On January 11, Genting Hong Kong Ltd. confirmed that its German shipbuilding unit MV Werften Holdings Ltd. (MVWH) has filed for bankruptcy, which might lead to a default on a $2.77 billion cruise ship investment.
Genting Hong Kong operates casino cruise ships and casinos in the Philippines. It is a subsidiary of the Malaysian Genting Group. The bankruptcy filing occurred after the company and the German government couldn’t agree on a bailout plan that would have allowed it to finish building a 5,000-passenger cruise liner—which is 80 percent complete. The ship’s originally planned 2021 launch was delayed by the Covid pandemic.
In 2020, Genting Hong Kong suspended all payments to creditors because of the pandemic.
Genting stated: “The relevant creditors of the group under these cross defaulted financing arrangements may have the right to demand payment of the indebtedness and/or take action pursuant to the terms of their respective financing arrangements.”
The Associated Press reported that Germany blames the collapse of the shipbuilding unit on Genting. The government had been willing to discuss a €600 million ($678 million) bailout from Germany’s Economic Stabilization Fund but wanted Genting to provide 10 percent of the amount.
German Economic Minister Robert Habeck commented, “The German government did everything to prevent the insolvency of MV Werften and thereby save jobs.” He added, “However, the owners rejected our offer of help; the bankruptcy application is the result.”
Genting responded that it was unable to force participating banks “or its shareholders to provide the additional financial assistances now requested.”
