Maritime liens in case of shipowner's bancruptcy

Abstract

In this article author compares two separated branches of law (Admiralty and Bankruptcy) which are connected in case when maritime lien applies on ship whose owner is in bankruptcy. The problem which arises here is to which of two aforementioned branches of law should be given the preference in the application, because these two can't be applied simultaneously. This is because of shortage in value of ship in question which is not enough to settle both admiralty and bankruptcy creditors. Therefore, it is necessary to make the order of priority in which different types of creditors settle their (un)secured claims. Particular problem arises for the claims which are created some short time before and after commencement of the bankruptcy proceedings due to Bankruptcy Law deprives these creditors of secured status. From these reasons, author proposes resolution in preference of Admiralty Law in competition with Bankruptcy Law. The main argument for this reasoning is contained in the fact that maritime lienor doesn't know nor can know that shipowner gets into bankruptcy (or already is in bankruptcy). This conclusion is sup- ported by the fact that maritime lienor usually acquires maritime lien on the ship which is distanced from the owner for miles.