Robb Report: Charter business in crisis

[AA3JY]

https://robbreport.com/motors/marine/with-summer-approaching-coronavirus-is-sowing-confusion-in-the-yacht-charter-market-2904849/

[Nils Gruttner]

Interesting times ahead. My line of thinking was concerning charter yacht companies being able to meet their financial obligations as many of the yachts are financed by deposits of individual owners (or finances fully by owners) ... aka 'unsecured creditors' downstream..

[belizesailor]

The story is more about the megayacht industry, but the mid-range industry is being hit hard too. A friend of mine manages a small charter base. They have 5 boats out right now. They expect some of them may cancel mid-charter and head home. They have had a bunch of cancellations for near future charters.

[Paul L]

This might really dampen the market for cats, as some get pulled from charter and put on the market.

[belizesailor]

Originally Posted by Nils Gruttner

Interesting times ahead. My line of thinking was concerning charter yacht companies being able to meet their financial obligations as many of the yachts are financed by deposits of individual owners (or finances fully by owners) ... aka 'unsecured creditors' downstream..

Im not following how this ends up with unsecured creditors. For all charter vessels Ive ever known of with a mortgage (and thats a lot) it was the vessel owner who was ultimately responsible for the mortgage. How are unsecured creditors involved?

[belizesailor]

Originally Posted by Paul L

This might really dampen the market for cats, as some get pulled from charter and put on the market.

Yes, two big hits for the charter industry in a row. Those in the E Carib are still recovering from the massive hurricane damage and now they get whacked by CV. I expect some will not survive this second blow.

The big players can likely weather the storm, but not many of the small ones. I saw that in 2001 with the tech industry implossion. I was living in SW Florida and knew several mom & pop charter companies that folded. One by friends who were aging, having health issues, and needing to retire...the crash wiped them out and they closed their doors...old broke and sick...a tough position.

[Chotu]

Everyone's business is in crisis.

[Nils Gruttner]

Originally Posted by belizesailor

Im not following how this ends up with unsecured creditors. For all charter vessels Ive ever known of with a mortgage (and thats a lot) it was the vessel owner who was ultimately responsible for the mortgage. How are unsecured creditors involved?

In the Dream Yacht Charter "Dreameasy" program, you don't actually own the boat until end of contract. You basically pay 35% down payment up front. DYC would that take that to the bank as the deposit. The boat is in their name, so they are responsible for the mortgage. An I am an unsecured creditor to DYC.

[belizesailor]

Originally Posted by Nils Gruttner

In the Dream Yacht Charter "Dreameasy" program, you don't actually own the boat until end of contract. You basically pay 35% down payment up front. DYC would that take that to the bank as the deposit. The boat is in their name, so they are responsible for the mortgage. An I am an unsecured creditor to DYC.

Yes, now that you mention it, I recall an arrangment like that from when I delivered a boat coming out of charter with DYC in Martinique. Contributed to a bunch of paperwork delays and we were stuck in Martinique for 2 weeks...boo hoo! [emoji6]

Puzzled as to why they would do it that way. Big risk for DYC given the size of their fleet. Very uncommon in the industry.