What If NCL files for bankruptcy? And we have cruises book ?

[rjm11]

I just checked with my insurance provider (LeisureCare) and they said that yes, bankruptcy of the company is a covered occurrence. 

[mkdreams]

1 hour ago, spanishguy1970 said:

 This is a pandemic that no one wanted and is out of our control. We would have loved to go on our cruise but alas is not the case. When this is an emergency contracts should be null and void and NCL should not have control of what they do with our money. I find that clause or requirement that you MUST book a new cruise by 2021 in order not to lose your FCC ridiculous. Some of us want to take our time and not feel we have to book anything right now, specially since it has been stated that this could last for a whole year to 18 months.  IMHO

Agree 100 percent.

[njhorseman]

39 minutes ago, npcl said:

NCL is a bit different from RCL and CCL in that a lot of NCLH's debt is secured loans tied to the ships, this is different from CCL where all of its debt is unsecured and not tied to any of its ships.  RCL does have some secured debt but most of their ships do not seem to be tied to any loans.

Yes, well we are on the NCL board and the thread is titled "What if NCL Files for Bankruptcy" so I wasn't generalizing to other cruise lines although I admit  I wasn't aware that all of CCL's debt is unsecured...but it seems a bit odd that lenders would do that given how much it costs to build a cruise ship.

[Formula280SS]

In normal circumstances, a company faces bankruptcy in response to actions it has taken to put its' financial future at risk.  For example, the 2008 financial crisis and the bail out of the banks.

 

NCL, nor its senior competitors RCCL and CCL, did not take consequential actions that cause the 'pause in world-wide cruises; it was COVID-19, a world-wide pandemic.

 

NCL finances its ships and general operations through standard industry lines of banks for ships, operations and credit lines.  Such financing sources, also under siege (stock collapse), are completely aware that NCL management did not cause this current financial consequence via risky, failed business strategies.  Also, Chapter 11 bankruptcy, or reorganization, is a timely, costly and futile remedy for informed lenders, as creditors, in such circumstances.

 

NCL has over $6B of 'book equity (assets - liabilities).  NCL stock price is roughly 1/3rd of that.  So, it is not adequate 'capital, it might be 'liquidity.  IMO, it appears the big banks in the NCL lenders pool will not compromise to a Chapter 11 bankruptcy reorganization (extreme cost and time exhaustion) versus line of credit or similar advances.

 

Customer deposits have a unique priority position in bankruptcy, depending on venue, with potential protections up to almost $3,000 (not advice, very complicated).  All of the cruise line have BILLIONS of prepaid charges (deposits, payments towards balances, etc.) that would have a 'priority status in bankruptcy.

 

Currently, unless the COVID-19 is unstoppable, IMO, can't see NCL or its lenders 'in the mood for Chapter 11 and the ugly process it is.  Further, if alternatively so, what reorganized debtor would 'stiff their prepaid customers?

 

Lastly, although NCL (and RCCL AND CCL) pay minute % of taxes to US, the US ports and port cities benefit significantly from hosting cruise lines.  The US House and Senate aren't 'thrilled with no US taxes part, but can't ignore the financial losses to the host ports.  For years, the US politicians have wanted more regulations on the cruise lines (flagged elsewhere) over "everything" from wages, to safety, etc.  In a recent US Senate letter, US Senators wanted assurances that cruise lines would improve health care on ship capabilities, screening and related matters "as a prerequisite to US aid."  Other reports have also cited the $100,000's+ cost of US resource for each at sea rescue.  There was no mention of 'taxation.  So, it might be that the cruise lines will need to meet some of these other, not tax, measure sought by powerful US Senators to be considered to aid in the rounds of aid in response to the COVID-19 virus.

 

Just IMO.

 

Can't wait for COVID-19 to be "beat," so we can start booking our cruises again.

 

 

Edited March 18, 2020 by Formula280SS

[njhorseman]

57 minutes ago, anyman said:

 

May be true if the banks wanted to take back the Ships, which I can't image they would. So it

It make more sense for the banks to agree to restructure the debt, and allow NCL to stay in business.

Yes, if NCL looks like it can be restructured into a viable business. With NCL's huge debt burden it isn't immediately obvious that it can and if it can it might mean that  NCL will emerge a much smaller company...meaning fewer ships.

Edited March 18, 2020 by njhorseman

[njhorseman]

2 minutes ago, rkelly21 said:

The cruise lines pay basically no U.S. taxes because they conveniently fly under a foreign flag. That's also how they get around paying slave wages. Let their foreign flag country bail them out - not the U.S Taxpayers.

The ships fly a foreign flag. The cruise lines themselves are incorporated in foreign countries...not necessarily the same country as the the ships' flags.

 

 NCL ships except Pride of America are registered in the Bahamas, but NCLH, the corporate holding company, is incorporated in Bermuda. It's the country of incorporation that primarily results in the cruise line's ability to avoid federal corporate income taxes. It's the foreign flag state that permits the employment of crew at wages substantially below what would be required if registered in the US. It's two different things at play.

[ColeThornton]

4 minutes ago, rkelly21 said:

Great info. Unfortunately the bottom line of paying no U.S. Taxes remains the same. So why should we bail them out? I believe the Bahamas are British. Let them bail them out.

 

I believe the Bahamas became an independent nation from the UK in the early seventies.

[njhorseman]

Just now, ColeThornton said:

 

I believe the Bahamas became an independent nation from the UK in the early seventies.

Yes...1973

[ColeThornton]

3 minutes ago, njhorseman said:

Yes...1973

 

 

I'll take Caribbean Nations for $300, Alex.    🙂

[Soonergirl35]

We have a cruise already paid for and they said we could have 100% for a future cruise but we lose our 700.00 ins and when we rebook we have to purchase ins again

[rkelly21]

Dispute the bill on your credit card if you still can. Don't go for FCC as they may not be around. If the are there will be a ton of bargains.

[sr71_1]

44 minutes ago, Formula280SS said:

Just IMO.

 

Can't wait for COVID-19 to be "beat," so we can start booking our cruises again.

 

I"ll 2nd that.  While I find the thread interesting with some well-considered comments.....here's where my mind is :

• waiting for NCL to cancel the Alaska cruises thru July 1 so that I can get my Haven cash back
• purchase a decent NCL stock position (very soon)  - a pile of money to be made here for longs.
• rebook Alaska for 2021 or 2022
• start planning for a cruise to Antartica          

 

Edited March 19, 2020 by sr71_1

[npcl]

1 hour ago, Love my butler said:

US taxpayers don't fund the country of Norway.

Of course Norway has nothing to do with NCL.  NCLH the parent company and owner of NCL, is incorporated in Bermuda.

[npcl]

1 hour ago, njhorseman said:

Yes, well we are on the NCL board and the thread is titled "What if NCL Files for Bankruptcy" so I wasn't generalizing to other cruise lines although I admit  I wasn't aware that all of CCL's debt is unsecured...but it seems a bit odd that lenders would do that given how much it costs to build a cruise ship.

Both RCL and CCL use bond offerings to fund ships. as well as using unsecured loans guaranteed by  export credit agencies from the countries where the ships are built.  NCLH is less clear since they do not have any public bond offerings.  Since they were owned by a Chinese company and Apollo prior to selling to NCLH their loan sources are a bit less public.

[njhorseman]

3 minutes ago, npcl said:

Both RCL and CCL use bond offerings to fund ships. as well as using unsecured loans guaranteed by  export credit agencies from the countries where the ships are built.  NCLH is less clear since they do not have any public bond offerings.  Since they were owned by a Chinese company and Apollo prior to selling to NCLH their loan sources are a bit less public.

NCLH has been in existence since 2013 so the financing of most of their large ships should be known.

[npcl]

1 hour ago, Formula280SS said:

In normal circumstances, a company faces bankruptcy in response to actions it has taken to put its' financial future at risk.  For example, the 2008 financial crisis and the bail out of the banks.

 

NCL, nor its senior competitors RCCL and CCL, did not take consequential actions that cause the 'pause in world-wide cruises; it was COVID-19, a world-wide pandemic.

 

NCL finances its ships and general operations through standard industry lines of banks for ships, operations and credit lines.  Such financing sources, also under siege (stock collapse), are completely aware that NCL management did not cause this current financial consequence via risky, failed business strategies.  Also, Chapter 11 bankruptcy, or reorganization, is a timely, costly and futile remedy for informed lenders, as creditors, in such circumstances.

 

NCL has over $6B of 'book equity (assets - liabilities).  NCL stock price is roughly 1/3rd of that.  So, it is not adequate 'capital, it might be 'liquidity.  IMO, it appears the big banks in the NCL lenders pool will not compromise to a Chapter 11 bankruptcy reorganization (extreme cost and time exhaustion) versus line of credit or similar advances.

 

Customer deposits have a unique priority position in bankruptcy, depending on venue, with potential protections up to almost $3,000 (not advice, very complicated).  All of the cruise line have BILLIONS of prepaid charges (deposits, payments towards balances, etc.) that would have a 'priority status in bankruptcy.

 

Currently, unless the COVID-19 is unstoppable, IMO, can't see NCL or its lenders 'in the mood for Chapter 11 and the ugly process it is.  Further, if alternatively so, what reorganized debtor would 'stiff their prepaid customers?

 

Lastly, although NCL (and RCCL AND CCL) pay minute % of taxes to US, the US ports and port cities benefit significantly from hosting cruise lines.  The US House and Senate aren't 'thrilled with no US taxes part, but can't ignore the financial losses to the host ports.  For years, the US politicians have wanted more regulations on the cruise lines (flagged elsewhere) over "everything" from wages, to safety, etc.  In a recent US Senate letter, US Senators wanted assurances that cruise lines would improve health care on ship capabilities, screening and related matters "as a prerequisite to US aid."  Other reports have also cited the $100,000's+ cost of US resource for each at sea rescue.  There was no mention of 'taxation.  So, it might be that the cruise lines will need to meet some of these other, not tax, measure sought by powerful US Senators to be considered to aid in the rounds of aid in response to the COVID-19 virus.

 

Just IMO.

 

Can't wait for COVID-19 to be "beat," so we can start booking our cruises again.

 

 

I suspect that congress could quite easily ignore the impact on embarkation port areas.

 

While there might be some losses to ports. the embarkation  ports are located in tourist areas that might suffer some loss, usually the port itself (generally local government organizations) the surrounding tourist infrastructure would, in general survive. Even if all 3 were to fail totally.

 

It is unlikely all 3 would fail totally.  NCLH the smallest of the 3 would have the least impact.

 

If the government were to provide aid I suspect that it would either be as part of a restructuring that would wipe the shareholder and for that matter management, while protecting to some degree suppliers, employees, ports and surrounding jobs or some other form as lender of last resort.

 

While the congressional delegations from the major port areas (Southern Florida, Washington, California) might support a bailout, there are a large number that are not strong supporters of the cruise lines with probably as many that are downright hostile as there are strong supporters. Some of the items currently being tossed about would render the cruise industry pretty unprofitable as it is run today, with the current fare structures.

 

Some of the discussions are already pointing at the money being spent in stock buy backs and similar corporate actions.  Where if that money had been kept, would have greatly reduced or eliminated the need for a bailout.

Edited March 19, 2020 by npcl

[npcl]

Just now, njhorseman said:

NCLH has been in existence since 2013 so the financing of most of their large ships should be known.

They list that the debt exists, the amounts, but do not list all of the sources.  That is why I say that it is not known.  Some are known with specific banks (Bof A, Nordea Bank, JP Morgan Chase each hold some of the debt), some are listed as "private offerings" and the source is not listed.

 

Unlike RCL and CCL that have offerings in the Bond market NCLH financing vehicles are not publicly traded so no way to check at what value they are trading at today.  CCL 10/20 note is near 25% YTM today compared to the 3% YTM is was trading at last week.  RCL has a 2022 bond that is at 18% YTM today.  That gives a little view into how their debt is viewed.

[IrieBajan54]

Say it isn't so! Look like taxpayers will be bailing out the cruise industry. Semantics calling it "relief":

 

"Congress has already started working on a third stimulus package that is likely to address the needs of small businesses that are struggling due to the pandemic while also offering some type of cash assistance to Americans. There are also proposals for additional paid leave, bolstered help for the healthcare industry and relief for the airline and cruise industries. Senate leaders said they would not leave Washington until this third bill passes, which many hope will happen this week or next."

https://www.usatoday.com/story/news/politics/2020/03/18/coronavirus-senate-vote-expected-house-sick-leave-testing-bill/5076063002/

[mianmike]

1 hour ago, IrieBajan54 said:

Say it isn't so! Look like taxpayers will be bailing out the cruise industry. Semantics calling it "relief":

 

"Congress has already started working on a third stimulus package that is likely to address the needs of small businesses that are struggling due to the pandemic while also offering some type of cash assistance to Americans. There are also proposals for additional paid leave, bolstered help for the healthcare industry and relief for the airline and cruise industries. Senate leaders said they would not leave Washington until this third bill passes, which many hope will happen this week or next."

https://www.usatoday.com/story/news/politics/2020/03/18/coronavirus-senate-vote-expected-house-sick-leave-testing-bill/5076063002/

 

Not a surprise really. I have felt this way ever since Trump met with the cruise industry CEOs and asked them to suspend cruises for 30 days.  I suspect there was some kind of quid pro quo offered.  "You do me a solid and I'll make sure you're made whole."  Right after the CEO meeting and the 30 day cruise suspension announcements, when talking to reporters, Trump would include the cruise industry, along with airlines and hotels that we need to care for.  

 

[TrumpyNor]

16 hours ago, Ptroxx said:

What’s everyone thoughts on this ?   
what do you think would happen if you have a paid in full cruise?? 
I have a May 2nd cruise and starting to worry a little bit with the market dumping as it is. NCL is now down to $7.xx A share.  
 

what’s everyone thoughts.  

 

I have booked and paid in full a 15 days European cruise that was supposed to start May 1st, that obviously will be cancelled by NCL. I have paid more than $4000 for two persons, and under "normal circumstances" I would definitely take the 125% Future Cruise Credit over "cash" refund of 100% as I will certainly continue cruising at a later time. BUT just now I actually logged on to CruiseCritic to see if others was thinking the same as I was starting to think: 

What if NCL ends up going bankrupt as a concequence of being out of business for a longer period of time  - then all my $4000 dollars would be lost for ever... And that is a risk I feel I am not ready to take, even if it may be an unlikely scenario - as to me $4000 is a lot of money that I worked very hard to save for that particular cruise. So even though 125% FCC (in my case a total of $5000) is tempting - I will cancel and get my money refunded as soon as the cruise is officially cancelled! And then; when things go "back to normal" again in the future (no matter how long it may be until that time), I will be ready to book another cruise...

Edited March 19, 2020 by TrumpyNor

[Love my butler]

2 hours ago, TrumpyNor said:

 

I have booked and paid in full a 15 days European cruise that was supposed to start May 1st, that obviously will be cancelled by NCL. I have paid more than $4000 for two persons, and under "normal circumstances" I would definitely take the 125% Future Cruise Credit over "cash" refund of 100% as I will certainly continue cruising at a later time. BUT just now I actually logged on to CruiseCritic to see if others was thinking the same as I was starting to think: 

What if NCL ends up going bankrupt as a concequence of being out of business for a longer period of time  - then all my $4000 dollars would be lost for ever... And that is a risk I feel I am not ready to take, even if it may be an unlikely scenario - as to me $4000 is a lot of money that I worked very hard to save for that particular cruise. So even though 125% FCC (in my case a total of $5000) is tempting - I will cancel and get my money refunded as soon as the cruise is officially cancelled! And then; when things go "back to normal" again in the future (no matter how long it may be until that time), I will be ready to book another cruise...

You are assuming you get your refund in a timely manner.  All recent reports seem to indicate NCL is delaying cash refunds for weeks or months.  If this drags on for a few more months, I would expect you are promised a refund but it could take months to 'process'.  During that process, anything can happen, including NCL filing for bankruptcy.  

[Love my butler]

5 hours ago, mianmike said:

 

Not a surprise really. I have felt this way ever since Trump met with the cruise industry CEOs and asked them to suspend cruises for 30 days.  I suspect there was some kind of quid pro quo offered.  "You do me a solid and I'll make sure you're made whole."  Right after the CEO meeting and the 30 day cruise suspension announcements, when talking to reporters, Trump would include the cruise industry, along with airlines and hotels that we need to care for.  

 

You seem to want to put a negative slant on 'quid pro quo'.  Guess what?  It is how business is done, all over the world.  Has been like that for centuries.  It's ok.  I blame the fake news media for feeding the ignorance to the masses.

[TrumpyNor]

1 hour ago, Love my butler said:

You are assuming you get your refund in a timely manner.  All recent reports seem to indicate NCL is delaying cash refunds for weeks or months.  If this drags on for a few more months, I would expect you are promised a refund but it could take months to 'process'.  During that process, anything can happen, including NCL filing for bankruptcy.  

I still mean cash refund is a better alternative than the Future Cruise Credit as the situation is today - or do you know about an alternative that I don't see......? 

[luv2kroooz]

20 minutes ago, TrumpyNor said:

I still mean cash refund is a better alternative than the Future Cruise Credit as the situation is today - or do you know about an alternative that I don't see......? 

 

Take the cash. Give them 21 days to issue the refund, then open a dispute with your credit card company if they are dragging their feet. That's what I did with my recently cancelled Norwegian Air flight from Rome next month, unrelated to Norwegian Cruise lines. However, I gave them seven days....no response...called Visa and they were very kind about opening a dispute for my cancelled flight.

 

No one is booking cruises. Everyone at NCL can be devoted to issuing timely, prompt refunds to their customers. They are even reported to be cutting back to a four day work week.

[SteveH2508]

Those of us in the UK (and I would expect the EU as well) have various legal protections in place. Our refunds should be processed within 14 days by law (Package Travel Regs 2018). (I'm not holding my breath on that one, given the circumstances and numbers involved).

 

There is an ABTA/ATOL bond in place if they go bust, so we would get our money back (eventually).

 

https://www.ncl.com/sites/default/files/PreContractConsumerLetter-Confirmation_EU.pdf