The Fort Lauderdale based yacht transporter, who it emerged this year was facing over 100 claims from yacht owners and several prior lawsuits, is to sell ‘most of its assets’.
It is hoped the sale will help recover some of the funds owed to the creditors, amounting to $7million dollars and possibly more, with some amounts now ‘unknown’ due to be filed by the 24 July proof of claim due date.
The auction will involve the sale of the assets of all four of the debtors - Yacht Path International, Yacht Path Palm Beach, Unity Shipping Lines and Unity Marine - excluding causes of action for recovery on fraudulent and preferential transfers. It would take in equipment located all over the world, which might now be accruing storage charges and which is not insured against loss.
The auction is set for July 22 with a bidding deadline of July 21. But early this week it looked possible the company was not to be put up for auction, but sold to a company named Yacht Path Holdings.
The company, formed recently in New Jersey, told the Court it had no connection with the management of Yacht Path despite the similar name. Creditors objected to the sale, however, on the grounds that the bidding process proposed – with Yacht Path Holdings due to seal the deal quickly due to an arrangement facilitated by its trustee – did not allow enough time for adequate advertising to attract competitor bidders.
Yacht Path Holdings, however, has put up a 'stalking horse' bid, which means it will be the successful bidder if no one else puts in an offer.
The auction is the culmination of several weeks in which a Trustee has been attempting to discover monies or ways to repay debtors. The Trustee was appointed upon the pleading of several principal creditors to investigate alleged mismanagement and fraud as well as to handle the repayments.
It has now emerged Yacht Path has also been forced into liquidation by the Trustee.
Kevin Cummings, director of Yacht Path, said the trustee shut down operations after deciding it could not allow a booked voyage on legal and financial grounds:
“The sad thing after this whole effort we tried to do to keep this company going, is the trustee came in and we had a voyage booked… We had 39 yachts for shipment and were going to make a substantial profit,” he said.
“The trustee….was uncomfortable with not having an exact figure for costs, [and] about whether the company needs to be licensed by the Federal Maritime Commission. They came in and told my employees, 'go home - you’re no longer getting paid.' So we got kicked out and since then we’ve had no connection with the company. It was taken from us.”
Kevin Cummings said his priority now is for the trustee to complete the investigation to clear his name. He said it was the whole reason for consenting to the trustee in the first place, which initially Yacht Path fought against in court.
“The reason why we voluntarily allowed the trustee to come in – there were so many accusations we wanted someone from outside to come in and look at our books and understand what happened to the business and what happened to the money.”
“I hope they don’t just wind it down and not look into it further, and follow through to the end.”
A source who spoke to SuperyachtNews.com just before the trustee was appointed, suggested the consent was a last resort:
“My perception is there was going to be a bad day in court [where they'd have to disprove the allegations] and it was better to go along with it than continue to fight.”
Nothing more is expected to emerge until at least the deadline for proofs of claim at the end of July.