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court. If it remains in custody, all costs, including lender-procured Port Risk insurance, demurrage, security, maintenance, etc. continue to accrue against the vessel. If bonding fails, the court may order an interlocutory sale prior to the completion of litigation or rendering of a judgment. The sale may be instigated by deterioration of the vessel or custodial costs inappropriate to the value of the vessel. If such a sale does not occur, then the vessel, unless other remedies are made, will be sold at a Marshall?s auction to satisfy a court-issued judgment. When a lien is executed by the ling of an admiralty action in federal court by lien claimants and are proven to be entitled to compensation, the vessel may be sold, usually at public auction. In order of priority, claimants will be paid from the proceeds. If the value of a lien is not satis ed by the proceeds, a judgment may be sought and rendered for the balance of the amount owed. If a balance remains after the sale and all claimants have been satis ed, that remaining balance may be paid to the original borrower. DIVORCE : POTENTIALLY COSTLY ; ALWAYS PAINFUL There is much more that you should know when you are faced with the prospect of incurably defaulting on your Preferred Ships Mortgage. It can be a lengthy process with considerable nancial repercussions for you and your business. Foreclosure, like some divorces can be a very costly exercise. It is best placed in the hands of an experienced admiralty lawyer. Seek competent guidance from a legal and nancial counsel before you, your vessel and your lender meet up on the rocks. Richard J. Paine, Sr. is a recognized authority on U.S. commercial marine lending and leasing. He can be reached at rpaine@optonline.net MN 19www.marinelink.com
