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Trade credit insurer Bond and Credit Company (BCC) denies it should pay out €18mn to a commodity trader for unpaid debts following the collapses of traders Rhodium and Longview, in a sprawling case that has also dragged in broker Marsh. 

Singapore-headquartered trader Triumph Global filed a lawsuit against BCC last year attempting to recover funds due from four commodity trades with Rhodium and another with Longview, agreed during February and March 2020. The trader says the losses were covered by a trade credit insurance policy provided by BCC. 

The case is one of several legal tussles between commodity traders and their insurers to have arisen since 2020, when a liquidity crunch sparked the collapse of numerous trading houses. 

Australian court documents seen by GTR show that in each of the trades, Triumph’s Hong Kong subsidiary purchased goods including copper and coal from Singapore-based Supernova Enterprises, before immediately selling them on with payment due after 180 days.  

Title to goods would be passed by transferring original bills of lading (BLs), Triumph’s claim states. 

However, both Rhodium and Longview fell into financial difficulties in 2020 and defaulted on those debts. Rhodium  owed over US$620mn to creditors at the time of its collapse. 

Although BCC had provided cover for the trades, it argues in defence filings that Triumph’s claim is not valid. It says that because the trades were part of a string of back-to-back sales, Triumph did not take physical possession of the goods as required by the policy wording. 

BCC, a subsidiary of Tokio Marine, also argues that sales contracts did not specify that buyers could procure goods solely through a transfer of documents, rather than with shipment or delivery as well, and that Triumph has only provided copies of unendorsed BLs as evidence the trades occurred.  

Triumph refutes the insurer’s claims, saying strings of commodity trades are common market practice, and that “physical control” of goods does not mean actual possession or delivery. It argues that either payment is due under the policy, or BCC misled Triumph into agreeing a policy unsuited to its business. 

It adds that the trades themselves involved original BLs rather than copies but the originals are no longer in its possession, and that there is no requirement to endorse BLs each time they are traded back-to-back while goods are in transit. 

BCC’s defence also argues that because the Rhodium and Longview invoices were discounted by a third-party factoring company, no insured debt exists. Triumph says in response that BCC was aware of those arrangements and that Triumph’s rights under the sales contract are unaffected. 

Many comparable cases between traders and insurers also involve BCC, as well as the dispute over whether back-to-back trades require parties taking physical control over goods – although in some similar cases there are additional claims that the underlying trades were not legitimate. 

A lawsuit brought by Australian trade financier Marketlend against BCC was settled in April last year, and in 2022 BCC lost a case brought by a trader that fell victim to a fraud carried out by Phoenix Commodities. 

The Triumph case also marks another where the broker of the policies has been dragged into proceedings. 

Triumph added Marsh as a defendant late last year, arguing Marsh knew Triumph would not take control of goods. It says that by failing to advise Triumph that the policy may not be suited to its business model, it was in breach of its obligations and duties as a trade credit insurance broker. 

Marsh’s defence argues that Triumph should have disclosed that aspect of its business model. 

The broker has also filed a cross-claim against BCC, saying that if the court finds in favour of Triumph, Marsh should be able to recover funds from the insurer because it ought to have known that the policy was unsuited to the trader. 

BCC argues in its defence that Marsh “bears the primary responsibility”, and last month filed a cross-claim of its own saying it would be entitled to recover funds from Marsh in the event the case is lost. 

Spokespeople for BCC and Marsh say they do not comment on ongoing litigation when approached by GTR, while a representative of Triumph declined to comment.