2020 - What a year! We started the year with a major commodities company seeking court protection for its astronomical debt. The year has since been peppered with one company after one collapsing under a mountain of debt. Perhaps, it is not surprising then, that the year ended with yet another commodities trader seeking court protection in Dec. Trade finance has taken a beating in 2020 with a combination of trade fraud scandals, Covid-19, the oil crash and global market uncertainty. The rot in commodities trading has been exposed, i.e., when traders are no longer in the business of finance for trade, but trading to raise finance. And with that, the many dubious aspects of trade have risen to the surface– fictitious trades, double financing, forged documents, manipulated financial statements etc. This is not a bad thing for the industry – it represents a moment of catharsis to cut the rot, adjust financing costs and re-evaluate the velocity of trade finance. The interface between shipping and commodities has also been pronounced in 2020 with the prevalent use of letters of indemnity for discharge or payment, coming under close scrutiny. The issue of who bears the risk of fraudulent documents under letters of credit or insurance policies has and will continue to be tested. It appears to me that the only realistic solution lies with digitization of trade documents but there continues to be inertia in the community against its widescale adoption, and as such the risk inherent in misdelivery claims is likely to stay and has to be managed. Many areas of the commodities market however have been booming with iron ore leading the way with some record pricing. The work that has kept us busy in 2020 is reflective of this trend as we find ourselves occupied with work in the following areas: • • • • • Enforcement actions, restructuring and insolvency in agri and oil sectors Arbitrations in oil, coal, metals and shipping sectors Advising on payment instruments such as BLs, LOIs and security documentation Trade fraud investigation and insurance claims Operational aspects of trading affected by Covid-19 As prices move upwards and liquidity continues to tighten, we expect an increase in non-performance and catastrophic collapses in 2021. Restructuring mandates will continue to dominate the landscape. In the next few pages, we have listed some highlights of our work. Our highlight for 2020 came earlier in the year when we were nominated in the inaugural Legal 500 SE Asia awards for International Arbitration alongside global heavyweight arbitration law firms. It took us by surprise, but we were heartened that our message of competing with the best in the world resonated with many of you. In a world of Goliath law firms, we will always be a David and every aspect of this firm embodies those values of overcoming the odds, surpassing limits, and changing prevailing mindsets. Thank you for the support and I wish you every success in 2021. Baldev Bhinder Email: baldevbhinder@blackstonegold.com
Our clients are the world’s largest MNCs including mining companies, oil conglomerates and trading houses with head offices listed in Australia, Europe, India and China. We advise traders in metals, minerals and softs on their operations across the world and advise lenders, insurers and borrowers on power, trade and investment structures, defaults and investigations. Bangladesh Power Producer Listed Australian Mining Group Listed European Energy Co. Middle East Oil Producer Japanese Oil Trader Global Trade Finance Banks European State Fund Norwegian Maritime Contractor Invesment Fund Chinese Metals Trading House Global Oil Producer/ Trader Indian Steel Producer London Credit Insurer Listed Bangladesh Steel Co. Listed Agri Commodity Trading House Australian Steel Producer European Credit Insurer Swiss Trade Finance Fund Trade Finance Fund SG Coal Traders
SG Restructuring Vietnam Enforcement UK Arbitration SG Insolvency Petchem Borrowing Base Cotton Trading
UK Court SG Arbitration Chinese Insolvency Agri Borrowing Base Copper Trading
Security Enforcement Supply Chain Financing Enforcement/ Trade Investigation Ship Financing
Africa Insolvency Letters of Indemnity Legal Risks Agri Commodities Oil Trading
Trade Investigation/ Debt Enforcement SG, Malaysia, India, UAE UK Arbitration Upstream Oil Project
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