Vessel Hypothetical - A Lawyer's Perspective

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After the euphoria of the evening wears off, the questions begin to swirl. How do we choose the right yard? Have we timed the market correctly? Where will we get the money?

We haven’t heard too much about our owner’s business. He has made a good deal of money in the United States – his business is buoyed by Uncle Sam. His is one of the lucky companies that had successfully negotiated Operating Differential Subsidies (“ODS”) with the U.S. Maritime Administration. The U.S. government is contractually obligated to provide these funds to the owner who happens to operate a fleet of primarily U.S. flag vessels in certain desirable liner trades. In 1985, one of these contracts alone is worth up to $2 million per year per vessel. Despite the collapse in the tanker trades, our owner is doing quite well.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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