29 May 2016

10 Apr 2013

Creditors demand investigation into 'sordid history' of yacht transport company

By

Principal creditors, amongst the 100 or so claimants seeking over $7million dollars in refunds from Yacht Path under Chapter 11 bankruptcy, have filed a petition to a US Court to appoint a trustee to investigate “the sordid history of the Debtor.”

The case is being dealt with the United States Bankruptcy Court Southern District of South Florida and follows tumultuous events this February, when alleged legal trouble left Yacht Path unable to access bank accounts and thus pay freight for yachts. Five shipments of yachts faced arrest on arrival and owners had to pay twice their passage fee to the shipper. The company then filed for bankruptcy on 20 March facing threats of involuntary bankruptcy from affected parties.

But the principal creditors petitioning - Dolphin Partners, PJ Pacific and others representing various yachts - say these problems were due to long standing, serious problems:

“The Debtor was plagued with mismanagement, the misappropriation of funds and fraud in the operations of the Debtor by its directors,” reads their statement to court dated 8 April.

“The Debtor’s directors induced various customers to enter into agreements with the Debtor by providing assurances that the yacht transport services would be completed within the required time knowing that the Debtor was unable to provide the services.”



The petition lists various claims that yachts were not shipped within the required time and that the agreement allowed for a full refund if services were not given in that time.

SuperyachtNews contacted Dennis Cummings, president of Yacht Path for comment regarding the claims which include several open cases outside of the Bankruptcy Court. He said:

“They (the claims) are all of the same nature, a delay. I don’t know the exact nature of every single claim, some could be more than 30 others could be 40 days.”

He said the problems in court now could be attributed to the clients:

“We intended to carry out our contract for these clients and the clients are the ones who turned to their attorney and said we’re cancelling and we want our money back.”

He said the clients had not appreciated the potential for delays during transportation; Yacht Path which acts as a ‘slot charterer’ - renting space on board freighters or carriers rather than charter its own fleet – could be constrained by the itinerary of the vessel it has recruited.

Cases submitted to court reveal this is not entirely accurate as M/Y Ado waited two months to be shipped before its owner demanded a return of its $65,855.00 deposit when the service was not rendered.



The events this year, and subsequent cases to emerge, have polarized industry who see incidents as either illustrative of bad business practice on the part of Yacht Path or ills at the root of the yacht transport sector itself.

“The [yacht transport] contract is so lucrative, they can ship and drop you off whenever wherever they want, the master of ship has right to delay. You either sign it or you don't. There’s [no legal back up for] time delays,” said Captain David Sloate, in command of 36m First Draw which faced seizure this February when it transpired Yacht Path had not paid the shipper.

“This is a worldwide business that is not under supervision of any one agency, no international regulator,” agreed Bruce McAllister, at Alley Maass Rogers & Lindsay, representing owners of yachts in the bankruptcy.

Bob McIntosh at McIntosh Schwartz, Fort Lauderdale, representing five clients under contract with Yacht Path in 2012, expressed his surprise that the situation was ever able to become as serious as it has:

“I am just puzzled as to why they have been running short of money for so long, maybe they weren’t good businessmen, maybe they were selling the space too cheaply, but it doesn’t seem right. Look at the money they received from the yacht owners to board the freighters – they received all that money,” he said.



Yacht Path continues to operate as a business under Chapter 11, which gives it protection from litigation whilst proceedings for its reorganization take place. Cummings said, “Yacht Path is not going out of business."

“This course of action will enable us to make significant improvements to Yacht Path’s operations. We aim to be a more streamlined, efficient and focused company upon emerging from this process,” he told SuperyachtNews.

The creditors, on their part, are hoping Chapter 11 will find answers to the questions. “It is clear that, absent of an independent fiduciary, the creditors of the estate are placed into the quandary of relying on the same individuals that defrauded them if the management of the Debtor remains in control,” they urge.

The Court’s decision on appointment of a trustee is expected this month. Elliot Bishop, solicitor at Hill Dickinson, says he expects the case of 46m Auspicious - whose owner is suing Yacht Path for breach of contract - to take place at High Court by the end of the year. As of 5 April Yacht Path's English lawyers ceased acting, leaving them without UK legal representation.

The bankruptcy filing shows $5,124,845.50 is claimed by creditors holding unsecured Priority Claims and $2,155,433.99 by Non Priority Claims, the brackets pertaining to claims from yacht owners.

Profile links

Hill Dickinson LLP


Alley, Maass, Rogers & Lindsay P.A.

Comments

Add a comment

1800 character limit

Having problems? Let us know editor@superyachtnews.com

Other Business News

Seal Superyachts expands in the southern Pacific

Seal Superyachts has expanded its network of offices in the southern Pacific Ocean to better service the superyacht industry and connect more of the various islands to Asia and Australasia. More

The Algerian VAT run

With growing tensions and political instability in the Mediterranean and Balearic's non-EU nations, Algeria continues to be a convenient way-point for yachts seeking tax exemptions and exportation from the EU.   More

Greek VAT increase to affect charters

As of 1 June the Greek VAT rate will increase from 23 per cent to 24 per cent. This is the sixth VAT increase in as many years and will continue to drive up charter costs. More

MEPC 69

In April the IMO gathered for the 69th session of the Marine Environment Protection Committee. During the committee the status of the BWM Convention was confirmed, further regulations for large vessels were announced and, in principle, the creation of a P More

business News Archive

Most Recent Comments

  1. Rogue frequency disrupts Barcelona's infrastructure More
  2. Italian export formalities clarified More
  3. New marina opens in Halkidiki More
  4. Win, win More
  5. An Amazing ASEAN Opportunity More
SuperyachtNews app available now. Click here to download.
The Superyacht Intelligence Annual Report is out now. Subscribe today and access your digital copy instantly. Subscribe now.

E-Newsletter

Get regular updates from SuperyachtNews with our weekly Email Newsletter.

Submit

SuperyachtIndex.com

Latest Premium Listings

Faststream Recruitment

Faststream Recruitment

International Marine Management

International Marine Management

Wilsonhalligan

Wilsonhalligan

Robert Allen Law

Robert Allen Law

Cantalupi Lighting Srl

Cantalupi Lighting Srl

Blue Haven Resort and Marina

Blue Haven Resort and Marina

International Crew Training

International Crew Training

Directory. Add your logo here with a premium listing.
 
 
 
 
 
 
 
 
 
 

Featured Listings

Satellite Communication

BestVSAT.com
Over 40 VSAT providers want your contract. BestVSAT.com is a 100% free service. We find the best deals for you - saving you time and money while increasing internet speed and quality aboard. Give it a try - it is absolutely free.
www.bestvsat.com

Navigation

Raytheon Anschuetz
Integrated Navigation Systems based on state-of-the-art technology and decades of experience in the superyacht industry. Ultimate knowledge and flexibility in system integration. Dedicated customer care throughout the whole project and beyond.
http://yacht.raytheon-anschuetz.com

Tenders & Toys

Superyacht Tenders & Toys
Superyacht Tenders & Toys have a high level of expertise in providing new build and custom tenders, chase boats, RIBs & all popular yacht toys. With an unrivalled global service network, maintaining a personal & bespoke service, wherever you are in the world, Superyacht Tenders & Toys can help.
www.superyachttendersandtoys.com

Shore Power Convertors

ASEA POWER SYSTEMS
ASEA POWER SYSTEMS is the Marine Industry Leader for Shore Power Conversion equipment ranging in power from 8kVA - 1000kVa.
www.aseapower.com

Recruitment

Viking New Zealand Limited
VIKING is the leading Large Yacht Recruitment Specialists and is continually looking for qualified and experienced Deck, Technical and Hospitality Crew. Also providing Full Crew Management Functions including: Offshore Employment, Payroll Services, Crew Administration, Pre-employment Medical Screening and a dedicated Marine Travel Service.
www.vikingrecruitment.com

Paint & Protection

Wrede
WREDE Consulting is an independent paint consultant and paint surveyor company who has worked for most of the 200 largest yachts worldwide in coating, paintwork and equipment areas. WREDE Consulting engages in quality management and objective quality assessment for the coating of mega- and superyachts. www.wrede-consulting.com
www.wrede-consulting.com

Satellite Communication

Marlink AS
Marlink offers seasonal, flexible contracts to match regional sailing requirements. Through our dedicated account managers & customer services, we develop personal relationships with customers & drive innovations to develop digital solutions & smart applications that take you beyond just connectivity.
www.marlink.com

Engine Room

ABB Marine
ABB is a leading supplier of electrical power and propulsion systems for ships. We provide innovative, safe and environmentally-friendly solutions and qualified services worldwide. Our Azipod® propulsion has proven its efficiency and reliability on yacht vessels with its ultimate silent and ecological solution.
www.abb.com/marine

Shore Power Convertors

ATLAS MARINE SYSTEMS
Atlas Marine Systems, the world leader in the design of marine electrical power systems, offers a full range of engineering services necessary to define the onboard electrical distribution system or simply the application of the Atlas power conversion products.
www.AtlasMarineSystems.com

Add your company listing here

Add a featured listing here and your advert will appear on every page of SuperyachtNews.com, SuperyachtIndex.com, TheSuperyachtReport.com and TheCrewReport.com.

Add my company listing