Genting Hong Kong has been denied its only hope. The company, a division of Genting Group, was ruled out by a German court because the cruise line sought funding from the state of Mecklenburg Vorpommern in the amount of $88 million. Today, the company is forced to file for bankruptcy.
Genting Hong Kong rejected in Germany
Industry outlet Seatrade Cruise News reported that Mecklenburg Vorpommern was not required to provide the loan as part of a prior agreement to support Genting Hong Kong’s German shipbuilding company MV Werften. holdings ltd. (MVWH). The company warned last week that filing for insolvency would also trigger events of default under the various financing agreements it had reached with its creditors in 2021, relating to debts exceeding 2.8 billion. of dollars.
The company has yet to release a statement on the recent court ruling or its intention to appeal.
The cruise line took legal action after Euler Hermes, the German government’s export credit agency, stopped the $88 million levy in December. Euler Hermes refused to authorize the insurance cover.
Genting Hong Kong said in a filing it received last Thursday from affected counterparties that their failure to meet their binding contractual obligations had created a significant cash shortfall for the company. However, the court ruling supported Mecklenburg’s claim that the company does not need financial assistance.
Genting Hong Kong prepares bankruptcy documents
Genting Hong Kong is now considering filing for interim bankruptcy in Bermuda. The cruise ship giant claimed that in addition to financial aid in Germany, it tried to access $81 million of its own money. These funds are currently held in a liquidity reserve account by lenders under a facility agreement. However, the participating banks rejected the request.
As such, the company had “exhausted all reasonable efforts to negotiate with relevant counterparties under its funding arrangements”. It is currently preparing legal proceedings to file for interim liquidation due to the inability to meet its financial obligations under its financing agreements. The company’s board explained in a notice:
“The Board believes that the appointment of provisional liquidators is essential and in the interest of the Company, its shareholders and its creditors in order to maximize the chances of success of the financial restructuring and to provide for a moratorium on claims and to seek to avoid a disorderly liquidation of the Company by one of its creditors.
Genting Hong Kong
As of 9 a.m. Tuesday, trading in Genting Hong Kong shares had been suspended on the Hong Kong Stock Exchange. This suspension was anticipated by the announcement of the resignation of three independent non-executive directors of the company, Ambrose Lam Wai Hon, Justin Tan Wah Joo and Alan Smith.