Three years ago, a court awarded ownership of the former Presidential yacht Sequoia to a lender. Heated disagreements over the cost of needed repairs, liens, and other outstanding liabilities followed. While court filings piled up, Sequoia sat, for two years, on the hard in Virginia, suffering from neglect. It took another court ruling this week to resolve the impasse. The judgment: Sequoia can change hands at an adjusted option price amounting to $0.
The decision came from Delaware Chancery Court judge Sam Glasscock, overseeing the legal tussle all this time. He notes that the yacht, a National Historic Landmark, “is sitting on an inadequate cradle on an undersized marine railway in a moribund boatyard.” He adds that she’s “deteriorating and, lately, home to raccoons.” The 104-foot Sequoia is all wood, originally built in 1925.
The lender acquiring Sequoia for $0 is FE Partners, a U.S. company formed in 2012 to loan the owner money. (The company soon after described itself as focusing on preserving vessels of historic significance. It has since acquired another notable boat, a yawl built for the father of the late President John F. Kennedy.) Sequoia’s owner is Gary Silversmith, a Washington, D.C. lawyer who’s had her since 2000. While the loan, in 2012, totaled $5 million, the parties agreed to let FE Partners acquire the yacht in case of a default. That occurred, so the purchase option, for $7.8 million, kicked in.
The lawsuits started in early 2013. Following each side accusing the other of misconduct, FE Partners filed a motion for default judgment in June 2013. The judge found that Silversmith fraudulently induced the loan. Silversmith agreed to the default motion that August, and Glasscock formally dismissed the lawsuit. Glasscock appointed an independent counsel in September 2013 to oversee the sale and transfer of Sequoia. Among the counsel’s duties: investigate outstanding and potential debts. FE Partners could then deduct the sum, plus potential restoration costs, from the purchase option. The counsel submitted his findings in 2014, amounting to about $272,000. Neither FE Partners nor Silversmith accepted the total, however.
Each side countered with wildly different liabilities over the past year, in fact. They additionally vehemently disagreed over the cost of rebuilding Sequoia. FE Partners hired a surveyor, who quoted $2.75 million. Silversmith, meanwhile, countered with $310,000, citing Coast Guard inspections that noted minor changes needed.
Each side did eventually accept certain liabilities as deductions. Glasscock brought in an independent restoration consultant in the process. This week, Glasscock ruled that the final exercise price is just over $2.4 million. Considering that the loan disbursement amounted to $2.49 million, Sequoia’s price came down to zero.
Silversmith expressed disappointment to several media via email. He further expressed concern that a family in India owns FE Partners. Silversmith raised this issue previously, repeating his view that “there is nothing to prevent the Sequoia from going overseas.” FE Partners previously denied that possibility and restated it this week to media. “FE Partners is committed to restoring and preserving the Sequoia in cooperation with the U.S. Coast Guard so that future generations of Americans will be able to enjoy the storied past of this magnificent yacht,” it states.
Leave a Reply