Cruisers Forum
 


Join CruisersForum Today

Reply
 
Thread Tools Rate Thread Display Modes
Old 14-02-2013, 19:14   #16
Registered User

Join Date: Jul 2008
Posts: 81
Re: Limiting Liability

Quote:
Originally Posted by twistedtree View Post
Ok, I'll take a crack at what I think you are asking. I think you are saying that you are interested in buying a boat, willing to put down a significant down payment, and want to finance the balance. But, you are worried about the world going to s&*t again, and want to have a way to walk away from the boat if that should become necessary. You realize that you would lose your down payment, but you don't want to also be stuck with the loan. In other words, you want to leave the boat and loan to the bank to sort out since the boat will presumably be collateral for the loan. Is that what you are saying?
You are correct that I would not be concerned about paying for a boat under current conditions, or better conditions, but under very bad conditions.

I am surprised at all the statements of under what conditions banks will lend money with no numbers. I am curious, are any of you business lawyers, commercial lenders, or business people with personal experience on the subject? Is it really that no bank would lend money to a corporation, or is it that they would want a large deposit (25-60%)?

While there are other things that the business could do, and all of them more fun, the one which in the current economy would definitely pay the bills is to rent the boat to me as a place to live and play while I work in various port cities. I do not know if that would be a legitimate function of a corporation or not.

Kettlewell and nautical62 thank you for your input
__________________

__________________
decktapper is offline   Reply With Quote
Old 14-02-2013, 19:22   #17
Nearly an old salt
 
goboatingnow's Avatar

Cruisers Forum Supporter

Join Date: Jun 2009
Posts: 13,649
Images: 3
Quote:
Originally Posted by denverd0n
Same here. I think we need more details about exactly what sort of scenario you are envisioning, and what sort of protection you want.

Though, in the end, the most important thing to remember is...

Internet legal advice is worth exactly what you pay for it--NOTHING!

Whatever answer you get here, you are still going to have to talk to an attorney.
I'm sure your right about the Internet legal advice. , the worrying thing is after 30 years in business the same is true of legal advice I paid lots for. !!!


Summary; all legal advice is generally worth nothing !!! ( and my daughters a lawyer !!)
Dave
__________________

__________________
Check out my new blog on smart boat technology, networking and gadgets for the connected sailor! - http://smartboats.tumblr.com
goboatingnow is offline   Reply With Quote
Old 14-02-2013, 19:26   #18
Nearly an old salt
 
goboatingnow's Avatar

Cruisers Forum Supporter

Join Date: Jun 2009
Posts: 13,649
Images: 3
Quote:
Originally Posted by decktapper

You are correct that I would not be concerned about paying for a boat under current conditions, or better conditions, but under very bad conditions.

I am surprised at all the statements of under what conditions banks will lend money with no numbers. I am curious, are any of you business lawyers, commercial lenders, or business people with personal experience on the subject? Is it really that no bank would lend money to a corporation, or is it that they would want a large deposit (25-60%)?

While there are other things that the business could do, and all of them more fun, the one which in the current economy would definitely pay the bills is to rent the boat to me as a place to live and play while I work in various port cities. I do not know if that would be a legitimate function of a corporation or not.

Kettlewell and nautical62 thank you for your input
I can't see a commercial lending institution providing a large loan to finance a depreciating asset contained in a company with no credit or commercial history and do so on a non recourse basis. If you find such a lender however do let us know.
Dave
__________________
Check out my new blog on smart boat technology, networking and gadgets for the connected sailor! - http://smartboats.tumblr.com
goboatingnow is offline   Reply With Quote
Old 14-02-2013, 19:34   #19
֍֎֍֎֍֎֍֎֍֎

Cruisers Forum Supporter

Join Date: Apr 2006
Posts: 13,022
Re: Limiting Liability

" Is it really that no bank would lend money to a corporation, or"
Tapper, banks don't stay in business unless they make a profit, and they don't make a profit by taking incredible risks. Lending money to anyone--person or business--that has no assets, no credit history, and no income? That's not just risky, it is probably illegal in most venues outside of the casinos.

But as long as you are asking, hey, would you mind lending me twenty grand? I'll pay you good interest, really I will. Just send the money to me care of Western Union, OK?
__________________
hellosailor is offline   Reply With Quote
Old 14-02-2013, 19:38   #20
Marine Service Provider

Join Date: Aug 2010
Location: north carolina
Boat: command yachtsdouglas32
Posts: 3,113
Re: Limiting Liability

Quote:
Originally Posted by goboatingnow View Post
I can't see a commercial lending institution providing a large loan to finance a depreciating asset contained in a company with no credit or commercial history and do so on a non recourse basis. If you find such a lender however do let us know.
Dave
This type of thing was "par for the course" in Japan and Korea and anywhere they did business in the early 1990s, they built 2 golf courses on Guam and then arrested the folks who built them in 1995..The banksters of today ie, Jamie Diamond and his kind are using bad dept as collateral for new loans! I know lots of folks that would like to use their bad depts for collateral ,but they dont have the connections!
__________________
tropicalescape is offline   Reply With Quote
Old 15-02-2013, 08:31   #21
Registered User
 
denverd0n's Avatar

Join Date: Jun 2008
Location: Tampa, FL
Posts: 3,948
Images: 6
Re: Limiting Liability

Quote:
Originally Posted by decktapper View Post
Is it really that no bank would lend money to a corporation, or is it that they would want a large deposit (25-60%)?
No, what it is, is that no bank would loan money to a corporation without the same down payment and collateral that they would want from an individual. If the corporation's ONLY asset is the boat, then the bank is going to want a very substantial down payment, just like they would from an individual whose ONLY asset was the boat.

Most people, and most corporations, have other assets that the bank knows it can go after if it has to. If it knows that you DON'T have any other assets, then it's going to be much more selective about the criteria for any loan. Basically, they will want to be sure that at no time during the term of the loan, do you ever become "upside down" on the asset. Or they may well ask you to put up additional, personal assets as collateral, to go along with the corporation's sole asset.

Of course, there are also exceptions. If you have a personal relationship with someone in a position of authority at the bank, you might get them to waive the normal requirements. If you happen onto a bank that is not paying attention, trying to work complex deals, and/or simply acting in unethical ways (NO! Banks would never do THAT! Would they?) then you might just get an unusual deal. I wouldn't count on it, though.

This is from someone who has spent half his career, about 15 years in all, working in the financial industry, including several years working for the mortgage lending division of one of the nations largest banks.
__________________
denverd0n is offline   Reply With Quote
Old 15-02-2013, 09:07   #22
Armchair Bucketeer
 
David_Old_Jersey's Avatar

Join Date: Oct 2006
Posts: 10,013
Images: 4
Re: Limiting Liability

Quote:
Originally Posted by decktapper View Post
I am surprised at all the statements of under what conditions banks will lend money with no numbers. I am curious, are any of you business lawyers, commercial lenders, or business people with personal experience on the subject? Is it really that no bank would lend money to a corporation, or is it that they would want a large deposit (25-60%)?
boat owners in general tend to be from a wide demographic and the activity is usually also a great leveller - lots of folks with boats have diverse backgrounds. Often enough the window cleaner and the squillionaire treat each other as equals at sea and usually also at the dock! - even if 500 yards down the road one would likely not get out of his BMW to p#ss on the other if he had caught fire .

A long winded way of saying, yes. Lots of folks on CF with that sort of experiance and from a variety of angles. Effectively you are simply asking someone to lend money to another person (called a corporation) who has a depreciating asset (a boat) with no certainity of income (only a single source of income - you!, which may (aka will!) stop whenever you feel like it!).....neither me nor you would lend anyone money on that basis! (even with a large deposit).......the work around for the lender is usually simply a written guarantee from you - effectively they want to be able to "look through" the corporation (to you and your assets & income) if the repayments stop.....and nothing new or "credit crunch" in that approach.

But I was once married to a woman who did do that sort of thing (no boats though!) - but she was foreign with very foreign ways . with a rather high monthly interest rate, plus a loan termination clause that included a possible face to face introduction to Mr Buddha , with debts passing onto surviving family. Happy Days .
David_Old_Jersey is offline   Reply With Quote
Old 15-02-2013, 10:09   #23
Registered User

Join Date: Sep 2010
Posts: 793
Re: Limiting Liability

I think the key here is that some number of people have used these various shell companies as a way to abandon their financial responsibilities and leave the bank holding the bag. Banks are now on to it, and will look at the company's ability to repay the loan. A company with no assets other than the boat, and no income to make payments is not a strong candidate.

In contracting for the boat that I'm building, I wanted to be able to move the contract to a third party. My goal was to be able to put it all under an LLC for liability and privacy reasons, not for financial reasons. The builder was fine with this PROVIDED I agreed to remain personally responsible financially to complete the purchase. I was scratching my head over this until I realized that this is exactly why. They had people stick them with half-built boats by walking away from shell LLCs with no recourse back to the actual buyer.

Anyway, you could try what you are describing, and it might work. But I suspect the lender will want you to personally be on the hook for the loan, not just the holding company.

I think the better way to approach it is to accept that if you have to bail out unexpectedly, you will have to sell the boat, and might find yourself underwater (no pun intended) on the loan when you do and hence incur more of a loss than just your down payment. And if that's too big a financial risk, then maybe buying a boat isn't the right thing to do.
__________________
twistedtree is offline   Reply With Quote
Old 15-02-2013, 10:31   #24
Senior Cruiser
 
Cheechako's Avatar

Cruisers Forum Supporter

Join Date: Aug 2006
Location: Skagit City, WA
Posts: 19,334
Re: Limiting Liability

I guess maybe I'm naive'.... but if you buy the boat with a loan and a substantial down payment..... then walk away.... is the lender really going to do anything other than repossess the boat?
__________________
"I spent most of my money on Booze, Broads and Boats. The rest I wasted" - Elmore Leonard











Cheechako is offline   Reply With Quote
Old 15-02-2013, 10:50   #25
Registered User
 
Capt Phil's Avatar

Join Date: Jun 2010
Location: Stateline NV
Boat: Prior boats: Transpac 49; DeFever 54
Posts: 2,749
Re: Limiting Liability

For a number of years, I was the skipper of a former US flagged and documented vessel that was owned by a non US citizen. He explored a number of different options prior to purchasing the boat, all them offshore, as the vessel had to be removed from USCG documentation. He settled on forming corporation in the Cayman Islands however it was necessary to fully fund the company with his own resources in order to purchase the boat. There was no way a Cayman bank would finance the purchase without significant capital over and above the value of the vessel. I suspect the rules of other banking institutions would demand similar terms and conditions.
The owner provided me with documentation identifying me as an officer of the corporation which allowed me to move the vessel from country to country, including in and out of the US, provided I had the appropriate Cruising Permit for each country we visited. Once the paperwork was sorted removing the boat from USCG documentation roles and establishing it as an asset of the Cayman Corporation, we had no difficulties whatsoever moving the vessel from country to country and port to port.
I can't emphasize the importance of getting the paperwork sorted out in advance of purchase and moving the vessel. I met another skipper who was stuck in a well known Mexican harbor for several months aboard a 150 footer awaiting the requisite permits to move the boat. If the owner is not present, the problems seem to multiply. The problem arises in foreign ports that require the equivalent of the Mexican Zarpe to move from port to port which will not be issued without proper documentation such as ownership, insurance, Permission to Operate, crew lists, passports, Captains' Certification, etc., etc. Most of Central and South America require such documentation. Phil
__________________
Capt Phil is offline   Reply With Quote
Old 15-02-2013, 10:54   #26
֍֎֍֎֍֎֍֎֍֎

Cruisers Forum Supporter

Join Date: Apr 2006
Posts: 13,022
Re: Limiting Liability

" is the lender really going to do anything other than repossess the boat? "
Sure. It costs them very little to put a lien on the owner(s), which is good for ten years, and then file an extension for another ten. So for the next 20 years, 10% of everything you earn will probably go to the lender unless you stay "judgement proof" with zero income and zero assets.

YMMV but that's the typical picture. Some of them actually sell the debt, for pennies on the dollar, and let debt collection companies chase you instead. Either way, it would be simpler to just steal a boat.
__________________
hellosailor is offline   Reply With Quote
Old 15-02-2013, 12:03   #27
Senior Cruiser
 
Cheechako's Avatar

Cruisers Forum Supporter

Join Date: Aug 2006
Location: Skagit City, WA
Posts: 19,334
Re: Limiting Liability

hmmm... so the worst case scenario is they somehow "make" you pay for the boat and you still have it? I've heard even court judgements in lawsuits aren't often enforceable to the extent the winner actually gets their money...? (you cant be jailed for debts) It's all a mystery to me.... I suppose it all depends on how deep your pockets are...
__________________
"I spent most of my money on Booze, Broads and Boats. The rest I wasted" - Elmore Leonard











Cheechako is offline   Reply With Quote
Old 15-02-2013, 15:15   #28
֍֎֍֎֍֎֍֎֍֎

Cruisers Forum Supporter

Join Date: Apr 2006
Posts: 13,022
Re: Limiting Liability

"they somehow "make" you pay for the boat and you still have it?"
No, they make you pay for the boat and you don't still have it, because they have seized it.

" I've heard even court judgements in lawsuits aren't often enforceable " That's true. Getting a judgement is one thing, getting it enforced quite another. Sometimes you go to a marshal and have assets seized. Sometimes the court freezes assets like bank accounts. Sometimes they tell your employer to send 10% of your paycheck to someone else--and you have no say in that.

And then sometimes, folks get real clever about saying "I can't pay that" and after they ignore a judge's order to pay it? The judge has them arrested for contempt. Not for the debt, but for refusing to pay it as ordered. Yes, they can do that too. Won't always happen or happen easily, but it does happen.
__________________
hellosailor is offline   Reply With Quote
Old 15-02-2013, 16:00   #29
Registered User
 
transmitterdan's Avatar

Join Date: Oct 2011
Boat: Valiant 42
Posts: 4,017
Re: Limiting Liability

Quote:
Originally Posted by hellosailor View Post
And then sometimes, folks get real clever about saying "I can't pay that" and after they ignore a judge's order to pay it? The judge has them arrested for contempt. Not for the debt, but for refusing to pay it as ordered. Yes, they can do that too. Won't always happen or happen easily, but it does happen.
At least in the US you will not be jailed for simply being destitute. The contempt citation will not come because you could not pay. It will come if you said you could not pay and that was not a true statement. The contempt citation then is for lying about your ability to pay. It's a subtle but important distinction.
__________________
transmitterdan is online now   Reply With Quote
Old 15-02-2013, 17:37   #30
֍֎֍֎֍֎֍֎֍֎

Cruisers Forum Supporter

Join Date: Apr 2006
Posts: 13,022
Re: Limiting Liability

Gee, it must be subtle. Or you might have noticed I said that.
__________________

__________________
hellosailor is offline   Reply With Quote
Reply

Thread Tools
Display Modes Rate This Thread
Rate This Thread:

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off




Copyright 2002- Social Knowledge, LLC All Rights Reserved.

All times are GMT -7. The time now is 09:16.


Google+
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.
Social Knowledge Networks
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.

ShowCase vBulletin Plugins by Drive Thru Online, Inc.