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UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK IN RE: GMI USA MANAGEMENT, INC., et al., 1 Debtors. CHARLES M. BERK, as LIQUIDATING TRUSTEE OF THE GMI USA MANAGEMENT, INC. AND ITS AFFILIATED DEBTORS LIQUIDATING TRUST, Plaintiff, v. TSUNEISHI GROUP (ZHOUSHAN) SHIPBUILDING, INC., Defendant.

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Chapter 11 Case No. 15-12552 (SMB) (Jointly Administered)

Adversary Proceeding No. ___________

ADVERSARY COMPLAINT For his complaint against Tsuneishi Group (Zhoushan) Shipbuilding, Inc., Charles M. Berk, as Liquidating Trustee of the GMI USA Management, Inc. and Its Affiliated Debtors Liquidating Trust, states the following: Jurisdiction & Parties 1.

The above-captioned adversary proceeding arises in and is related to the above-

captioned bankruptcy case which is currently pending under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). 1

The Debtors in these chapter 11 cases comprise GMI USA Management, Inc. (1208), Global Maritime Investments Holdings Cyprus Limited, Global Maritime Investments Vessel Holdings Pte Limited, Global Maritime Investments Cyprus Limited and Global Maritime Investments Resources (Singapore) Pte. Limited.

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This adversary proceeding is brought pursuant to Rule 7001 of the Federal Rules

of Bankruptcy Procedure. 3.

This Court has jurisdiction over the subject matter of this adversary proceeding

pursuant to 28 U.S.C. §§ 157 and 1334. 4.

This adversary proceeding is a core proceeding pursuant to 28 U.S.C. § 157(b)(2).

5.

Venue is proper in this court pursuant to 28 U.S.C. §§ 1408 and 1409(a).

6.

On September 15, 2015, GMI USA Management, Inc., and certain affiliated entities

(the “GMI Debtors”) filed voluntary petitions for relief under the Bankruptcy Code in the Bankruptcy Court. 7.

On December 20, 2016, the Bankruptcy Court entered an order (the “Confirmation

Order”), confirming the Debtors’ Third Amended Joint Plan of Liquidation under Chapter 11 of the Bankruptcy Code (the “Plan of Liquidation”) which Plan became effective on December 30, 2016 (the “Effective Date”). 8.

On the Effective Date, and as provided for by the Bankruptcy Code, the Plan of

Liquidation, and the Confirmation Order, among other things, the GMI Debtors and certain affiliated non-debtor entities were substantively consolidated into the estate of GMI Debtor entity GMI USA Management, Inc. (“GMI USA”). 9.

Also on the Effective Date, and pursuant to the Bankruptcy Code, the Plan of

Liquidation, the Confirmation Order, and the GMI USA Management, Inc. and its Affiliated Debtors Liquidating Trust Agreement dated as of December 20, 2016 (the “Liquidating Trust Agreement”), Charles M. Berk (“Liquidating Trustee”) was appointed as the Liquidating Trustee of the Liquidating Trust, and all assets of GMI USA (which then included all assets of the GMI

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Debtors and the non-debtor affiliates consolidated into GMI USA) were transferred to the Liquidating Trust to be administered pursuant to the terms the Liquidating Trust Agreement. 10.

Defendant Tsuneishi Group (Zhoushan) Shipbuilding, Inc. (“Tsuneishi”) is a

corporation organized under Chinese law. 11.

Tsuneishi filed two proofs of claim in the Bankruptcy Court on June 20, 2016,

and June 22, 2016. 12.

Pursuant to Bankruptcy Rule 7008, the Liquidating Trustee consents to the entry

of final orders or judgments by this court. General Allegations 13.

On or around April 25, 2014, Tsuneishi and debtor Global Maritime Investments

Cyprus Limited (“GMI Cyprus”) entered into a “Shipbuilding Contract for Construction and Sale of One (1) D/W 81,600 MT Type Bulk Carrier (Hull No. SS181)” (the “SS181 Contract”). A true and correct copy of the SS181 Contract is attached hereto as Exhibit A. 14.

On or around April 25, 2014, Tsuneishi and GMI Cyprus entered into a

“Shipbuilding Contract for Construction and Sale of One (1) D/W 81,600 MT Type Bulk Carrier (Hull No. SS182)” (the “SS182 Contract” and together with SS181 Contract, the “Shipbuilding Contracts”). A true and correct copy of the SS182 Contract is attached hereto as Exhibit B. 15.

On or around April 26, 2014, GMI Cyprus transferred to Tsuneishi $6,630,000.

This payment was the first installment payment pursuant to the SS181 Contract. 16.

On or around April 26, 2014, GMI Cyprus transferred to Tsuneishi $6,630,000

(together with the payment described in the preceding paragraph, the “Shipbuilding Deposits”). This payment was the first installment payment pursuant to the SS182 Contract.

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At the time GMI Cyprus transferred the Shipbuilding Deposits to Tsuneishi, GMI

Cyprus was insolvent and was engaged in business or a transaction, or was about to engage in a business or a transaction, for which any property remaining with the GMI Cyprus was an unreasonably small capital. 18.

Each of the Shipbuilding Contracts contains the following provision under Article

X, Section 2 “Refund by Builder”: Upon rescission or termination or cancellation of this Contract by the BUYER for any reason whatsoever, including, but not limited to Article III, Paragraph 4 of this Article and any other provisions of this Contract specifically permitted the BUYER to do so, the BUILDER shall promptly refund to the BUYER the full amount of all sums paid by the BUYER to the BUILDER on account of the VESSEL…. 19.

“Buyer” is defined as GMI Cyprus. “Builder” is defined as Tsuneishi. “Vessel”

is defined as the ship that is the subject of each of the Shipbuilding Contracts. 20.

GMI Cyprus initially filed a motion in the Bankruptcy Court to sell rights under

the Shipbuilding Contracts. The sale process failed to identify a buyer, and the motion was converted to a motion to accept/reject executory contracts. 21.

Counsel for Tsuneishi was keenly aware and followed closely the progress of the

sale process. 22.

On or around December 3, 2015, Debtors’ counsel advised counsel for Tsuneishi

of the failed sale process and intent to reject the Shipbuilding Contracts. At the time building had not begun, and steel had not yet been cut as it relates to the SS181 Contract. 23.

Given the failed attempt at a sale, it was Debtors’ understanding that neither party

had any intent to move forward with performance under the Shipbuilding Contracts.

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On or about December 8, 2015, Tsuneishi gave its first notice of “cutting steel”

beginning construction under the SS181 Contract. 25.

GMI Cyprus filed motions to reject the Shipbuilding Contracts on December 18,

2015. The Bankruptcy Court approved the motions. See Ch. 11 Dkt. 249 (order approving rejection of SS182 Contract) and Dkt. 250 (order approving rejection of SS181 Contract). Count I Fraudulent Transfer 26.

The Liquidating Trustee incorporates by reference the allegations contained above

as if fully set forth herein. 27.

Under §§ 548 and 550 of the Bankruptcy Code, the Liquidating Trustee may

recover the value of transfers made if the debtor received less than reasonably equivalent value in exchange for the transfers and (i) was insolvent at the time of the transfers, (ii) was engaged in business or a transaction, or was about to engage in business or a transaction, for which any property remaining with the debtor was an unreasonably small capital; or (ii) intended to incur or believed that it would incur debts that would be beyond its ability to pay as they matured, or (iii) made such transfers to or for the benefit of an insider under an employment contract and not in the ordinary course of business. 28.

GMI Cyprus received less than reasonably equivalent value in exchange for the

Shipbuilding Deposits. 29.

GMI Cyprus was insolvent at the time the Shipbuilding Deposits were made to

Tsuneishi. 30.

GMI Cyprus was engaged in business or a transaction, or was about to engage in

business or a transaction, for which any property remaining with the debtor was an unreasonably small capital. 5 US.110194013.04

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Pursuant to §§ 548 and 550 of the Bankruptcy Code, the Liquidating Trustee is

entitled avoid the transfers and recover the value of the Shipbuilding Deposits. Count II Contract Claim 32.

The Liquidating Trustee incorporates by reference the allegations contained above

as if fully set forth herein. 33.

GMI Cyprus and Tsuneishi entered into the Shipbuilding Contracts.

34.

The Shipbuilding Contracts are valid and enforceable.

35.

Pursuant to the Shipbuilding Contracts, upon rescission or termination or

cancellation of the Shipbuilding Contracts by GMI Cyprus for any reason whatsoever, Tsuneishi must promptly refund all amounts paid by GMI Cyprus to Tsuneishi. 36.

GMI Cyprus effectively cancelled the contracts when a buyer was not identified

for the Shipbuilding Contracts. At that time the parties understood that neither side would be moving forward with the shipbuilding. 37.

Tsuneishi is obligated to refund the Shipbuilding Deposits to GMI Cyprus –now

the Liquidating Trustee. 38.

Tsuneishi has refused to make the required refunds, resulting in harm to the

Liquidating Trustee. Count III Unjust Enrichment & Constructive Trust 39.

The Liquidating Trustee incorporates by reference the allegations contained above

as if fully set forth herein.

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Tsuneishi did not cut steel and begin construction on the ship that was the subject

of the SS181 Contract until after it learned that the SS181 Contract would be rejected and that GMI Cyprus would never perform. 41.

Neither GMI Cyprus, the bankruptcy estate, nor the Liquidating Trustee has

received any benefit from Tsuneishi’s receipt and continued retention of the Shipbuilding Deposits or from Tsuneishi’s decision to cut steel to construct the ship after it learned that the GMI Cyprus would not perform under Shipbuilding Contracts. 42.

Tsuneishi has been enriched by its retention of the Shipbuilding Deposits.

43.

Tsuneishi has been enriched at GMI Cyprus’s expense.

44.

It is against equity and good conscience to permit Tsuneishi to retain the

Shipbuilding Deposits. 45.

The Shipbuilding Deposits were being held for the benefit of the debtor. The

debtor received no benefit. The funds should be impressed with a constructive trust for the benefit of GMI Cyprus and should be returned to the Liquidating Trustee. Count IV Disallowance of Claim Pursuant to 11 U.S.C. § 502(d) 46.

The Liquidating Trustee incorporates by reference the allegations contained above

as if fully set forth herein. 47.

Tsuneishi has filed one or more proofs of claims asserting one or more claims

against one or more of the debtors. 48.

Pursuant to Section 502(d) of the Bankruptcy Code, the Liquidating Trustee

requests that any and all claims asserted by Tsuneishi be disallowed for the failure to repay the Shipbuilding Deposits.

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WHEREFORE, the Liquidating Trustee demands that the Court enter judgment in his favor against Tsuneishi and specifically award the trustee the amount of the Shipbuilding Deposits and all other appropriate relief. Respectfully submitted, FAEGRE BAKER DANIELS LLP

By:

/s/ Jay Jaffe

Jay Jaffe (Admitted Pro Hac Vice) Harmony A. Mappes (Pro Hac Vice pending) Jay Jaffe (Attorney No. 5037-98) 600 East 96th Street, Suite 600 Indianapolis, IN 46240 Telephone: (317) 569-4687 Facsimile: (317) 569-4800 [email protected]

Attorneys for Charles M. Berk, as Liquidating Trustee

Harmony A. Mappes (Attorney No. 27237-49) 300 N. Meridian Street, Suite 2700 Indianapolis, IN 46204 Telephone: (317) 237-0300 Facsimile: (317) 237-1000 [email protected]

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