Shipping giant Frontline escaped wind-up proceedings yesterday with its eleventh hour payment of a debt it owed to the judgment creditor in a case first brought to court more than three years ago.

At the end of May, Frontline - reported to be the world's largest oil tanker company - was served with a statutory demand for payment of a court order made by the Bermuda Supreme Court on May 15, 2003.

In effect, the judgment upheld a previous award - for some $7.5 million - made by the Swedish Chamber of Commerce and the Swedish Court of Appeals after plaintiff The Blad Foundation launched arbitration proceedings in 2000.

In late June, the judgment debt had been neither paid nor disputed which prompted Blad to file a wind-up petition against Frontline claiming the Bermuda-based firm was insolvent, on the basis of its not having honoured the judgment debt, and should be shut down under the provisions of the Bermuda Companies Act 1981.

The dispute between the two parties, which dates back to the late 1990s, stems from an agreement between The Blad Foundation and Frontline whereby the former would help the latter in a hostile takeover bid for rival shipping company ICB. In that deal, which would later turn sour, The Blad Foundation was to use its membership in a consortium to buy up shares of ICB and transfer them to Frontline in exchange for compensation above the value of the shares.

On July 25, 2003, in Bermuda Supreme Court, Blad's legal representative, Conyers Dill & Pearman lawyer Jeffrey Elkinson, told Chief Justice Austin Ward that the judgment debt owed to Blad remained outstanding and moved to have the wind-up petition against Frontline enforced.

Chief Justice Austin Ward heard from Frontline's lawyer, Appleby Spurling & Kempe's Kelvin Hastings-Smith, that Frontline had transferred money to a CD&P bank account in Bermuda.

But Mr. Elkinson said the debt could not be considered paid as the monies could not be touched after Frontline had, that very day, informed him that court orders in Liechtenstein revoked CD&P's power of attorney rights to receive money on behalf of its client.

Chief Justice Ward said he thought the matter should be adjourned, giving the parties time to determine whether or not the debt had been paid.

But when the court reconvened on July 30, Chief Justice Ward found that the matter was where it was before with funds having been transferred by Frontline yet the plaintiff's counsel still held no power to distribute the money.

In court that day, Mr. Elkinson said: "The situation remains this morning that the debt is unpaid and accordingly the petitioner moves for the wind up of the company."

But Chief Justice Ward saw fit to extend Frontline more time to straighten out the matter but said it must ensure that the debt was paid and funds received by The Blad Foundation on or before 7 August.

If not, Chief Justice Ward said the wind-up order on the tanker firm would take effect the very next day.

Frontline was however able to secure, in chambers, on 7 August, another extension on its payment deadline to 14 August. Then again last week, Frontline made an appeal in chambers for yet more time, this time three business days, promising that the debt would be paid in full.

Yesterday marked what Acting Puisne Judge Dangor said was the absolute payment deadline for Frontline after she ruled last week that Frontline could have until Tuesday, 19 August but thereafter the court would grant "no further extensions" for making good on the debt.

In that chambers session, AS&K lawyer Jerome Dill, acting on behalf of Frontline, said payment would be made by the final due date, but added that a wind-up of the "substantial public company" listed on the London, Oslo and New York stock exchanges would be "nonsensical"

As of yesterday, The Royal Gazette understands that The Blad Foundation had been paid the money it was owed and as a result, the wind-up order on Frontline would not take effect.

However this may not be the real end to the matter after court documents filed at the Bermuda Supreme Court last week revealed that Blad would be unable to actually access the award of some $7.5 million it had received from the tanker company. Court documents showed that separate litigation from Frontline, which reportedly does not bear upon the dismissal of the wind-up petition in Bermuda, has put injunctions in place on Blad in Liechtenstein which effectively freeze the funds it received from the shipping giant. Those documents showed that the Liechtenstein injunctions restricted Blad "in its dealings with the monies that have been transmitted there."