A PET resin producer has won compensation from a credit-risk insurer after a client's business failed during the global financial crisis.
Melbourne-based Leading Synthetics Pty. Ltd. makes PET resin, polyester fiber and filament yarns for companies in Australia, New Zealand and Europe.
In 2007 and 2008, Leading supplied resins to Melbourne-based plastic container maker Signum Specialities Pty. Ltd. In November 2008, Signum liquidated, owing US$2.2 million to Leading.
In late 2007, Leading had asked Melbourne-based insurance broker Adroit Insurance Group Pty. Ltd., trading as Austbrokers, to insure it against the risk Signum might fail to pay. From January to May 2008, Austbrokers negotiated with Sydney-based credit-risk insurer Atradius Credit Insurance NV to place cover for up to US$781,500 in losses.
But because of a lapse in correspondence between Austbrokers and Atradius, no policy was ever prepared, no invoice sent and no premium paid.
After Signum failed, Leading launched action against Atradius in the Supreme Court of Victoria for indemnity, alleging a contract was made. Justice Cameron Macaulay agreed, and said that under the policy, Leading was entitled to receive 90 percent of the US$781,500 insured loss. After deducting the premium and taxes, the judge assessed Leading's net loss at US$688,900.