Related News

Crédit Agricole and Demica unveil SCF platform for Asia Pacific

IFC joins Taulia as supply chain finance funder

Trade credit insurance reaches just 13% of insured shipments: ICISA

Bondaval continues expansion with senior UK hire

Asia’s businesses boost efforts to unlock trapped working capital ahead of expected demand surge

Australian trade finance platform Marketlend says it intends to file further lawsuits against trade credit insurer the Bond & Credit Company (BCC) and its parent, Tokio Marine, for what it says is failure to honour claims filed after a spate of insolvencies in the Asian commodities trading sector.

Marketlend last year asked Australia’s Federal Court to order BCC and Tokio Marine to pay a US$1.4mn claim that the company says it is owed under its insurance policy. Marketlend says it incurred the loss when Singapore trader Kams defaulted on a supply chain finance arrangement in 2020.

Sydney-headquartered Marketlend operates a trade finance marketplace that connects investors with small and medium enterprises and corporates seeking finance.

Its founder and chief executive, Leo Tyndall, tells GTR that the company “is on the cusp of filing several more claims against BCC and other insurers”, with the backing of investors.

“Despite numerous attempts by Marketlend to negotiate and also reply to requests for information, the insurance providers have been repugnant in the way they have dealt with this and responded in a manner that continues to delay payment of claims,” Tyndall says.

Marketlend has recently been paid out by another insurer in a similar case, which Tyndall says suggests “that the constant delays are only confirmation that it’s a matter of time that the insurer [BCC] will need to pay but is delaying its requirement to declare such claims into the market”.

Marketlend says it expanded into the Asia commodities sector in late 2018, with the approval and encouragement of insurers including BCC.

A representative for BCC and Tokio Marine tells GTR the companies have no comment on Marketlend’s claims.

In a court document filed on February 1, BCC and Tokio Marine asked the Federal Court to dismiss Marketlend’s claim over the Kams loss, arguing that the platform had not provided evidence that it should be covered by the policy.

The insurers list several reasons why they should not have to pay out under the policy, including that Marketlend did not “exercise reasonable care and prudence in giving credit to Kams in the same manner as it would if it were not insured”.

BCC and Tokio Marine say they have not been provided with evidence that Marketlend satisfied itself that Kams, its buyers and guarantors had the capacity to pay or sufficient recoverable assets in the event of inability to pay; that the “underlying trades of the goods were in fact taking place”; or that the goods were stored in a fashion that showed they remained the property of Marketlend.

The insurance providers also argue that Marketlend has not proved that Kams’ outstanding debt qualifies as a loss under the policy, partly because they say there is no evidence that the underlying goods left Marketlend’s control.

Marketlend has also not provided enough information or documents for the insurers to properly assess the claim and has not said what steps it has taken to trace and attempt to recover the loss, the insurers allege. They say they are also considering whether the claim might be void because the trader’s collapse was attributed in part to a Covid-19 lockdown in India.

Tyndall says the insurers’ response showed they are “clutching at straws” and says BCC never expressed any concerns about Marketlend’s due diligence, or the clients, at the time of issuing the policies and obtaining the premium, and that the company goes beyond what would normally be required for due diligence on a client.

The court document says that in December 2020, Kams’ liquidators offered Marketlend US$419,000 to settle the US$1.6mn claim.

A case management hearing is scheduled for March 1.

BCC is also being sued by Australian financier Thera Agri Capital in a separate dispute about insurance cover for financing deals with collapsed Dubai trader Phoenix Commodities.

BCC’s pulling of insurance cover triggered the downfall last year of supply chain finance firm Greensill, which mounted an unsuccessful last-minute legal challenge against the insurer.

BCC was also an insurer to embattled commodities trader Rhodium Resources, since renamed Antanium Resources, documents seen by GTR show.

Tyndall says, based on conversations with others in the market, that the value of claims against BCC following recent trader failures in Singapore could be “in the vicinity” of US$750mn. The insurer declined to comment on the estimate.

He says the company asked to meet with Yoshinaro Endo, managing director and group chief investment officer of Tokio Marine, to resolve the dispute, but that he declined the invitation.

Tokio Marine’s Australian subsidiary acquired BCC in 2019, saying at the time that the insurer had produced a gross written premium of A$36mn for the 2017-18 financial year.