A federal bankruptcy court judge has appointed a trustee to run Yacht Path International, the yacht-transport company that filed for involuntary bankruptcy protection in March.
In bankruptcy cases, a trustee is an independent party that assumes day-to-day control over a company—in this case, taking control from Yacht Path International’s owner. Since Yacht Path International filed for Chapter 11, the trustee will decide how best to continue the reorganizational process, such as paying the secured creditors. While it is too early to determine what will happen with Yacht Path International, in some bankruptcy cases, trustees decide the best course of action for all parties, including the debtors, is to sell the business.
The trustee’s appointment comes after a petition filed with the court earlier this month by five customers of Yacht Path International. They claimed that the company committed civil fraud, alleging that Yacht Path International knew it was in serious financial trouble when it took their advance payments to have their yachts shipped. Those yachts are now sitting in a variety of ports around the world, with liens filed against them by the shipping company that owns the vessels upon which they were scheduled to be transported by Yacht Path International.
Yacht Path International is not the only yachting firm of its type that doesn’t own the ships it uses. Indeed, a handful of companies have been operating under it for many years. However, in this case, the five yacht owners referenced above reportedly provided payment to Yacht Path International, but Yacht Path International did not pay the shipping company. Dennis Cummings, the president of Yacht Path International, claimed that his firm was unable to pay because of a failed merger and a writ of garnishment placed on its bank accounts, the latter following an earlier lawsuit settlement. Regardless, the company owning the ships refused to take on the yachts, and the yachts cannot be shipped by anyone until it is paid.
In related news to the bankruptcy, in April Yacht Path International’s total debt was re-stated as $21 million, up from the initial claim of more than $7.5 million when it filed Chapter 11 in March. The new figure includes $8 million owed by Unity Shipping Lines, a sister company to Yacht Path International, and debts owed by two other sister companies, these being Unity Marine and Yacht Path Palm Beach. The four companies all filed for Chapter 11 and are being jointly administered by the trustee. The assets that Yacht Path International initially claimed remain the same, however, a total of $343,000.
UPDATE, JUNE 3, 2013: The trustee has shut down all of Yacht Path International’s operations, meaning the firm will not be transporting any yachts for the foreseeable future. According to an email obtained by the South Florida Business Journal, the trustee’s office informed customers last week that they should make alternate arrangements to ship their boats. The trustee, Soneet Kapila, a founding partner of Kapila & Company and a certified public accountant, elaborated by telling the newspaper that he does not believe any voyages should take place while he examines the best way to have Yacht Path emerge from Chapter 11. Among the ideas he is considering is offering the business for sale.
bob
Hello Dennis,
RE- EMAIL BANKRUPTCY STATUS.
In my view Y.P. knowingly and willingly received our payment for shipping Dulce to Singapore with prior knowledge of financial trouble.
In the situation of Y.P. requesting Dulce to be sailed to St. Thomas for loading with a paid crew, airfares and now expensive costs at Crown Bay Marina.
These added costs to a ship that was never going to arrive
Further Captain Noel Small tried several times to receive loading information while in St. Thomas to no avail.
Mr Stuart Butler from St.Thomas shipping company also received no assistance from his many calls.
Currently we are arranging a sailing crew from Grenada to fly on to St.Thomas, then at great expense sail Dulce towards Malaysia.
Being on the other side of the world with hopes and dreams shattered and still a stranded yacht with no indication of any assistance is in the very least disturbing.
At this stage our expenses stand around $75000 USD, this does not include current expenses to sail Dulce towards Malaysia.
Due to such late acceptance of our payment for shipping to Singapore.
And looking at the facts of our email,
I TRULY and SINCERELY see this situation as Deception and Fraud on behalf of Yacht Path.
Bob Bradley,