Crystal Cruises’ parent company, Genting Hong Kong, in Financial Stress. What Does It Mean?

It was announced late yesterday that Genting Hong Kong, the parent company of Crystal Cruises, does not have sufficient liquidity to pay all of its current debts and, after trading was halted on this public company, it stated that it will need to find financing, restructure or, possibly, liquidate. I have seen some rather panicked statements by both consumers and travel agents about what the effect of this is on their cruises, refunds, deposits and commission payments. The reality is that we don’t know what it means as to them and panicking or making emotional decisions or statements isn’t going to better one’s position. So let’s take a moment to at least see what the immediate future brings.  In other words: Breathe! To give you some detail, Crystal Cruises is a separate corporate subsidiary of Genting Hong Kong so it may…may…have sufficient liquidity to meet its obligations without any additional funding support from Genting Hong Kong. I don’t know…yet. Also the trigger for the current issue seems to be that payments were due by Genting HK on its deal where it purchased Lloyd Werft, the Germany shipbuilding company.  See Crystal Cruises – They Liked it So Much They Bought the Shipbuilding Company! (Sort of).  That, of course, is a different deal regarding a different company so it is not known if it interrelates or not. Keep in mind, as well, that a lack of cash flow by a parent company does not axiomatically render all of its assets illiquid or otherwise insolvent or, for that matter, worthless.  It could be that Crystal Cruises, even if it is in financial trouble, is an asset of value and may be sold and continue to live on. Remember, it was only in 2015 that Genting HK bought Crystal from Japan’s NYK Line for US$550 Million. If Crystal Cruises is sold – clearly it will be at bargain basement pricing with the effects of COVID-19 on the travel industry playing into this, the purchasing company would be pretty much obligated to protect all of the deposits and Future Cruise Credits or be effectively blackballed by the travel industry.  The value of Crystal Cruises is not only its ships, but its Good Will a/k/a passenger loyalty. Also, assuming a worst-case scenario, I don’t know how consumer obligations versus commercial obligations are handled. While it would seem by a quick overview of Hong Kong insolvency law that secured creditors would come first, that is not always the case; especially in light of efforts to preserve assets so that they can be sold (see above).  Keeping Crystal Cruises viable would be in the best interest of all of the creditors; so it would seem. So what does all this mean?  Actually not much because we just don’t know enough to make any rational or fact-based conclusions. So what can you do?  At this point, not much. If Crystal is going to proceed forward you will/should/may be OK. If Crystal is not going forward, then you probably will have to wait for quite a while to find out if refunds will be issued (and if they will be at 100%) or if your Future Cruise Credits are of any value. If you paid via credit card AND your travel agency made sure your payments were processed by Crystal Cruises rather than run through the agency’s accounts, you may have some protection through your credit card company. (NOTE: After 2008 many credit card companies changed their policies so the provide less or no protection from a travel company’s default, so check your card’s terms and conditions.) On the other hand, if you paid your travel agency directly and they paid Crystal Cruises, your only recourse may be to seek a refund from it. I won’t get into the possible ramifications of same as each travel agency operates differently and may be subject to different terms and conditions. If you have any questions or would like more information as it comes available, Give me a call, drop me an email or send me a Facebook message!

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