The fate of luxury line Crystal Cruises is uncertain after parent company Genting Hong Kong revealed it could run out of cash by month-end.
Last week, Genting Hong Kong's MV Werften shipyard in Germany filed for insolvency after the company couldn't come up with 10% of the capital needed for a German government bailout plan.
Following that news, the company's board said the 'cross-default' triggered by the shipyard insolvency would trigger an adverse effect on its business operations, prospects, and financial condition. The board said it was discussing "options available to the company."
Now the parent of Crystal, Star Cruises and Dream Cruises has filed a petition in a Bermuda court that will see provisional liquidators appointed. The liquidators will have the power to sell off or shut down parts of the company's operations.
Based in Hong Kong, Genting Hong Kong maintains a registered office in Bermuda, which allows it to file for liquidation there. In a filing with the Hong Kong stock exchange, the cruise operator said it has no access to further liquidity and expects to run out of cash around the end of this month.
Genting has been hammered by the global pandemic and its far-reaching impact on travel, including a long cruise industry shutdown. Last May, the company posted a record loss of $1.7 billion. It's stock value has dropped by more than half since 2018.
The developments don't necessarily mean the end for the cruise lines owned by Genting Hong Kong and its largest shareholder, Malaysian billionaire Lim Kok Thay.
In a statement, the company wrote: "Certain business activities of the group, including but not limited to the operations of cruise lines by Dream Cruises Holding Limited, shall continue in order to preserve and protect the core assets and maintain the value of the group, however it is anticipated that the majority of the group's existing operations will cease."
There's no specific mention of the fate of Crystal Cruises, which has the highest North American profile of Genting Hong Kong's cruise holdings. It operates two oceangoing ships - Crystal Serenity and Crystal Symphony - along with a fleet of five European river ships and the expedition ship Crystal Endeavor.
The company has been in operation for 31 years and is widely regarded as offering one of the world's best luxury cruise experiences.
At press-time, Symphony, Serenity and Endeavor are all sailing, while Crystal's river ships are normally dormant at this time of year.
In its filing with the Hong Kong stock exchange, Genting said it was seeking an order from the Bermuda court that will oversee the liquidation process to authorize its liquidators to "assist the company in developing and proposing a restructuring of the [company's] financial indebtedness in a manner designed to allow the company to continue as a going concern."
Genting Hong Kong also asked the court to authorize its liquidators to "dispose of all or certain of the company's assets with a view to maximizing value and returns for creditors."
It added that the liquidators would "seek to avoid a disorderly liquidation of the company."
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