Seven of Dongfang Shipbuilding’s tankers have been seized by Chinese banks and Credit Suisse as the shipbuilder was unable to clear outstanding debts of around $250m following a Singapore Supreme Court ruling that favoured the creditors.

Control of four Dongfang tankers in Singapore has been taken over by Credit Suisse since May 26, after the company failed to pay debts of $42m, reports Reuters.

A consortium of Chinese banks, including the Agricultural Bank of China and Bank of China, seized three tankers due to non-payment of outstanding debts of CNY1.3bn ($204m).

The seven vessels were expected to be delivered to Europe-based clients, which later cancelled the orders.

Dongfang was forced to close down its shipyards in China and cut jobs as banks stopped lending to the company more than a year ago.

The global shipping industry has been affected by a sharp decline in freight rates, an oversupply of ships, a decrease in ship financing and slowing economic growth.

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By GlobalData

Dongfang Shipbuilding former chairman Venkatesh Narayanaswamy resigned from his position in February 2012, and the company has not yet replaced him.

A few weeks after Narayanaswamy’s resignation, the company’s chief financial officer AKM Ismail also resigned.

Narayanaswamy said the receiver-manager for the company is PKF International, a global network of legally independent firms that provides accounting and business advisory services.

The shipbuilder struggled for months to stay in business in the face of the current slowdown in the maritime industry, and was also delisted from the London Stock Exchange’s alternative investment market last week.