What will happen with Tiers and Benefits in case of a cruise line bankruptcy?

[TroubleT]

I know we are dealing now with something that has never happened before. There are a lot of posts about refunds, FCC, new bookings, re-booking, new cancellations…

I saw in the most recent post the thought about potential bankruptcy for many if not all cruise lines. We kind of know that we’ll probably loose our deposits and all our 100% or 125% FCC will be equal to ZERO.

But, but, but… What is going to happen to our Captain Club’s Tiers and Benefits? I am so far away from being Zenith (and probably would get to it only in my next life), but I worked so hard to get to Elite Plus.

So, with that being said, if current cruise line (e.g. Celebrity) disappears and a few new ones (with the same ships) are created, Are we going to start from ground ZERO to climb up to all the tiers?

 

[Orator]

Only a guess since no one knows. My guess is that they would keep the tiers, but might reduce benefits. They've already removed some of the additional benefits from Zeniths, like dining with the Officers and comp dinner for the top cruiser. They would also revise the program making more difficult to reach levels. They might also might make your level dependent on a minimum number of dollars spent. Better stop before I give them more ideas.

[farawayatsea]

15 minutes ago, TroubleT said:

I know we are dealing now with something that has never happened before. There are a lot of posts about refunds, FCC, new bookings, re-booking, new cancellations…

 

I saw in the most recent post the thought about potential bankruptcy for many if not all cruise lines. We kind of know that we’ll probably loose our deposits and all our 100% or 125% FCC will be equal to ZERO.

 

But, but, but… What is going to happen to our Captain Club’s Tiers and Benefits? I am so far away from being Zenith (and probably would get to it only in my next life), but I worked so hard to get to Elite Plus.

 

So, with that being said, if current cruise line (e.g. Celebrity) disappears and a few new ones (with the same ships) are created, Are we going to start from ground ZERO to climb up to all the tiers?

 

 

 

These kind of benefits are not recognised creditors in the bankruptcy of a company so would have no value and would disappear.  Even if they were a recognised creditor any value would be wiped out by secured loan holders. In the present climate a cruise ship has little value. My view is that most potential customers for cruising will not consider a cruise holiday for at least 2 years and not all if there is even a hint of a virus anywhere in the world.

[jalves]

I don't agree that we would lose FCC, deposits or tier status.  Unless a line actually goes out of business, the loyal customers are a significant asset to any reformulated cruise line.  They will do as much as they can to maintain relationships.  

[Nachosdelux]

when the different airlines went bankrupt (over the years), people kept their status and miles.  Also vouchers were still honored.  who knows what will happen with the cruise lines?

[jelayne]

Airlines have gotten and will get government bail out assistance. 

[Jeremiah1212]

There was a good thread on the RCL board that put bankruptcy into more sensible terms. 
 

If a company like Celebrity went through bankruptcy and touched customer funds, it would tarnish the brand very badly and that negative image would linger for years. 
 

Loyalty programs are always a liability. But in reality Celebrity’s program doesn’t cost them that much since the actual benefits are nominal, even at the highest tiers. That’s also why I don’t really understand why people chase cruise
 line loyalty but that’s a separate topic. 

[farawayatsea]

22 minutes ago, Nachosdelux said:

when the different airlines went bankrupt (over the years), people kept their status and miles.  Also vouchers were still honored.  who knows what will happen with the cruise lines?

I think the airlines received a bailout and survived.  I think this is unlikely in the cruise industry . 

[az_tchr]

1 hour ago, farawayatsea said:

These kind of benefits are not recognised creditors in the bankruptcy of a company so would have no value and would disappear.  Even if they were a recognised creditor any value would be wiped out by secured loan holders. In the present climate a cruise ship has little value. My view is that most potential customers for cruising will not consider a cruise holiday for at least 2 years and not all if there is even a hint of a virus anywhere in the world.

Agree except cruises will not happen until covid19 is gone for a month.

[mac_tlc]

1 hour ago, farawayatsea said:

I think the airlines received a bailout and survived.  I think this is unlikely in the cruise industry . 

Delta Air lines filed for chapter 11 bankruptcy in September 2005 and emerged in April 2007. 

 

American Airlines filed in November 2011 and emerged in December 2013.

 

Also USAirways, United, Air Canada and a whole bunch of others. Many ceased operations  and some were acquired. DL, AA, and AC emerged and survived to fly another day. 
 

mac_tlc

[Pushka]

When Ansett (A major competitor to Qantas) in Australia went bankrupt then all status etc became meaningless. I'm not convinced there will be a cruiseline bailout unless head office Corporation is in the USA. 

[HS2BS]

RCL,  when it secured the big loan of $2.2 Billion used Celebrity and it’s logo as security to the note holder! So in the worst case scenario, RCL would forfeit Celebrity Cruise line to a new owner who could do whatever it considers financially beneficial to them.

 

Hal

[TeeRick]

13 hours ago, TroubleT said:

I know we are dealing now with something that has never happened before. There are a lot of posts about refunds, FCC, new bookings, re-booking, new cancellations…

 

I saw in the most recent post the thought about potential bankruptcy for many if not all cruise lines. We kind of know that we’ll probably loose our deposits and all our 100% or 125% FCC will be equal to ZERO.

 

But, but, but… What is going to happen to our Captain Club’s Tiers and Benefits? I am so far away from being Zenith (and probably would get to it only in my next life), but I worked so hard to get to Elite Plus.

 

So, with that being said, if current cruise line (e.g. Celebrity) disappears and a few new ones (with the same ships) are created, Are we going to start from ground ZERO to climb up to all the tiers?

 

 

 

I am sorry but I find your post a bit humorous.  I know you were being serious so I apologize but it gave me a laugh.  Thank You.

[Ride-The-Waves]

11 hours ago, az_tchr said:

Agree except cruises will not happen until covid19 is gone for a month.

Just one month?  Likely much longer than that.

[Ride-The-Waves]

13 hours ago, TroubleT said:

I know we are dealing now with something that has never happened before. There are a lot of posts about refunds, FCC, new bookings, re-booking, new cancellations…

 

I saw in the most recent post the thought about potential bankruptcy for many if not all cruise lines. We kind of know that we’ll probably loose our deposits and all our 100% or 125% FCC will be equal to ZERO.

 

But, but, but… What is going to happen to our Captain Club’s Tiers and Benefits? I am so far away from being Zenith (and probably would get to it only in my next life), but I worked so hard to get to Elite Plus.

 

So, with that being said, if current cruise line (e.g. Celebrity) disappears and a few new ones (with the same ships) are created, Are we going to start from ground ZERO to climb up to all the tiers?

 

 

 

FCCs and "tier" benefit war all commodities and subject to creditor acquisition on bankruptcy/restructuring.  Likely all go away...

[TroubleT]

1 hour ago, TeeRick said:

I am sorry but I find your post a bit humorous.  I know you were being serious so I apologize but it gave me a laugh.  Thank You.

I agree. It is kind of funny. People worry about non-existent $$$ (FCC), but our Tier benefits are also our $$$. I know it's not a lot on a single cruise, but if you combine many-many cruises then you see a good benefit in laundry coupon, three free drinks, etc. I have a feeling that because of this huge financial crack even the survived cruise lines will erase all (or most of) benefits. 

[mac_tlc]

I don’t recall any airline erasing all FF miles when they went bankrupt. I think the loyalty is very important any company emerging from bankruptcy and may be preserved. If it disappears and someone else buys the assets, that’s a different ballgame. Hopefully we will never find out.

 

mac_tlc

 

 

[Jiminy1955]

15 hours ago, farawayatsea said:

I think the airlines received a bailout and survived.  I think this is unlikely in the cruise industry . 

Here’s an article that addresses the bail out regarding cruise lines.  Bottom line is they do not qualify for any bail out money. 
 

https://cruiseharbournews.com/cruisebailout.html

[Prost Seattle]

I work for an airline that went through bankruptcy.  The ‘what if’ scenarios are too many to even contemplate, and the people who would make a lot of these decisions (lawyers and courts) haven’t been, nor need be chosen.  

[gotcha3]

18 hours ago, farawayatsea said:

These kind of benefits are not recognised creditors in the bankruptcy of a company so would have no value and would disappear.  Even if they were a recognised creditor any value would be wiped out by secured loan holders. In the present climate a cruise ship has little value. My view is that most potential customers for cruising will not consider a cruise holiday for at least 2 years and not all if there is even a hint of a virus anywhere in the world.

This is all gloom and doom and NOT backed up with any kind of hard facts.

Edited March 27, 2020 by gotcha3

[Quo Vadis?]

Since we are at the top of the loyalty perk, we would be so much better off if Celebrity were to cut off all the perks.  We would be so p1$$3d off (can't put that in print) that we would never cruise with them again.  That's a savings of $40 grand a year that we would no longer be spending for upkeep on our Celebrity oceanview condo.  If we had waited one more hour to cancel a cruise that was 49 hrs from losing our full cruise cost, we would have been eligible for a full refund.  Now we might get a future cruise credit that is worthless without a doctor's note (that's not going to happen).  The whole sequence of press releases and offers( if one can just hold off when the grim reaper is threatening your life), has soured me to to cruising as a major pastime.  I am so sorry that we have seven more X cruises booked already with non-refundable deposits.  Once one is accustomed to hibernating as a result of a positive result for a cruiser on our sailing March 6th - 15, it is easy to become agoraphobic.

[mac_tlc]

28 minutes ago, Argo. said:

Since we are at the top of the loyalty perk, we would be so much better off if Celebrity were to cut off all the perks.  We would be so p1$$3d off (can't put that in print) that we would never cruise with them again.  That's a savings of $40 grand a year that we would no longer be spending for upkeep on our Celebrity oceanview condo.  If we had waited one more hour to cancel a cruise that was 49 hrs from losing our full cruise cost, we would have been eligible for a full refund.  Now we might get a future cruise credit that is worthless without a doctor's note (that's not going to happen).  The whole sequence of press releases and offers( if one can just hold off when the grim reaper is threatening your life), has soured me to to cruising as a major pastime.  I am so sorry that we have seven more X cruises booked already with non-refundable deposits.  Once one is accustomed to hibernating as a result of a positive result for a cruiser on our sailing March 6th - 15, it is easy to become agoraphobic.

Let’s hope that time heals the wounds. We have 9 future ones booked with RC and X. 
 

I hope the doctors note requirement is temporary and that you are able to get onboard again. I have enjoyed your posts and reviews. 
 

mac_tlc

Edited March 27, 2020 by mac_tlc

[4774Papa]

I am a retired attorney that once did some bankruptcy law.  

Chapter 11 is a special type of bankruptcy that a corporation would undertake to keep on doing business, under an appointed court representative.  It would attempt to resolve its debt issues over time.  

Not sure about cruise lines bankrupting in US courts, since all are Foreign Corporations.  Still, bankruptcy court is open to non-US corporations, but it gets complicated.

https://www.abi.org/abi-journal/an-overview-of-us-bankruptcy-law-involving-a-foreign-representative-of-a-foreign

 

Some cruise lines may have subsidiaries that are incorporated in the USA.  Still, if the Foreign Corporation goes bankrupt the laws of that country would largely govern.

 

Corporations that go bankrupt that have lots of assents (ships, real estate, equipment) would be prime for takeover by a new buyer, it the cruise line corporation wasn't able to restructure its debt to continue operating.

 

Not sure what kind of debt Royal Caribbean has, but that could tell the tale.

[az_tchr]

1 hour ago, 4774Papa said:

I am a retired attorney that once did some bankruptcy law.  

Chapter 11 is a special type of bankruptcy that a corporation would undertake to keep on doing business, under an appointed court representative.  It would attempt to resolve its debt issues over time.  

Not sure about cruise lines bankrupting in US courts, since all are Foreign Corporations.  Still, bankruptcy court is open to non-US corporations, but it gets complicated.

https://www.abi.org/abi-journal/an-overview-of-us-bankruptcy-law-involving-a-foreign-representative-of-a-foreign

 

Some cruise lines may have subsidiaries that are incorporated in the USA.  Still, if the Foreign Corporation goes bankrupt the laws of that country would largely govern.

 

Corporations that go bankrupt that have lots of assents (ships, real estate, equipment) would be prime for takeover by a new buyer, it the cruise line corporation wasn't able to restructure its debt to continue operating.

 

Not sure what kind of debt Royal Caribbean has, but that could tell the tale.

RCCL debt is pretty much secured by Leon's on its ships.  Now idea who owns most of the debt.  Will be interesting to see when one of the major lines reports earnings to see the amount of cash burn.

 

[Orator]

3 hours ago, Argo. said:

Since we are at the top of the loyalty perk, we would be so much better off if Celebrity were to cut off all the perks.  We would be so p1$$3d off (can't put that in print) that we would never cruise with them again.  That's a savings of $40 grand a year that we would no longer be spending for upkeep on our Celebrity oceanview condo.  If we had waited one more hour to cancel a cruise that was 49 hrs from losing our full cruise cost, we would have been eligible for a full refund.  Now we might get a future cruise credit that is worthless without a doctor's note (that's not going to happen).  The whole sequence of press releases and offers( if one can just hold off when the grim reaper is threatening your life), has soured me to to cruising as a major pastime.  I am so sorry that we have seven more X cruises booked already with non-refundable deposits.  Once one is accustomed to hibernating as a result of a positive result for a cruiser on our sailing March 6th - 15, it is easy to become agoraphobic.

I bet that this will be a topic for discussion next time we meet. Be well.