Sears Holdings – Shipper Yang Ming Objects to DIP Financing, Intends to Retain Up to 130 Containers Pending Freight Payment

October 26, 2018 – Yang Ming (America) & Yang Ming Marine Transport (together, “Yang Ming”) filed an objection [Docket No. 329] to the Debtors’ DIP Financing [Docket No. 7]. The objection asserts, “The Motion indicates that Bank of America as collateral agent (“BofA”), is the first lien holder. Yang Ming submits that with respect to certain container loads of cargo under the custody and control of Yang Ming, this is not accurate. Rather, Yang Ming holds a priority possessory security interest in the Debtors’ merchandise loaded inside containers in Yang Ming’s possession (the “Merchandise”) for unpaid freight, demurrage and charges due Yang Ming post-petition. To the extent that the Debtors seek a priming lien in Merchandise subject to Yang Ming’s possessory interest, Yang Ming objects to the relief sought in the Motion. Yang Ming has the Merchandise in its possession or under its control.  By the time of the hearing on the Motion, it is expected that approximately 130 containers will have been discharged from ocean vessels and placed “on hold” at terminals and storage locations under Yang Ming’s control. Yang Ming is or will soon be owed more than $250,000 for unpaid freight plus demurrage and additional charges incurred in connection with the handling of the Merchandise…. To maintain perfection of its interest in the Merchandise, Yang Ming continues to possess the Merchandise on notice to the Debtors. As a priority secured party, Yang Ming is entitled to receive its collateral or the value of the collateral up to the amount of all unpaid freight, demurrage and charges due or to be come due post-petition. Since post-petition freight, demurrage and other charges are not yet paid, Yang Ming is entitled to retain possession of the Merchandise to secure its claim so that it may ultimately execute its maritime lien on the cargo. Any freight charges or demurrage due for the post-petition period constitute amounts that are secured by the Merchandise.”