A New York federal judge has ruled that a group of former shareholders of Eletson Holdings have no standing to appeal an order consummating the shipping company's Chapter 11 plan and no grounds to appeal sanctions for failing to follow the order.

In a Monday order rejecting five separate appeals of bankruptcy court orders, U.S. District Court Judge Lewis J. Liman said the Greek entity controlled by former shareholders can't appeal because it doesn't legally exist, and that they earned their sanctions by failing to follow specific instructions from the court.

"They did not have license to ask the bankruptcy court to reorganize [Eletson] and then simply to disobey the court's orders when they disliked how the company was reorganized," the judge wrote.

Eletson, which operates oil and gas tankers, launched a Chapter 7 case in 2023, after a group of creditors alleged the company had defaulted on about $354 million in notes and other debts. The case was then converted into Chapter 11.

In October 2024, the court approved a Chapter 11 plan handing ownership over to the creditor group, rejecting an alternative plan proposed by the former controlling shareholders. However, in November, the former owners obtained an order from a Greek court appointing a provisional board of directors that has since contested implementation of the plan.

A bankruptcy judge in New York entered an order in January 2025 that consummated the Chapter 11 plan and ordered the former owners and their entity, referenced in documents as Provisional Holdings, to comply with the order by updating corporate documents and ship registry information. In February, the court found the former owners in contempt for failing to comply with the order, and fined them $1,000 a day, then increased that penalty to $5,000 the following month.

Provisional Holdings, the former owners and their counsel, Reed Smith LLP, appealed the plan consummation order and the sanctions to district court.

In his order, Judge Liman said Provisional Holdings has no standing to appeal because it has no legal existence. He said the pre-bankruptcy Eletson ceased to exist when the bankruptcy plan was confirmed, and that in June, the Greek court that appointed the provisional board reversed itself, finding its 2024 order had been invalid and rejecting the argument that the plan confirmation was not effective in Greece.

"Understanding both that there is not now and never was a legitimate 'Provisional Holdings' under Greek law and that the confirmation plan did not create such an entity under U.S. law, Provisional Holdings' remaining arguments flounder," the judge said.

The former shareholders and Reed Smith did not have standing because they weren't aggrieved parties, Judge Liman added.

"The consummation order did not itself diminish the property of Reed Smith or the former majority shareholders, increase their burdens, or detrimentally affect their rights," he wrote.

The judge also said the bankruptcy court did not abuse its discretion in imposing the sanctions, saying the parties were given specific instruction on the actions they needed to take to follow the consummation order and that they unquestionably failed to do so.

Counsel for the parties did not immediately respond to requests for comment Tuesday.

Eletson is represented by Kyle J. Ortiz, Brian F. Shaughnessy, Jennifer Sharret and Andrew Citron of Herbert Smith Freehills Kramer LLP.

Provisional Holdings is represented by Louis M. Solomon and Colin A. Underwood of Reed Smith LLP.

The former shareholders are represented by Lawrence M. Rolnick, Richard A. Bodnar and Frank T.M. Catalina of Rolnick Kramer Sadighi LLP.

The appellate cases are Eletson Holdings Inc. et al. v. Reorganized Eletson Holdings, case numbers 1:25-cv-01312, 1:25-cv-01685, 1:25-cv-02897, 1:25-cv-02824 and 1:25-cv-02811, in the U.S. District Court for the Southern District of New York.

The bankruptcy case is In re: Eletson Holdings Inc. et al., case number 1:23-bk-10322, in the U.S. Bankruptcy Court for the Southern District of New York.