A U.S. Bankruptcy Court judge in Florida denied a trustee’s emergency motion requesting that Yacht Path International be allowed to use cash collateral to continue operations, according to court documents, resulting in the company’s shutdown.
In early June, Judge Paul G. Hyman Jr. denied the request the trustee filed on behalf of the Fort Lauderdale-based yacht transport service, which is plagued by allegations that it took money for yachts that were never shipped or did not pay the freight costs after the yachts shipped.
An assistant to Soneet Kapila, the trustee appointed to handle the Chapter 11 bankruptcy of the company and its related entities—Unity Shipping Lines, Yacht Path Palm Beach and Unity Marine—sent an email to potential Yacht Path customers saying “Yacht Path will not be making any more voyages,” according to the South Florida Business Journal. Kapila did not return calls to Soundings Trade Only Today.
Yacht Path’s assets were frozen after myriad claims were filed by customers who said they either had to pay twice to get their yachts shipped—once up front and another time when the yacht reached its destination—or they paid to have yachts shipped that never made the trip.
The company took in $7.9 million from customers who say their yachts were never shipped or they were unable to take ownership of the yachts when they arrived because freight charges hadn’t been paid by Yacht Path, a lawyer working on the case told Trade Only earlier this month when the request for a trustee was made. Most of the customers, about 80 percent, had yachts that never shipped, the lawyer told Trade Only. He did not want to be named while the case was still open.
Court documents filed in April show that the company’s total liability for all five pending cases exceeds $21 million.
Yacht Path president Dennis Cummings said in an email to clients that a failed merger and lawsuit resulted in a writ of garnishment on Yacht Path’s bank accounts, restricting the company’s access to funds.
Because the accounts were frozen, Yacht Path couldn’t pay freight charges in February and March, Cummings said. That led to shippers filing liens on several yachts, in some cases having U.S. marshals “arrest” them upon delivery until yacht owners paid the charges, even though the owners had already paid to have them shipped. In all, 10 yachts were seized, forcing owners to double-pay shipping charges. Another 16 yacht owners averted seizure, again by double-paying charges.
Fort Lauderdale lawyer Robert McIntosh sent a letter advising clients of his who were involved in the litigation over their yachts to join in filing suit to force Yacht Path and sister company Unity Shipping into involuntary Chapter 7 bankruptcy.
That prompted Yacht Path and related entities to file for Chapter 11 bankruptcy protection on March 20.
— Reagan Haynes
Originally posted on Trade Only June 5, 2013.
