Dream Yacht suspending Guaranteed Charter Income payments

[mvweebles]

Originally Posted by letsgetsailing3

FWIW, the entire world shutting down for a month is unprecedented in modern times.

Understood. The post I was responding to differentiated between guaranteed income and other. The OP was clear - in his contract, income was guaranteed.

Second, many of DYCs competitors such as Moorings have issued no such exception.

In the end, I stand by my statement. DYCs guarantee of income is their promise. Until it isn't. They get to chose when it's applicable and when it's not. Owners are welcome to sue them in Mauritius if they want to take issue with their unilateral proclamations. They signed the contract and those are the terms.

My guess is that if an owner had extraordinary events during normal times and needed forbearance on terms, DYC would be less forgiving than they insist their owners need to be. But that's just speculation.

[jmh2002]

Originally Posted by mvweebles

My guess is that if an owner had extraordinary events during normal times and needed forbearance on terms, DYC would be less forgiving than they insist their owners need to be. But that's just speculation.

This part is certainly interesting. Even with simple things like a home utility bill, of course they expect the consumer to always pay on time, according to the terms.

But when they have a service outage, it's like "oh well we tried our best, but sorry, tough".

Imagine a consumer saying "oh well I tried my best but sorry tough I can't pay the electricity/phone/internet, etc bill this month".

Try that and watch how quickly you get cut off...

Although I must admit that in France at least it's quite common to get rebates or freebies if the phone or internet provider had a service outage.

[nextis12]

Originally Posted by valhalla360

If the big boys with accountants can't make the numbers work individuals aren't likely to make them work either.



Sounds like a rationalization....I want a boat I can't afford, so I'll buy into the baffling and befuddling numbers the salesmen throw around and make me sound smart to justify it to the wife.

Sounds about right. I would say the baffling and befuddling part is just typical boat ownership. Two years into a new boat and a bottom job that cost 1,000’s, have you priced life rafts? What it costs to operate/maintain a boat leaves me baffled [emoji53].

No one should go into these programs thinking their going to make money.

[valhalla360]

Originally Posted by mvweebles

My guess is that if an owner had extraordinary events during normal times and needed forbearance on terms, DYC would be less forgiving than they insist their owners need to be. But that's just speculation.

This is basically a variation on the old: If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem.

Difference is they vetted owners and play the odds spreading the risk out over many owners, so one bad owner doesn't break the bank.

Most owners really didn't vette the company and they have a huge dollar amount tied to one company.

[Dr. Sea]

Originally Posted by nextis12

What it costs to operate/maintain a boat leaves me baffled.

No one should go into these programs thinking their going to make money.

I owned a boat in the Sunsail fleet for 6 years. During that time I sailed 10-12 weeks a year from Sunsail and Moorings bases all over the world. I set my mortgage payments equal to my monthly lease payments from Sunsail, so basically it cost me nothing to own the boat and use it or Sunsail's other boats for 6 years. At the end of the program Sunsail reconditioned my boat and I sold it for almost as much as I still owed on it. So what it really cost me for 6 years of sailing in the Med, the Caribbean, the Pacific, and the Indian oceans was my original down payment. At charter rates I got much more benefit than the cost of my down payment.

Now I own a blue water cruiser and I have the privilege of paying the mortgage, insurance, dockage, maintenance, and repairs without the benefit of any lease agreement. It is a lot more expensive to own a boat outright, but I can sail it when and where I want to. I can equip the boat exactly the way I want it and I can leave my equipment such as dive tanks, fishing rods, and PFD's on the boat.

Unless you are actively engaged in operating a charter on your own boat, there is no way to consider a boat an investment. It costs you either way. But so does golf, mountaineering, sports cars, motorcycles, beach resorts, or any other hobby. Whatever you do for recreation has a price tag. Choose what suits you best and fits your budget.

[Boat Guy]

Originally Posted by mvweebles

From the original OP post and the DYC mea culpa. Income was guaranteed. Until it wasn't.

I've been all over the boat shows looking at these arrangements. While I didn't predict this precise scenario, I was always concerned about when the music stops...

Originally Posted by midatlantian

No choice in the matter, ....
In retrospect, there’s just too much risk and uncertainty in this “Guarantee” program. I would not recommend it to a friend unless you’re in a financial position where you could lose 500k and shrug it off. I’ve been saying that even before today’s development.

Sorry MA, perhaps you can post how things are going

Originally Posted by a64pilot

Again I’m no lawyer, but this is exactly why force majeure clauses exist, we used to write them into aircraft purchasing contracts, surely a major Corporation covered themselves with one, the owners of the building had to see it coming.

force majeure has come up in several groups I'm in....Not sure if it's been tested with the pandemic yet....

Originally Posted by redneckrob

...

I've always maintained that the counterparty risk was massive with these companies, which aren't well capitalized at all and are basically using your money to buy their product with all the risk on you. Will be interesting to see if the model holds up after this.

To your point, this has always been my feeling....Those of us with some age likely remember when charter co's owned their fleets. After the financial crisis and bankruptcies, the charter operators got smarter and decided to put the capital risk on the "owner"...They set the terms, set the price, are the profit center, and when the **** hits the fan, they have no depreciating asset to deal with....

Originally Posted by bstreep

Forget anything "legal" with Dream Yacht. There's a paragraph saying that you have to litigate in Mauritius.

To your point, I had a friend with a cat in the DYC program years ago. Without making any representations or hearing the other side, all I know is he wasn't happy and it was headed for litigation before pulling his boat out abruptly. I'm pretty sure they make people sign non-disclosure agreements so I'm not sure we'll even hear from the OP again. Perhaps why we don't hear from more people dealing with DYC, who knows?

Originally Posted by ol1970

....
The honest response i received back that "yep the risk is all on you, and there is no real guarantee at all so dont fool yourself" from DYC ... I'd get your boats out so you can at a minimum salvage some level of your capital.

You know, IMO, these deals were just simply too one-sided for me...Why I've had to sit on the sidelines...I'm just not the speculator....

Originally Posted by Group9

Practicing attorneys soon learn that in litigation, there is really one fight and one fight only....to stay out of court.

Correct, attorneys will set the retainer and bleed through the money and then advise a client of the risks of going to trial so the lawyer doesn't have to risk a loss / judgement against the client....Lawyers do what mediators should and get their money and get out...

Originally Posted by Cadence

That has to be 1202 other peoples yachts. I'm not faulting them who would have anticipated this but it would seem the people that have the notes are those that have the liability. DYC people can just walk away.

That's the business model and the plan....I'm not saying this is what they want...Far from it, but what they planned for....

Originally Posted by a64pilot

...
Very, very often the signed waiver works cause it does often have an effect in a jury trial a....
I can tell you of a case many years ago where a wealthy person in Tx bought a Bell 206 helicopter....

However the jury when they looked at the grieving Widow and was told she would now live in poverty as she had no way of making a living, they would lose the house and no one would send little Johnny to College etc., awarded a large amount of money to her.

....

I despise these types of suits where greed takes over personal responsibility.... I have no idea how that was Bell's fault

Originally Posted by Montanan

https://www.sailonline.com/boat-owne...boat-ownership

Layman's guide to charter boat ownership, a.k.a. charter boat ownership for dummies.

. Interesting

Originally Posted by a64pilot

J... Broker I spoke with told me that at every closing he attended now there were two checks written, I didn’t get it so I asked. One from the purchaser of course and the second from the seller to cover the difference on what was owed, which was considerable.
Everyone was upside down on their loans, ....


If there are going to be steal it prices, they won’t come until a year or so, after the bank repossess some and your buying from the bank.

Interesting post and I'm sure why the charter operators are out of the boat buying business....The money is in the selling....

Originally Posted by DYC

Dear forum members,

There is much speculation about our current financial position and you can be sure of our survival following the unprecedented pandemic disruption. ......We are in this together and the tourism industry has been through difficult times before and we will come out the other side.

Loïc Bonnet
President and Founder, Dream Yacht Charter

Good luck and keep us posted as to the status. It seems to be very fluid...

Originally Posted by IAmGroot

Catamaran Company has put their position out there now: https://www.catamarans.com/We-Go-The...o+The+Distance

Critical bit of the post for this thread:


Looks look like they built-up a cash reserve just for these situation. The balance of their post explains this a bit. Good work CatCo.

That's a management difference....


-----


Wow, crazy thread....I tried to read it all...I know none of us know what the future holds, but I'm not real confident that we aren't in this for the long haul...


I'm sure each owner's situation is different, but perhaps we can all learn from this...

[mvweebles]

The attraction to these arrangements is to defray costs, not make money. I'm guessing the reputable companies are straightforward with the risks. The programs are roughly similar between the companies - DYC, Moorings, etc . Difference is reputation. DYC took a giant step backwards. If this arrangement makes sense for someone, DYC is now the bottom of the heap compared to the likes of Moorings. It's a marginal business case fueled by passion for sailing. There are options that are more proven with similar benefits than DYC.

[Captn_Black]

Originally Posted by midatlantian

I just received an emailed letter from DYC’s President explaining the severe impacts COVID-19 has had on the worldwide business.

I am an owner about one year of five into the dream guarantee program. Well, I should say I’m a boat mortgage holder LOL.

The letter declares income will be delayed for six months, and my charter management contract will be extended for six months at the end.

I understand this is a very unusual situation for everybody. I just think this sort of thing should be out in the light of day. So, first post! I’m sure there are other dream guarantee owners out there. Who knows if they’re treating everyone the same? Let’s commiserate.

I’m gonna crack open a beer. Happy Friday.

I am a liveaboard, but I do a bit chartering, but not bareboat. This situation has seriously affected our income. My gf had to return to Poland and get an office job, as her online work has also suffered, and I have had to start freelance writing again. All that said, bareboat charter yachts are the scourge of many anchorages, so I can't feel that much sympathy
Good luck though.

[Tropiclvr]

As a current owner in the DYC program, I can tell you that not all contracts must be litigated in France. Our contract specifically states that any legal proceedings must take place in Maryland, as that is where they’re based in the states. However, I can also say that I spoke to an attorney, who says he is currently representing several owners with many various issues against DYC. He also said that most of the suits are for problems that people were having prior to the whole pandemic. Did not speak very optimistically about obtaining any kind of settlement from the company, although he was more than happy to take us on as a new client, for a mere $5000 retainer! Seems like throwing even more money into the wind. I’m not sure why there aren’t more owners or past owners speaking up about their issues with this company!

[Boatguy30]

You will pay big and you will win with your Maryland lawyer. The company will not have any assets in Maryland to collect against. And in France many of these companies are well connected.

[redneckrob]

Originally Posted by Boatguy30

You will pay big and you will win with your Maryland lawyer. The company will not have any assets in Maryland to collect against. And in France many of these companies are well connected.

That's an important point, winning a suit doesn't in and of itself get you anything. You have to collect and if they have no assets for you to seize in the jurisdiction of your suit they can safely simply ignore you.

[Cadence]

What is the adage, you can't get blood from a stone. It is a sad situation for everyone involved. DYC can go tits up and go bankrupt. I feel sure the major people involved can find a job or have paid themselves royally. It is the guy that leverage a lot of money for "their boat" I feel sorriest for. In a good economy it may, or may not have been a good idea. Some of them may have to go tits up. I hope they had done it as an LLC of alike so all they lose is the boats investment to date not everything they own.

[redneckrob]

Originally Posted by Cadence

What is the adage, you can't get blood from a stone. It is a sad situation for everyone involved. DYC can go tits up and go bankrupt. I feel sure the major people involved can find a job or have paid themselves royally. It is the guy that leverage a lot of money for "their boat" I feel sorriest for. In a good economy it may, or may not have been a good idea. Some of them may have to go tits up. I hope they had done it as an LLC of alike so all they lose is the boats investment to date not everything they own.

An LLC doesn't help you when you made a personal guarantee on a loan. And I'd be pretty surprised if anyone was able to get a bank to loan a half million dollars or more to a special purpose LLC that held only a boat without some sort of additional personal guarantee. If you anyone did manage to do that I'd love to know the name of the bank!

[Augi]

Originally Posted by Cadence

What is the adage, you can't get blood from a stone. It is a sad situation for everyone involved. DYC can go tits up and go bankrupt. I feel sure the major people involved can find a job or have paid themselves royally. It is the guy that leverage a lot of money for "their boat" I feel sorriest for. In a good economy it may, or may not have been a good idea. Some of them may have to go tits up. I hope they had done it as an LLC of alike so all they lose is the boats investment to date not everything they own.

Any DYC owners potentially in the situation you describe, assuming they can get to their boat with COVID travel restrictions, ought to consider going and taking over their boat and selling it.

[aqfishing]

Sunsail still paying......for now!

I am sure DYC will work through this. No point everyone rushing to collect your yacht, then they are sure to fail. Work with them and enjoy the extra 6 months use.

I have just renewed with Sunsail for another 6 years. There is a 1 month delay in the delivery of the new yacht, but they just shifted the end date. They have also allowed me to use this years points anytime over the next 6 years. They have been super accommodating in this regard.