If NCL declares bankruptcy, what happens to skeleton crew onboard?

[fstuff1]

some companies when they close down, it's without warning to their employees.

they find out they are jobless when the show up for work in the morning.

 

if ncl declares bankruptcy, will the crew be stranded and have to find/pay for their own way home?

 

[em-sk]

1 hour ago, fstuff1 said:

some companies when they close down, it's without warning to their employees.

they find out they are jobless when the show up for work in the morning.

 

if ncl declares bankruptcy, will the crew be stranded and have to find/pay for their own way home?

 

 

Given the international nature of the operation it is likely complex.  NCL going into receivership in the US may or may not impact the NCL subsidiary in the Bahamas that operates the ships.

 

However, generally in most countries the courts appoint an administrator who is responsible to secure the business, and try to sell off the assets.  The administrator would be responsible for ensuring the assets (ships) are appropriately safeguarded to optimize resale value.  They would take over being responsible for paying for essential crew to do that.   

 

If the ships are leased, the owner may want to take back the ships, they would likely keep the minimum crew needed to ensure the assets are protected.  

[BirdTravels]

1 hour ago, fstuff1 said:

some companies when they close down, it's without warning to their employees.

they find out they are jobless when the show up for work in the morning.

 

if ncl declares bankruptcy, will the crew be stranded and have to find/pay for their own way home?

 

Just like when the airlines went bankrupt, it was business as usual the next day. 

[don't-use-real-name]

Would it be the difference in Bankruptcy ?

 

Bankruptcy to Liquidate the assets company cruise line

-OR-

Bankruptcy for reorganization to operate another day and time

[em-sk]

1 hour ago, don't-use-real-name said:

Would it be the difference in Bankruptcy ?

 

Bankruptcy to Liquidate the assets company cruise line

-OR-

Bankruptcy for reorganization to operate another day and time

 

It is a complex international web.  The US has a very flexible bankruptcy process.  In many other countries it is different. 

 

All the ships are registered in the Bahamas with the exception of the Pride of America.  It sounds like the Bahamas laws only permit Bankruptcy for Liquidation not reorganization.     Determining which countries laws apply will be complex.  In addition to all of this most of the ships are in Europe these days.  You also have the laws of the country where the ship is physically docked to deal with.  

 

The US airlines are a little different in most of their assets are in the US at any given time.  That said, as an example if a US airline was behind on its landing fee and paying for jet fuel in Canada, and one of its aircraft was on the ground in Vancouver, the creditors could go to a court in Canada to get an order to have Canadian sheriffs take control of the aircraft and those debts would then be resolved in Canada and not the US.   

 

[Roger88]

3 hours ago, BirdTravels said:

Just like when the airlines went bankrupt, it was business as usual the next day. 

Yeah, its a regular business thing. Moreover, going bankrupt does not always mean stop of the operation. Its more economically, tax-wise. They are avoiding the sanctions and taxes and continue to operate under another name or a third-party company. I mean, I dont know the entire scheme but it seems to be - its exactly how they continue to  work when they go bankrupt 

[onetimearoundtheworld]

I have no doubt that the major cruise lines already have a plan set out for that. 

[Trimone]

Most bankruptcy is set up and agreed beforehand with receivers, who’s having what, people don’t tell you this but the bullet is normally fired when a big news story has broken, examples, look at the morning after Michael Jackson died.
What big events are happening soon? 

[sanger727]

I don’t think that anything comparable to a company locking its doors could occur on a cruise ship in the event of a bankruptcy. Even if assuming full liquidation; No one will wake up without a job suddenly. There are laws about the minimum number of staff a ship has to have, if they tell everyone to go home it will suddenly just be a large chunk of steel that will not leave the location it’s in. For the purposes of liquidation, the ship would have more value to keep it staffed and operable until it is sold. And at the very minimum it will have to be staffed and operable until it’s in a location to be scrapped. 
 

Once the ship is in a location where the crew can leave, the crew will be in a country that they don’t have a visa to stay in. So I suspect that whoever is legally in charge of the ship at that time will have a legal obligation to get them home.

[bmwman]

5 hours ago, BirdTravels said:

Just like when the airlines went bankrupt, it was business as usual the next day. 

It will not as there is too much outside and investment and funds. You may well travelled but I can assure fund mangers will not let it be business as usual. New board and asset stripping at worst.

 

Anyway why are we talking about this again aint going to happen is it

[chengkp75]

First off, regardless of where the ships are registered, US law allows any corporation that is traded on the NYSE to file bankruptcy under US law.

 

Now, as to crew.  Based on the tenets of the Maritime Labor Convention of 2006 (MLC), if a shipowner defaults or goes bankrupt, and doesn't provide for repatriation of the crew, the flag state is responsible for the cost and arranging of the repatriation, and may then make a claim against the owner in bankruptcy hearings.  The flag state is authorized to seize or detain the vessel until such time as restitution is made.  In addition, each vessel is required to have a certificate of financial responsibility (an insurance bond) to cover the unpaid wages of the crew, the repatriation costs, and "maintenance and cure" (food, housing, medical coverage) needed by the crew until it can be repatriated, as well as any collective bargaining terms and conditions that may apply to bankruptcy proceedings.

[em-sk]

8 hours ago, chengkp75 said:

First off, regardless of where the ships are registered, US law allows any corporation that is traded on the NYSE to file bankruptcy under US law.

 

Now, as to crew.  Based on the tenets of the Maritime Labor Convention of 2006 (MLC), if a shipowner defaults or goes bankrupt, and doesn't provide for repatriation of the crew, the flag state is responsible for the cost and arranging of the repatriation, and may then make a claim against the owner in bankruptcy hearings.  The flag state is authorized to seize or detain the vessel until such time as restitution is made.  In addition, each vessel is required to have a certificate of financial responsibility (an insurance bond) to cover the unpaid wages of the crew, the repatriation costs, and "maintenance and cure" (food, housing, medical coverage) needed by the crew until it can be repatriated, as well as any collective bargaining terms and conditions that may apply to bankruptcy proceedings.

 

A few years ago there two cargo ships stuck off the coast of Vancouver.  One owned by a Korean company and the second operated by that company but owned by a German firm.  Between bankruptcy filling and claims in the US, Korean, Canada and other parts it was quite a long time before the ships were permitted to dock to offload anywhere and was done country by country.  

 

https://www.timescolonist.com/news/local/stranded-near-victoria-korean-ship-s-crew-expects-to-go-home-this-week-1.7491454?mod=article_inline

 

https://www.reuters.com/article/us-hanjin-shipping-debt-usa-bankruptcy-idUSKCN11F2DV

 

In the last few years there have been no shortage of US companies that have entered into bankruptcy and it has not impacted their Canadian subsidiaries to continued to function.      

 

Edited September 13, 2020 by em-sk

[njhorseman]

14 hours ago, em-sk said:

 

It is a complex international web.  The US has a very flexible bankruptcy process.  In many other countries it is different. 

 

All the ships are registered in the Bahamas with the exception of the Pride of America.  It sounds like the Bahamas laws only permit Bankruptcy for Liquidation not reorganization.     Determining which countries laws apply will be complex.  In addition to all of this most of the ships are in Europe these days.  You also have the laws of the country where the ship is physically docked to deal with.  

 

The US airlines are a little different in most of their assets are in the US at any given time.  That said, as an example if a US airline was behind on its landing fee and paying for jet fuel in Canada, and one of its aircraft was on the ground in Vancouver, the creditors could go to a court in Canada to get an order to have Canadian sheriffs take control of the aircraft and those debts would then be resolved in Canada and not the US.   

 

FYI, NCL's ships other than POA are flagged in the Bahamas, but the corporation, NCLH, is incorporated in Bermuda, not the Bahamas. NCL America-related corporations owning and operating POA are incorporated in Delaware .

 

It isn't even necessary for NCLH to be traded on a US-based stock exchange in order to qualify for Chapter 11 . All that's needed is a presence or operations in the US. Having the corporate headquarters in Miami is sufficient. 

 

Edited September 13, 2020 by njhorseman

[PelicanBill]

So as @njhorseman says... Norwegian Cruise Line Holdings Ltd. is the parent company.

from Wikipedia:

 

Norwegian Cruise Line, also known in short as Norwegian, is a cruise line founded in 1966, incorporated in Bermuda and headquartered in Miami. It is the third-largest cruise line in the world by passengers, controlling about 8.7% of the total worldwide share of the cruise market by passengers as of 2018

 

Here is a list of legal entities held by the parent company. The question is, which is it that would run out of money forcing it to enter reorganization bankruptcy?  And what are its assets? The money must flow around to cover the operating costs of the ships held in separate legal entities. If the money dries up, then multiple of these could be in trouble. I can see a scenario that says the only option for a company that only exists to own a ship would have to sell the ship if it runs out of money.

Name of Subsidiary		Jurisdiction of Incorporation or Organization
NCL Corporation Ltd.		Bermuda
Arrasas Limited		Isle of Man
NCL International, Ltd.		Bermuda
NCL America Holdings, LLC		Delaware
Norwegian Dawn Limited		Isle of Man
Norwegian Star Limited		Isle of Man
Norwegian Jewel Limited		Isle of Man
Norwegian Sun Limited		Bermuda
Norwegian Spirit, Ltd.		Bermuda
Norwegian Pearl, Ltd.		Bermuda
Norwegian Gem, Ltd.		Bermuda
Norwegian Epic, Ltd.		Bermuda
Breakaway One, Ltd.		Bermuda
Breakaway Two, Ltd.		Bermuda
NCL (Bahamas) Ltd. d/b/a Norwegian Cruise Line		Bermuda
NCL America LLC		Delaware
Pride of America Ship Holding, LLC		Delaware
Pride of Hawaii, LLC		Delaware

[npcl]

14 hours ago, chengkp75 said:

First off, regardless of where the ships are registered, US law allows any corporation that is traded on the NYSE to file bankruptcy under US law.

 

Now, as to crew.  Based on the tenets of the Maritime Labor Convention of 2006 (MLC), if a shipowner defaults or goes bankrupt, and doesn't provide for repatriation of the crew, the flag state is responsible for the cost and arranging of the repatriation, and may then make a claim against the owner in bankruptcy hearings.  The flag state is authorized to seize or detain the vessel until such time as restitution is made.  In addition, each vessel is required to have a certificate of financial responsibility (an insurance bond) to cover the unpaid wages of the crew, the repatriation costs, and "maintenance and cure" (food, housing, medical coverage) needed by the crew until it can be repatriated, as well as any collective bargaining terms and conditions that may apply to bankruptcy proceedings.

a foreign company that has operations in the US (by itself a stock market listing does not qualify as operations) may successfully file in the US. Anyone can file but they may not succeed.. Once a company files it is up to the bankruptcy judge to determine if the case can proceed in the US.  If creditors or another country can show sufficient reason, including insufficient scope of US operations, than a judge may terminate US proceedings and not allow the BK to continue in the US.

Edited September 14, 2020 by npcl

[MoCruiseFan]

22 hours ago, fstuff1 said:

some companies when they close down, it's without warning to their employees.

they find out they are jobless when the show up for work in the morning.

 

if ncl declares bankruptcy, will the crew be stranded and have to find/pay for their own way home?

 

Bankruptcy and going out of business are two different things.  There are several forms of bankruptcy and moist do NOT include a business ceasing operations.  So if BCL (or any business) files or bankruptcy, what happens all depends on what form of bankruptcy they petition the courts for.  So the status of the employees may not be impacted at all.

[MoCruiseFan]

28 minutes ago, npcl said:

a foreign company that has operations in the US (by itself a stock market listing does not qualify as operations) may successfully file in the US. Anyone can file but they may not succeed.. Once a company files it is up to the bankruptcy judge to determine if the case can proceed in the US.  If creditors or another country can show sufficient reason, including insufficient scope of US operations, than a judge may terminate US proceedings and not allow the BK to continue in the US.

Contrary to popular belief, filing for bankruptcy does not necessarily equal going out of business.  It all depends on what form of bankruptcy the business petitions the courts for and what is approved.

 

[npcl]

19 minutes ago, MoCruiseFan said:

Contrary to popular belief, filing for bankruptcy does not necessarily equal going out of business.  It all depends on what form of bankruptcy the business petitions the courts for and what is approved.

 

never said it meant going out of business, only that if a foreign company wants to file and proceed under the US rather lenient bankruptcy laws it is up to the bankruptcy judge on if they can do so in the US and their case proceed.

 

They certainly would want to reorganize under US law, it is not a given that a BK judge would determine that enough of their operations are in the US for it to continue, especially if creditor and or foreign governments object.

[tw67]

Did I miss something?  Do we think that they will be declaring bankruptcy?

 

 

[em-sk]

2 hours ago, npcl said:

a foreign company that has operations in the US (by itself a stock market listing does not qualify as operations) may successfully file in the US. Anyone can file but they may not succeed.. Once a company files it is up to the bankruptcy judge to determine if the case can proceed in the US.  If creditors or another country can show sufficient reason, including insufficient scope of US operations, than a judge may terminate US proceedings and not allow the BK to continue in the US.

 

The assumption here is that the courts in Bermuda or the Isle of Man will not accept a claim from a creditor(s) and will instead defer to the US court.   

 

The country where the ship happens to physically be located is also in a position to accept and enforce maritime liens against the ship.  That country courts may or many not recognize the authority of a US court.    

 

 

 

 

[em-sk]

13 minutes ago, em-sk said:

 

The list of subsiduries is actually a bit longer that posted earlier.....

 

Name of Subsidiary Jurisdiction of Incorporation or Organization

   

Norwegian Cruise Co. Inc. Delaware

   

Norwegian Sextant Ltd. United Kingdom

   

Norwegian Compass Ltd. United Kingdom

   

Arrasas Limited Isle of Man

   

NCL International, Ltd. Bermuda

   

NCL America Holdings, LLC Delaware

   

Norwegian Dawn Limited Isle of Man

   

Norwegian Star Limited Isle of Man

   

Norwegian Jewel Limited Isle of Man

   

Norwegian Sun Limited Bermuda

   

Norwegian Spirit, Ltd. Bermuda

   

Norwegian Pearl, Ltd. Bermuda

   

Norwegian Gem, Ltd. Bermuda

   

Norwegian Epic, Ltd. Bermuda

   

Breakaway One, Ltd. Bermuda

   

Breakaway Two, Ltd. Bermuda

   

Breakaway Three, Ltd. Bermuda

   

Breakaway Four, Ltd. Bermuda

   

Seahawk One, Ltd. Bermuda

   

Seahawk Two, Ltd. Bermuda

   

NCL (Bahamas) Ltd. d/b/a Norwegian Cruise Line Bermuda

   

Norwegian Sky, Ltd. Bermuda

   

NCL America LLC Delaware

   

Pride of America Ship Holding, LLC Delaware

   

Pride of Hawaii, LLC Delaware

   

NCL Australia Pty Ltd. Australia

   

Belize Island Holdings Ltd. Belize

   

Eurosoft Corporation Limited United Kingdom

   

Eurosoft Cruise Line (Shanghai) Co., Ltd. China

   

Leonardo One, Ltd. Bermuda

   

 

 

 

 

 

[npcl]

1 hour ago, em-sk said:

 

The assumption here is that the courts in Bermuda or the Isle of Man will not accept a claim from a creditor(s) and will instead defer to the US court.   

 

The country where the ship happens to physically be located is also in a position to accept and enforce maritime liens against the ship.  That country courts may or many not recognize the authority of a US court.    

 

 

 

 

individual actions can certainly be attempted.

 

but if they were to declare bk in the us to reorg. The creditors being impacted will not be the small one dealing with ship operations. The large bond holder, including holding secured interest are not going to want the ships. Instead what you will see is the shareholders wiped out. the bond holders will see their debt replaced by stock in the reorganized companies. the cruise lines will get a substantial reduction in debt payments. I doubt you will see anything seized in other venues, except maybe as a bargaining position. even then most of these kinds of reorganization are prenegotiated with the major bond holders and prepackaged.

Edited September 14, 2020 by npcl

[chengkp75]

And, all of this discussion as to where the bankruptcy filing can take place, or how the creditors are handled, or what happens to the assets of the company has nothing to do with the OP's question of what happens to the crew during even reorganization.  As noted, there is insurance to cover all expenses related to crew remaining on ships at the time of insolvency.

[PelicanBill]

4 hours ago, chengkp75 said:

And, all of this discussion as to where the bankruptcy filing can take place, or how the creditors are handled, or what happens to the assets of the company has nothing to do with the OP's question of what happens to the crew during even reorganization.  As noted, there is insurance to cover all expenses related to crew remaining on ships at the time of insolvency.

 

Good point.  Showing all the different organizations was meant to show that not all of NCL would go bankrupt at once.  So the issue of money to send a crew home would not be fleet wide.  In a US reorganization bankruptcy, someone usually steps in to finance a bridge loan to keep things running for a time while a new business plan is prepared. Expenses are cut back.  Contracts are dismissed or renegotiated. Maintaining payroll is typically high priority (although a reduction in workforce is usually immediate.)

[chengkp75]

1 hour ago, PelicanBill said:

 

Good point.  Showing all the different organizations was meant to show that not all of NCL would go bankrupt at once.  So the issue of money to send a crew home would not be fleet wide.  In a US reorganization bankruptcy, someone usually steps in to finance a bridge loan to keep things running for a time while a new business plan is prepared. Expenses are cut back.  Contracts are dismissed or renegotiated. Maintaining payroll is typically high priority (although a reduction in workforce is usually immediate.)

Well, all of those entities are merely shell corporations owning one or two ships at most, which is almost universal in the maritime world.  So, yes, they would all go bankrupt at the same time, because as soon as the parent corporation stops paying the loan on the ships, the subsidiary has no income and can't meet it's debt obligation.  The ships are operated in NCL's case by two entities, the parent "Norwegian Cruise Lines" and one of the US flag operations, I believe it is still "NCL America", to whom the MLC insurance bond is issued.  Note that if the insurer makes a payout against the bond, they can then become a creditor of the company for the amount of the payout.