Superyacht Shipyards Fall to Financial Crisis

10 June 2009 By Louisa Beckett

American boat-building giant Genmar Holdings Inc.’s filing for Chapter 11 reorganization protection in the U.S. Bankruptcy Court on June 1 – the latest blow in the worldwide marine industry’s continuing downward spiral – has everyone wondering which shipyard will be next to fall.

In a statement released by Genmar announcing the bankruptcy filing, Irwin L. Jacobs, the corporation’s outspoken chairman and CEO, said, “I have been in the boating industry for over 30 years and throughout those many years I have personally experienced several of what I thought were the worst and most difficult business conditions our industry had ever gone through. However, those conditions do not even remotely resemble anything close to what has taken place in the retail and wholesale recreational boating industry over the past approximately 12 months.”

While Genmar’s 16 boat brands, including the Nuvolari-Lenard-designed Marquis yacht line, are under 70 feet in length, the worldwide superyacht industry certainly has not been immune to the rash of shipyard bankruptcies reported in recent months.

On April 8, the Rodriguez Group, French builder of the Mangusta and Leopard superyacht ranges, opted for “sauvetage” or “safeguard,” which the company described in a press release as “a French legal regime that enables a company to continue its operations under normal conditions and to withhold the payment of its outstanding liabilities to be repaid in accordance with a repayment schedule…. Management remains in the hands of the current management of the company.”

Royal Denship, Danish builder of such notable yachts as 258-foot luxury charter vessel Princess Mariana, has not not been so lucky. The shipyard posted a brief note on its website this spring: “On 3 April 2009 [Jongert B.V.] was adjudicated bankrupt by the Bankruptcy Court in Aarhus. The court appointed Attorney-at-Law Niels Skovgård Larsen, Abel og Skovgård Larsen and Arne Knudsen, Delacour Dania as trustee in bankruptcy.”

Jongert B.V., builder of fast, high-tech sailing yachts, is the most recent European shipyard to close its doors – at least, to our knowledge. Jongert suspended operations on May 14 and an outside attorney was appointed receiver and manager. The shipyard decided only last year to offer a line of motor yachts in addition to its sailing yacht series.

The once-vibrant New Zealand yacht-building industry also has been affected by the financial downturn. Sovereign Yachts, builder of motor yachts ranging up to 150 feet, which launched the 103-foot sportfisher Al Duhail designed by Warwick Yacht Design in September 2008, was ordered into liquidation by the High Court of Auckland on June 4. According to The National Business Review of New Zealand, Sovereign, which moved to New Zealand from Canada in 2001, was unable to meet its obligations to creditors.

The plight of Kiwi shipyard Sensation Yachts, builder of record-breaking 148-foot ketch Mari-Cha III, is causing, well, a sensation in the newspapers. Sensation Yachts successfully dodged liquidation in March, but the shipyard’s owner, Ivan Erceg, has been engaged in an ongoing legal battle over five yachts reportedly commissioned by the Cayman Islands-registered company Balenia. Arbitration between the two companies led to the decision that Balenia would sell back three partially completed hulls to Sensation for U.S. $21.5 million, according to The National Business Review. Erceg reportedly appealed the decision, but on May 27 the Supreme Court of New Zealand dismissed the appeal, leaving him no further legal avenues.

Meanwhile, according to a report on May 17 in New Zealand’s Sunday Star Times, Erceg’s private motor yacht, the 164-foot Sensation, had been impounded by “creditors” in Marseille, France. Greg Ninness of the Sunday Star Times wrote that Erceg, who also has a mansion on the Cote d’Azur, was seeking buyers for the yacht and the house, both of which are owned by his family trust. “Sensation had an asking price of 26.5 million…and the mansion was listed for sale at 48m...,” Ninness wrote.

With such well-established shipyards falling prey to hard financial times, captains and owners looking for a yard capable of handling a new yacht or refit project would do well to do a thorough financial check before signing on the dotted line….