCC in the Australian courts. In March it was the subject of a last-gasp bid by doomed supply chain finance provider Greensill to force renewal of US$4.6bn in insurance cover. BCC’s decision not to renew those policies prompted Credit Suisse to freeze investment, ultimately triggering the company’s collapse.
In October 2020 financier Thera Agri sued BCC for A$6.6mn, alleging it had unjustly refused to honour a policy after the demise of Phoenix Commodities, a commodities trader and Thera client. It has also been named in Singapore court documents as an insurer to troubled commodities trader Rhodium Resources.
In the most recent case, Marketlend says it took out an insurance policy with BCC in August 2018 which covered 90% of its losses if an insured buyer failed to pay its debts due to insolvency.
BCC approved Kams as an insured buyer in November 2019 with an eventual credit limit of A$3.75mn, according to the claim.
Two months later Marketlend agreed to extend supply chain finance to Kams by paying invoices submitted to the firm from another Singapore trader, Quantum Impex, for the purchase of commodities such as maize, soybeans and cashews. Under the agreement, Kams was obliged to repay Marketlend 90 days later.
Between early February and late May 2020 Marketlend paid Quantum Impex A$3.1mn for its invoices. However, Kams only ever repaid A$1.4mn of that amount to Marketlend and defaulted in June, at which time all its invoices to Marketlend became immediately repayable.
Kams was wound up through insolvency in September of the same year and the following month the Singapore High Court appointed a liquidator.
Marketlend says it put BCC on notice of Kams’ financial woes in August and that in December the liquidator accepted Marketlend’s claim against Kams. The supply chain finance platform says it sent BCC evidence of the liquidator’s acceptance and that under the policy, the insurer was then bound to pay the claim within 30 days.
Marketlend says BCC is obliged to cover 90% of the insured loss, which comes to A$1.4mn after a A$100,000 deductible. It is also seeking interest.
An archived version of Kams’ now-inactive website describes the company as a “global link between producers and consumers to provide healthy food commodities”.
Incorporated in 2003, the company was led by Ritesh Bansal, whose LinkedIn profile also lists him as managing director of Agriex Australia, a Sydney-based commodities trader which no longer appears to be active.
A case management hearing between Marketlend and BCC is slated for early March. Marketlend did not respond to a request for comment.