Armada files for bankruptcy protection

Singapore-based bulk carrier charterer Armada filed for bankruptcy protection in a U.S. court filing, Bloomberg reported over the weekend.

   The filing said the carrier's losses from derivatives would hit $375 million this year due to the bottoming out of charter rates. The company is the latest to be impacted by the drop in freight and charter rates for bulk cargo transportation. The benchmark index for the sector, the Baltic Dry Index, plummeted 92 percent from a record high in the summer to a record low in December as demand for raw materials dwindled in North America, Europe and Asia.

   Armada actually turned a net profit of $130 million in 2008, according to the filing, but admitted losses on future freight contracts will be steep if rates continue to stay low, as analysts predict they will through at least the first half of 2009.

   The Jan. 7 filing is a Chapter 15 petition, one that lets foreign companies reorganize outside the United States and protects them from U.S. lawsuits and creditor claims, the Bloomberg report said.

   Armada has 50 vessels and its clients include BHP Billiton Ltd., the world’s biggest mining company, and ArcelorMittal, the biggest steelmaker, Bloomberg reported.

   Armada follows Odessa, Ukraine-based Industrial Carriers Inc. and Copenhagen-based Atlas Shipping Group in seeking protection from creditors, while U.K.-based Britannia Bulk Holdings Inc. last year asked a U.S. court for an order requiring American creditors to be governed by its U.K. bankruptcy.

Source: American Shipper