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Old 29-03-2020, 15:34   #106
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Re: Dream Yacht suspending Guaranteed Charter Income payments

When word gets out on the street about this, one can bet there will be a great deal of leariness of prospective charter clients risking putting down payments for bookings of future charters. As a renter of a boat one would be worried about the financial capacity of the charterer to actually deliver a boat upon arrival and the likelihood that the charter deposit would be lost in a bankruptcy.

DYC has just steeply discounted their future bookings online from the prices just a couple of weeks ago. I would expect a discounting to occur on the large number of boats their brokerage is marketing for the charter boat owners.

With the uncertainty, I can't imagine there would be very many people taking up bookings of the massive fleet even at steeply discounted rates.
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Old 29-03-2020, 16:22   #107
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Re: Dream Yacht suspending Guaranteed Charter Income payments

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Originally Posted by mvweebles View Post
No data? A company says they are going to suspend payments for 6 months? No mitigation except "gladly pay you tomorrow for hamburger today" response. Not sure what data you're looking for, but that's enough for me.

Fully understood OP can't resolve immediately, but that's where the effort needs to be. Be a nice guy, but retrieve his asset asap.

You don't have the data to make that conclusion.

Suspend payments for six months. Where does it say they won't maintain them? And how much maintenance is needed if the boats aren't moving from the dock?

I can sympathize with the OP. But going to get your own boat seems like the opposite of what you want to do. The company didn't suddenly turn into bad actors. The business model is clearly not going to work like it normally would.

Sure, you can take your boat out of the program, but then what are you going to do with it? Nothing that's going to generate any income right now.
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Old 29-03-2020, 16:26   #108
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Re: Dream Yacht suspending Guaranteed Charter Income payments

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What you say is true except.....who are the entities who own the airplanes that many airlines leaseback or hotels buildings? Exclusively unsophisticated private individuals?
I think the real logic is that no-one in private equity or anyone else with any sophistication in finance is buying fleets of boats and leasing them to the charter operators, while they are doing this for the industries you mentioned. Heck, even among the universe of people who own sailboats I don't know anyone with any financial sophistication who is participating in one of these charter operations. Why is that? Because the risk adjusted return is atrocious, mainly because of the massive risks that are obvious to those who make a living off evaluating risk and return.

Sorry to disagree, but I personally know quite a few. I am not getting in an argument on a theoretical basis, but simply pointing out a fact. Maybe they are stupid for making this kind of investment, but boat owning of any type is based on any number of factors, and those "who make their livings assessing risk and reward" have a far from flawless record, as I am sure you will agree.
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Old 29-03-2020, 16:45   #109
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Re: Dream Yacht suspending Guaranteed Charter Income payments

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Originally Posted by letsgetsailing3 View Post
You don't have the data to make that conclusion.

Suspend payments for six months. Where does it say they won't maintain them? And how much maintenance is needed if the boats aren't moving from the dock?

I can sympathize with the OP. But going to get your own boat seems like the opposite of what you want to do. The company didn't suddenly turn into bad actors. The business model is clearly not going to work like it normally would.

Sure, you can take your boat out of the program, but then what are you going to do with it? Nothing that's going to generate any income right now.

Obviously the OP is not going to fly in tomorrow to pick up their boat.
Obviously the OP should get good legal advice. When a business is going through extreme duress you don’t want your assets in their possession regardless of your legal rights and relative position in a liquidation. Particularly an asset that can easily attract a mechanic’s lien or suffer from lack of attention.
It would seem prudent to collect the boat at the earliest opportunity on the basis of using “owner time”. No need to create a scene or ill will. With it in the “owners” possession I’m sure it would be easy to return it into the DYC charter fleet when or if their business model becomes viable again.
If I were the OP I’d be looking to organize a cooperative arrangement among as many of the 1,200 owners as possible. Individually the professional fees for dealing with this well would be crippling but 0.08% of the fees would be much more manageable. (obviously reality will be more than .08% but if you could even get ten or a hundred owners....the numbers start to work).
If an “owners union” formed it would have significant negotiating leverage...
The value of the fleet is about an order of magnitude greater than the value of DYC when it took on investors in 2017...in all likelihood that ratio has swung further towards the owners.
If the owners act as a group it is easier for them to replace DYC than the opposite...at the very least $100 a month per owner would afford a kick ass team to represent them in renegotiating with DYC and exploring alternative arrangements. Such a team could likely line up better financing than the owners did individually so that probably makes them self funding. (Maybe I should come out of retirement...)
Is this mean or unfair to DYC...really who cares, it’s business. Fairness went out the door when DYC suspended payments. If DYC were well run it would have in place adequate business continuity insurance to cover this...it is not like this is not a forecastable risk. (I was responsible for some 3,500 FTE during SARS and our business continuity plans were certainly strained but they were also updated the next quarter to fully cover pandemics...this maybe a novel coronavirus but it is not a novel business risk).
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Old 29-03-2020, 17:07   #110
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Re: Dream Yacht suspending Guaranteed Charter Income payments

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It would seem prudent to collect the boat at the earliest opportunity on the basis of using “owner time”. No need to create a scene or ill will. With it in the “owners” possession I’m sure it would be easy to return it into the DYC charter fleet when or if their business model becomes viable again.

If I were the OP I’d be looking to organize a cooperative arrangement among as many of the 1,200 owners as possible. Individually the professional fees for dealing with this well would be crippling but 0.08% of the fees would be much more manageable. (obviously reality will be more than .08% but if you could even get ten or a hundred owners....the numbers start to work).
Seems to me the dumbest thing you could do would be to force the company who is helping make the payments on your boat into bankruptcy.

To me this type of thinking is an ambulance chaser's strategy. Because the lawyers are going to be the ones who come out ahead. While the company and the owners take it in the shorts.
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Old 29-03-2020, 17:10   #111
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Re: Dream Yacht suspending Guaranteed Charter Income payments

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Seems to me the dumbest thing you could do would be to force the company who is helping make the payments on your boat into bankruptcy.

To me this type of thinking is an ambulance chaser's strategy. Because the lawyers are going to be the ones who come out ahead. While the company and the owners take it in the shorts.
DYC very likely will be pushed into bankruptcy. One does not just get to defer your liabilities without someone, anyone, filing a claim in a bankruptcy court petitioning a settlement or a liquidation. That is the reality of the situation, if not a charter boat owner, perhaps any number of maritime lien holders, fuel companies, marina operators, workers, etc., etc. It is via a bankruptcy proceeding that reorganization plans can be vetted and priority of financial obligations defined. That is the norm, not the exception. It is business as usual. The real issue is whether a viable reorganization can be determined and accepted by the court or whether liquidation is deemed necessary.
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Old 29-03-2020, 17:20   #112
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Wink Re: Dream Yacht suspending Guaranteed Charter Income payments

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Sorry to disagree, but I personally know quite a few. I am not getting in an argument on a theoretical basis, but simply pointing out a fact. Maybe they are stupid for making this kind of investment, but boat owning of any type is based on any number of factors, and those "who make their livings assessing risk and reward" have a far from flawless record, as I am sure you will agree.
Private equity funds or other professionally managed money, or individuals? I'd be interested to know of any professionally managed money investing in charter yacht fleets. Individuals who manage other people's money who put their boat in a program? I'm sure there are a few out there, that's just my anecdotal experience of knowing a lot of people in the buy side and a lot of sailors, nothing scientific. I have observed that the people who manage money for a living seem to fail up pretty well, so while their record might not be great it's substantially better when it comes to taking care of their own situation
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Old 29-03-2020, 18:24   #113
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Re: Dream Yacht suspending Guaranteed Charter Income payments

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You don't have the data to make that conclusion.

Suspend payments for six months. Where does it say they won't maintain them? And how much maintenance is needed if the boats aren't moving from the dock?
So, they stop making payments and you're fine with them holding possession of a $500k asset? I guess we'll have to agree to disagree on this one - whether it's the company that's broken or the business model, I'd want the boat out of their fleet. ASAP. 6-months that includes hurricane season is too rich for my blood.

As someone else posted, guns-blazing isn't the right approach, but a quiet exit under the guise of owners' usage seems the best approach.
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Old 29-03-2020, 18:35   #114
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Re: Dream Yacht suspending Guaranteed Charter Income payments

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Seems to me the dumbest thing you could do would be to force the company who is helping make the payments on your boat into bankruptcy..
Ummm.....I hate to state the obvious, but they are not making payments. That's the problem. If that leads to bankruptcy, well, that's what bankruptcy is for. Which is exactly why the OP should exit as quickly as possible or risk getting ensared in a bankruptcy filing. And the myriad of others who's claim stand's in front of the OPs.
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Old 29-03-2020, 19:09   #115
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Re: Dream Yacht suspending Guaranteed Charter Income payments

Just going to drop this in there: Back in the late 80s CSY - Caribbean Sailing Yachts went belly up. The bank sent a bunch of professional skippers down to Tortola to repo boats en mass. I have zero idea if the current programs work the same way it did back then or or not. Just bringing it up. I know this because we had a charter with them that started the day after the BK declaration.
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Old 29-03-2020, 19:22   #116
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Re: Dream Yacht suspending Guaranteed Charter Income payments

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Just going to drop this in there: Back in the late 80s CSY - Caribbean Sailing Yachts went belly up. The bank sent a bunch of professional skippers down to Tortola to repo boats en mass. I have zero idea if the current programs work the same way it did back then or or not. Just bringing it up. I know this because we had a charter with them that started the day after the BK declaration.
Jeez, harsh. You'd think the bank would call them up see if everything was okay. Maybe offer to forego payments for at least six months to see if CSY could turn it around.
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Old 29-03-2020, 19:51   #117
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Re: Dream Yacht suspending Guaranteed Charter Income payments

Thinking about this some more...

The best option for the OP may be to...do absolutely nothing. Don't call or talk to to DYC (at least until the mortgage payment is due, don't talk to the bank).

Once you respond, you are acknowledging their plan.
- If you accept the 6 month delay, it's now legitimately part of the Contract.
- If you refuse or worse threaten to hold them to the Contract, you are now in an adversarial situation and they lose intensive to keep you a happy customer. (They aren't doing this out of ill will. There simply is no money to send out.)

Since it is likely to be at least a couple months before you could even consider going down to take possession of the boat, you still need their help for the time being and not responding, doesn't force you to pick a path. They will ASSUME you are on board with their plan but you never agreed to it.

If you take the boat, you can expect no help or charter money...EVER. No other charter company is likely to take on your boat as they have many unused boats kicking around and boat prices are likely to take a dive so selling isn't the greatest option either.

If you leave the boat and DYC survives, you may lose some money...but once they get going, you do have the potential to have money coming in. Also, they are likely to be in a better position to negotiate with the bank as they represent many millions in outstanding loans...once you are on your own, you may get a few months where the bank holds off on payments but then you are on your own.

If DYC doesn't survive, you can always claim the boat later. (do make sure the insurance is kept up)
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Old 29-03-2020, 20:07   #118
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Re: Dream Yacht suspending Guaranteed Charter Income payments

I was on the 2nd year of a 5 year charter contract on a Moorings boat in the BVI when 9/11 hit. This was before guaranteed contracts. My deal was I got 25% of gross charter income. After 9/11 that income fell by about 90% for a year.

In the end, the business came back. The Moorings stayed in business and still had customers. While I ended up a little financially the worse to wear. I certainly lost less on the Moorings boat than I did in the stock market after 9/11

I didn't have a mortgage on the boat. Just like buying stocks with borrowed money (e.g. "margin") - investing in a charter boat business using a mortgage just isn't very smart. It works out - until it doesn't. And then you're in trouble.

Looking back, I was incredibly lucky that the Moorings didn't go out of business. They maintained, insured, and stored the boat. And everything picked up where it left off. If they had failed, I and a few hundred others would have been flying to the BVI to try to move our boats (complete with Moorings logo) to another charter company. That would have been far worse.

If the OP only loses 6 months of "guaranteed" charter income - he should feel lucky - chalk it up to "lessons learned". If Dream Yachts goes out of business, he will just be an unsecured creditor at the end of a very long line. Many of those creditors (like banks) will be "senior" to him. Litigation will only generate legal bills making his loss bigger.
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Old 29-03-2020, 21:25   #119
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Re: Dream Yacht suspending Guaranteed Charter Income payments

If you consider it a large risk of losing your money, I would be examining the clauses in the contract with a legal person (over skype ). While Force Majeure may well be invoked, I doubt a blanket "and we'll keep your boat for another six months" is written. Or if it is, not knowing the jurisprudence of the jurisdiction is written in/for, you may well have the ability to seek proof from the company of solvency and withdraw your asset based on that.

There's no need to travel to do anything though - all you need is the legal withdrawal notice (whatever is written in contract or law of the jurisdiction). Then if they play nicely you fund a local captain to move the boat 3 marina berths (or whatever) and start paying berthing. Then she's your responsibility. If they don't play nicely, there's options all the way upto a forced repossession, none of which you need to be physically part of.

Of course, if you're sure the company is good then why go down this route at all! If you're concerned, and your insurance doesn't cover being an unsecured creditor if the company folds, then paying $50k to get her in your possession may be better than losing $500k at some time soon...(numbers made up )
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Old 30-03-2020, 01:08   #120
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Re: Dream Yacht suspending Guaranteed Charter Income payments

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Ummm.....I hate to state the obvious, but they are not making payments. That's the problem. If that leads to bankruptcy, well, that's what bankruptcy is for. Which is exactly why the OP should exit as quickly as possible or risk getting ensared in a bankruptcy filing. And the myriad of others who's claim stand's in front of the OPs.
They are saying that they won’t make payments for six months, not that they’ll never make payments. If you retrieve your boat, you do guarantee the latter result.
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