Troubled Danish company OW Bunker has filed for bankruptcy following the discovery of alleged fraud at its Singapore-based subsidiary.
The global bunkering firm, which is the third-largest company in Denmark by revenue, reportedly owes 13 banks $750 million, according to Reuters. It filed for bankruptcy at the probate court in Aalborg in northern Denmark on Friday.
On Thursday, the company confirmed that it was facing a potential loss of around $125 million due to alleged fraud by senior employees at Dynamic Oil Trading (DOT), its Singapore subsidiary. OW Bunker said it had decided to report "two key employees" at DOT to the police after conducting an internal investigation.
In a public statement issued on Friday, OW Bunker said its banks hold mortgages covering all its receivables and that without new, significant credit facilities in the immediate future, "the business could not be saved".
"It is now clear that such facilities will not be made available. Nor is a sale as a going concern a realistic option," Chairman Niels Henrik Jensen said. Bunkerworld reported on Thursday that the company had until December 1 to come up with a viable restructuring plan.
A bunker trader expressed concern earlier on Friday that OW Bunker's bankruptcy could have a domino effect. "If they go bankrupt, financially less secure players will also go bankrupt," he claimed.
Using a large integrated trader as an intermediary for the purpose of managing one's credit risk may become a thing of the past.