Genting Hong Kong Ltd, the cruise ship subsidiary of the Gentling Group, has begun actions that could liquidate many of its assets in various jurisdictions. On January 18, the company asked a Bermuda court to appoint joint provisional liquidators to help restructure its debts in a bankruptcy motion.
Several weeks ago, the company announced that its German shipbuilding company’s inability to pay $2.77 billion in debts would “in turn trigger cross default events under certain financing arrangements of the group.”
The company controls Dream Cruises, Crystal Cruises and Star Cruises. All have struggled during the pandemic.
Attorneys for the firm told the court that a successfully restructuring was possible as long as “certain business activities of the group, including but not limited to the operations of cruise lines by Dream Cruises Holding Ltd, shall continue in order to preserve and protect the core assets and maintain the value of the group.”
However the company said it anticipated that most of its operations would cease. It added that it has no access to outside funding and that its cash balances would be gone by the end of the month.
GEN HK claimed it had “exhausted all reasonable efforts to negotiate with the relevant counterparties under its financing arrangements.”
It said it decided to file for liquidation after a German court rejected its application for a $88 million backstop loan from the state of Mecklenburg Vorpommern. Genting claimed that it was entitled to the loan under agreements signed last year with the state. It sought to prop up its shipbuilding subsidiaries MV Werften Holdings Ltd. (MVWH) and Lloyd Werft Bremerhaven, which have now filed for bankruptcy.
The company says that the Covid pandemic strained its resources to the point where it was unable to finish construction of its newest ship, the Global Dream. It also said it was denied access to $81 million of its own money held by lenders in a liquidity reserve account.
The company stated that “relevant counterparties’ failure to perform their binding contractual obligations have created an immediate and significant gap in the liquidity resources of the Group.”
Trading of company stocks has been suspended.
