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Commitments and Contingencies
 6 Months Ended
Jun. 30, 2013
Commitments and Contingencies  
Commitments and Contingencies

7.     Commitments and Contingencies

 

Legal Matters

 

Cathay Pacific Litigation

 

Since April 2012, one of our subsidiaries, World Fuel Services (Singapore) Pte Ltd. (“WFSS”) has been involved in litigation with Cathay Pacific Airways Limited (“Cathay”) arising out of the emergency landing of a Cathay aircraft in Hong Kong in 2010, which Cathay alleges was caused by contaminated fuel supplied by WFSS. Cathay claims damages relating to the incident of approximately $34.0 million. Because the outcome of litigation is inherently uncertain, we cannot estimate the possible loss or range of loss for this matter. We intend to vigorously defend against this claim, and we believe our liability in this matter (if any) should be adequately covered by insurance. As of June 30, 2013, we have not recorded any accruals associated with this claim.

 

Other Matters

 

We are a party to various claims, complaints and proceedings arising in the ordinary course of our business including, but not limited to, environmental claims, commercial and governmental contract claims, such as property damage, demurrage, billing and fuel quality claims, as well as bankruptcy preference claims. We have established loss provisions for these ordinary course claims as well as other matters in which losses are probable and can be reasonably estimated. As of June 30, 2013, we had recorded certain reserves which were not significant. For those matters where a reserve has not been established and for which we believe a loss is reasonably possible, as well as for matters where a reserve has been recorded but for which an exposure to loss in excess of the amount accrued is reasonably possible, we believe that such losses will not have a material adverse effect on our business or financial condition. However, any adverse resolution of one or more such claims, complaints or proceedings during a particular period could have a material adverse effect on our results of operations or cash flow for that period.

 

Our estimates regarding potential losses and materiality are based on our judgment and assessment of the claims utilizing currently available information. Although we will continue to reassess our reserves and estimates based on future developments, our objective assessment of the legal merits of such claims may not always be predictive of the outcome and actual results may vary from our current estimates.

 

Other Contingencies

 

On June 7, 2013, STX Pan OceanCo. Ltd (“STX Pan Ocean”), one of our customers in our marine segment, filed for bankruptcy protection in Korea which was subsequently recognized in the United States on July 12, 2013.  As of July 25, 2013, we had outstanding receivables owing from STX Pan Ocean of $12.9 million, and outstanding receivables owing from STX Pan Ocean's parent company, STX Corporation (“STX Corp”), of $9.6 million.  As of the date of this report, STX Corp has not filed for bankruptcy protection and, at present, both entities continue to conduct operations.  We routinely extend credit to customers in connection with their purchases of fuel and services from us, and from time to time customers of ours face financial difficulty.  We have been successful in the past in being able to recover amounts from these customers with little or no losses on amounts owing to us, and we are confident in our ability to do so in this case.  We are currently in discussions with these entities to settle the outstanding receivables. We also have a number of avenues that we may pursue in connection with recovering these amounts or to mitigate losses we might face, including insurance, enforcement of maritime liens and offset rights.  However, there can be no assurance that we will be able to recover the full amounts owing from either STX Pan Ocean or STX Corp.