Dream Yacht suspending Guaranteed Charter Income payments

[Steve_C]

Originally Posted by theDangerz

Im honestly shocked that anyone would be talking about trying to file a lawsuit over this (right now). Not only is it highly unlikely to do any good whatsoever... but the deal on the table isn't actually so bad.

Look around. The entire system is failing globally.
As we sit here on our boat we are getting notices from renters back home that they cant pay rent. Is that a breach of contract? Of course!
But they have no other option and i'm not going to sue or evict any of them because they physically cant go to work... so how would they pay rent? Or how would a lawsuit help them pay rent?

Sadly, the upstream result of that is that I cant pay my mortgage (for long) so I have to report that to the lender. Am I breaching that contract - yes, but i also have no other option and all i can do is hope they are willing to work with me so i dont lose the home/investment.

Ive been on the phone for 2 weeks seeing what's possible there... and i can tell you that right now if the bank offered to simply suspend payments for 6 months and extend my loan by that same amount i would JUMP on the chance!!

The entire world's in chaos. People are literally struggling with life and death and/or paying for their next meal.
Much like our situation, DreamYacht has no guests, meaning no rents/income...
A 6month extension hardly seems like the biggest fear in this state of affairs (and frankly, so should the prospect of losing my home).

Im not sure where the boat is located, but if I were in this situation I would be more focused on trying to find out the plan for hurricane season. The season is coming rapidly for all of us, and as we are VERY aware our old plan for protecting the boat (and remaining insured) is no longer possible because Grenada (and all other islands) has closed its borders.

For DYC and other charter companies... not only may the old hurricane plan be reduced/gone, but the number of onsite employees may be reduced and while i hate to be the one to say it... they may be starting to think that an insurance payout looks pretty good right now.

Assuming it's located somewhere you can no longer fly in to sail the boat away on your own... I'd be a LOT more likely to take the human approach (be calling and offering to help rather than threatening to sue). Like it or not we're all in this together and I can all but guarantee that whoever is getting paid (or not) to tie the lines on that boat when the first storm comes have a lot more to worry about and a lot less to gain right now than any of us typing away here.

Very well said, I couldn't agree more. Until such point in time as you know otherwise, talk to an actual person on site where your vessel is and take the approach that you are in this together and you are NOT trying to make things worse for them. It is astounding how far people will go if they see you as a friend or ally rather than a problem.

Any other course of action will not do anything to help your situation in the short term. You can always change your course later if needed. NO ONE knows exactly how this will play out. Don't panic yet!

[valhalla360]

Originally Posted by a64pilot

Just about every owner will throw in quite a lot of cash, and there is lies a large portion of the problem, many can’t, they don’t have the cash, these are often the ones that won’t come down from their jacked up asking price.

The "some" I was referring to were those who still had cash reserves.

Of course the ones who have no cash, won't be able to write a check and unless they can climb the steep hill to get the bank to accept the remainder as a personal loan or write it off, they are looking at foreclosure.

[mvweebles]

Originally Posted by Steve_C

Very well said, I couldn't agree more. Until such point in time as you know otherwise, talk to an actual person on site where your vessel is and take the approach that you are in this together and you are NOT trying to make things worse for them. It is astounding how far people will go if they see you as a friend or ally rather than a problem.

Any other course of action will not do anything to help your situation in the short term. You can always change your course later if needed. NO ONE knows exactly how this will play out. Don't panic yet!

According to OP, DYC sent a letter informing they were not going to honor their contractual obligations. Sure. Tough times. Tough times for OP too. I don't buy being the nice guy and trying to understand their position. They could try several things including getting loans to make their payments. Instead, unilateral decision to breach. Id have no issue working with them. But I'd want 100% certainly my asset is safe. Tough to get that level of trust with a company who did what they did.

But hey, OP is in the wind. I wish him or her the best of luck for a happy resolution. But it may be luck that is needed.

Peter

[a64pilot]

If they had a force majeure clause and surely they do, they didn’t breach the contract.
If I were in their shoes or if I had a boat with them, I’d see this as being proactive and actively dong something to get through the Emergency.
It’s the ones that are sitting back and doing nothing that I would worry about.
Now I don’t know squat about Charters myself but it seems the Hurricane plan for them is Insurence, they don’t relocate for Hurricanes that I have seen, they sit through the season.

[valhalla360]

Originally Posted by mvweebles

According to OP, DYC sent a letter informing they were not going to honor their contractual obligations. Sure. Tough times. Tough times for OP too. I don't buy being the nice guy and trying to understand their position. They could try several things including getting loans to make their payments. Instead, unilateral decision to breach. Id have no issue working with them. But I'd want 100% certainly my asset is safe. Tough to get that level of trust with a company who did what they did.

Who says they didn't try to get a loan already? Given the current situation, any bank that would give them a loan must be run by idiots.

The whole premise of the charter companies is to do the sales and management but leave the risk on the "owners"...but that is all up front.

Of course, they are violating the contract but it doesn't make a difference if there is no money to distribute.

[letsgetsailing3]

Originally Posted by mvweebles

This company (i) breached an agreement; (ii) does not have financial strength to meet their obligations; (iii) has physical possession of a valuable asset that requires upkeep and maintenance; and (iv) apparently made no effort to communicate other than sending a letter declaring their intentions. I see nothing but down-side risk for the OP. Mechanic's lien from unpaid subcontractors, inflated claims for expense reimbursement (e.g. keeping their staff billable on meaningless maintenance tasks), mismanagement, swap of parts from OP's boat to another, etc. There's a reason lenders repossess/foreclose on assets - yes, to salvage the asset, but also to separate the bad-actor borrower from the asset to prevent further value erosion.

I fully understand current circumstances make it difficult - perhaps they have friends or contacts in the area who can assist. The alternative being stretched on this thread is to sit at home, find a lawyer, file a lawsuit, blah-blah-blah. As if that's easy now for the same reasons. Or you can sit back and hope this works its way out. It's now a cliche, but 'hope is not a strategy.'

Peter

Hope isn’t a strategy.

Neither is panic.

The company didn’t say the were going to take a pick ax to people’s boats. They said they couldn’t make payments on boats for the next six months.

While I wouldn’t like that as a customer, I also wouldn’t further compound the issue by making it worse.

I own a rental condo. I’m not expecting any rent for the next six months. I’m in a rental program, but not one that guarantees income. That said, a lot of folks are going to feel some financial pressure on their rental properties.

I’d talk to my bank about suspending payments for now.

[Elie]

You have to consider the reality forced by the pandemic what ever your political gurus hope or pretend: No charter income for a long while, that is assured.
And the charterer has to assume all the maintenance and marina costs unless he dump every body. You Americans are kwick to sue, but in my opinion it will cost you a bundle unless you have A Trump propension and funds for lawyers.
As soon as it becomes possible removing the boat physically from this charterer is probably the best way to solve this issue. This Corona virus crisis affect all economic activities, and contracts breaking will be the norm, for a long time to come.

[Sand crab]

Who typically is the lender on charter boats?

[mvweebles]

Force majeure, if present, provides relief from affected contractual provisions. CV would definitely qualify, but not for some arbitrary 6 month period Typically the claimant is compelled to make commercially reasonable efforts to mitigate loss and impact. Force majeure is not a get out jail free card to just say "gee, 6-months is about right." The claimant must open their books and show what they've done, and it sure can't be used as a way to delay creditors because the claimant is going under, which has a strong whiff of probability in this case.

The OP is in a tough spot. First step when you're in a hole is to stop digging. Unless the OP can get solid assurances DYC can and will perform their other contractual obligations including maintenance (tough given they now have near zero cash flow), he should get the boat out of their possession asap.

[contrail]

[QUOTE=valhalla360;3104114]I've pointed out a number of times on various threads. If it was really profitable (especially taking risk into account), they would buy their own boats and charter them.

Lots of industries rely on leasebacks or similar arragements. That doesn't mean that the business isn't profitable, it just means that different entities own or operate them. Look at the airlines....most of the planes are leased;look at hotels....many are not owned by the entity whose name they carry, including the ones labelled "Trump" this or that. To say that "if it were really profitable, they would buy their own boats and charter them" is a very simplistic answer. Branding and operations are not the same as ownership.

[redneckrob]

Originally Posted by contrail

Lots of industries rely on leasebacks or similar arragements. That doesn't mean that the business isn't profitable, it just means that different entities own or operate them. Look at the airlines....most of the planes are leased;look at hotels....many are not owned by the entity whose name they carry, including the ones labelled "Trump" this or that. To say that "if it were really profitable, they would buy their own boats and charter them" is a very simplistic answer. Branding and operations are not the same as ownership.

What you say is true except.....who are the entities who own the airplanes that many airlines leaseback or hotels buildings? Exclusively unsophisticated private individuals?
I think the real logic is that no-one in private equity or anyone else with any sophistication in finance is buying fleets of boats and leasing them to the charter operators, while they are doing this for the industries you mentioned. Heck, even among the universe of people who own sailboats I don't know anyone with any financial sophistication who is participating in one of these charter operations. Why is that? Because the risk adjusted return is atrocious, mainly because of the massive risks that are obvious to those who make a living off evaluating risk and return.

[letsgetsailing3]

Originally Posted by mvweebles

Unless the OP can get solid assurances DYC can and will perform their other contractual obligations including maintenance (tough given they now have near zero cash flow), he should get the boat out of their possession asap.

Again, I'd like to know where this is coming from.

The OP is going to do what, swim to where his boat is? And then where is he going to keep it?

I just think you're jumping to a rash conclusion, with no actual data.

[Cadence]

Originally Posted by redneckrob

What you say is true except.....who are the entities who own the airplanes that many airlines leaseback or hotels buildings? Exclusively unsophisticated private individuals?
I think the real logic is that no-one in private equity or anyone else with any sophistication in finance is buying fleets of boats and leasing them to the charter operators, while they are doing this for the industries you mentioned. Heck, even among the universe of people who own sailboats I don't know anyone with any financial sophistication who is participating in one of these charter operations. Why is that? Because the risk adjusted return is atrocious, mainly because of the massive risks that are obvious to those who make a living off evaluating risk and return.

I think I would have to agree with you. Leased aircraft are a totally different thing. No one buys one to lease as an individual. Boing and Airbus lease their planes. The UAE has bought fleets to lease. It's total different ball game.
I'm afraid the situation with this is totally unrelated more like the condo time shares that went south years ago.

[mvweebles]

Originally Posted by letsgetsailing3

Again, I'd like to know where this is coming from.

The OP is going to do what, swim to where his boat is? And then where is he going to keep it?

I just think you're jumping to a rash conclusion, with no actual data.

No data? A company says they are going to suspend payments for 6 months? No mitigation except "gladly pay you tomorrow for hamburger today" response. Not sure what data you're looking for, but that's enough for me.

Fully understood OP can't resolve immediately, but that's where the effort needs to be. Be a nice guy, but retrieve his asset asap.

[Tillsbury]

This thread reminds me of when the news started coming through about black Monday back in the 1980s. I happened to be in a financial organisation’s offices. The management called everyone from their desks to explain what a pile of doo-doo was going on. Half the staff started complaining to the management, or crying, or generally getting stressed out. The other half picked up as much expensive-looking computer gear as they could carry and walked out the door.

The ones who walked were the only ones who got away with anything. I don’t like theft as much as the next guy, but at least some of the employees got something in lieu of their wages.

Hard for the OP though. Obviously you’d just sail your boat away if you could, but that’s no longer possible. I get the feeling people might be looking back and wishing things were only this bad in a few months time though.