By NEIL HARTNELL
Tribune Business Editor
Two cruise ships that have been under arrest in Bahamian waters for more than four months were yesterday sold for a combined $128m via auction, Tribune Business was told.
Richard Horton, attorney and partner at Alexiou, Knowles and Company, who represented the Crystal Serenity and Crystal Symphony’s secured financier, confirmed to this newspaper that the vessels were sold for $103m and $25m respectively.
“For the Serenity, the total amount paid for the vessel was $103m. The buyer was a company called CDE Ltd,” Mr Horton, who acted for DNB Bank, revealed. “For the Symphony, the amount agreed was $25m for the vessel, and the purchaser’s name was CSY Ltd.”
Tribune Business understands that CSE Ltd and CSY Ltd are likely special purpose vehicles (SPVs) or entities specifically created to acquire, and hold, the two now-former Crystal Cruises vessels, with CSE standing for “Crystal Serenity” and CSY for “Crystal Symphony”.
Well-placed sources, speaking on condition of anonymity, suggested both SPV’s were beneficially owned by a London-based entity but Mr Horton said he was unable to confirm this. Both purchasing entities are represented by the same Bahamian attorney, Aisha Ferguson, McKinney, Bancroft & Hughes’ resident Freeport partner, but she did not return a call seeking comment before press time last night.
Senior Commander Berne Wright, the Port Department’s acting controller, and who as admiralty marshal has been responsible for arresting and detaining both cruise ships in Bahamian waters since early February 2022, told Tribune Business that the purchase price for both vessels has been deposited with himself.
“Yes, that is accurate,” he replied, when asked if the vessels’ sale had closed yesterday. “I do a report to the [Supreme] Court, and I have since done that. A final report will be made to the court. There is a final process where there will be a hearing as to who gets what. I have sight of both sales, and the funds have been deposited. Once that is done, as it has been done, then as admiralty marshal I would have no further dealings with the ships.”
Mr Horton, providing an insight into how the sale proceeds will be split between Crystal Cruises’ various creditors, said: “It will depend on what the court decides the priority will be. Normally what happens is that the admiralty marshal’s fees and expenses come off the top, and then you have the legal costs of the arresting parties and the selling party. There are two parties to the arrest of the vessel, and the party that sold.
“Those costs normally come out, and then you have the standard lien holders; the standard maritime lien holders, and the bank normally comes after them. Unsecured creditors rank below the bank. That [splitting proceeds between creditors] wouldn’t happen for at least 30 days, and I’m not sure of the precise timeframe. That’ll depend on who makes the application, when they make the application and what the court determines.”
Thus work remains for Freeport-based Justice Petra Hanna-Adderley, who is handling the Supreme Court case. Among the Crystal Cruises creditors seeking to recover what is due to them from the same is the Nassau Cruise Port, which provided berths and other facilities to the Genting-owned cruise line when it used Prince George Wharf for home porting amid the resumption of cruising in summer 2021.
The arrest, and subsequent work-out and auction, has also embroiled multiple Bahamian maritime and commercial attorneys in the fall-out. Besides Mr Horton, Kenra Parris-Whittaker at ParrisWhittaker is representing the Miami court-appointed assignee handling Crystal Cruises liquidation in the US, while Dr Peter Maynard of Peter Maynard & Company is representing the crew of both vessels in their claim for unpaid salaries, benefits and other compensation.
Robert Adams QC is acting for Crystal’s former Miami-based shipping agent, SMS, while Stephen Turnquest, the Callenders & Company partner, represents Peninsula Petroleum Far East, a Singapore-based shipping fuel supplier claiming to be owed some $2.1m for outstanding bunkers provided to the Crystal Cruises vessels. The Delaney Partners law firm, headed by ex-attorney general John Delaney QC, is understood to be acting for other creditors.
Dr Maynard, speaking to Tribune Business yesterday, confirmed of the vessels’ sale: “The closing was scheduled to take place today [yesterday], and so we expect it to have gone according to schedule. Bank drafts will be deposited with the admiralty marshal.
“By 30 days he will make his report, and then the priorities. The crew will rank as first priority and payments to maintain the vessel. It will be determined how to allocate the proceeds upon receiving the report of the admiralty marshal. There was a court hearing yesterday [Monday] with some of the parties.”
This newspaper was told that, with the sale closed, both Crystal Cruises vessels could leave Bahamian waters as early as today. It is understood that the auction almost did not take place according to schedule due to the need to remove movable items off both vessels, as these did not belong to DNB Bank, and a Supreme Court order was issued giving the Miami assignee until midnight Tuesday (yesterday) morning to effect this.
“There’s now going to be a battle over priorities of claims,” one source told this newspaper. “I think there’s going to be a fight there. It’s exactly the way it goes. Once the sale is confirmed by the admiralty marshal, everyone gets around the table to begin to carve it up and decide who gets what and when.”
The two Crystal Cruises vessels were initially arrested upon the filing of a Supreme Court action by Peninsula Petroleum Far East, but Tribune Business understands it ultimately passed this responsibility over to DNB Bank, hence Mr Horton’s reference to two arresting parties.
Financial strife at its immediate parent caused Crystal Cruises, which pioneered home porting in The Bahamas alongside Royal Caribbean, to initially suspend operations until at least April 29, 2022. This was to allow management to assess the company’s business, and determine its future options, with its parent set to run out of cash by end-January, but all rescue efforts proved futile and the cruise line is being wound up.
Genting Hong Kong’s woes, and Peninsula Petroleum’s securing of US arrest warrants, saw both Crystal Serenity and Crystal Symphony cut their last Caribbean cruises short by calling at Bimini, where all passengers were forced to disembark and either fly back to south Florida or take the Balearia Express ferry.
That move proved only a temporary respite for the two Crystal vessels as Peninsula Petroleum subsequently issued legal proceedings in The Bahamas on the fuel supplier’s behalf during the first week of February 2022, with the cruise line’s treatment of passengers provoking numerous complaints and costing it much goodwill.
Bimini was also selected as the disembarkation point because of the presence of Crystal’s affiliate, Resorts World Bimini, whose dock it used. Resorts World is owned by a separate Genting company, and is unaffected by the bankruptcy of its fellow Hong Kong subsidiary, which owned the conglomerate’s cruise business.
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