Cruise Ship Arrest

[JLD]

Well, that's that, I guess. So much for that anniversary cruise. It would be nice to see some of our deposit returned, but I think Delta is right on this: it won't be soon, if ever. If we do get any back, I've got some saloon cushions that need a makeover. A bit of a refresh, add some champagne, and will be just as good, right? Cruising on the Mississippi should be just like the Danube, right?

It will be interesting to see how (or if) they wrap things up with the customers and travel agents. The only reason I knew what was going down was because of this forum. We haven't had any communication from Crystal. In any case, I feel so bad for the employees and crew that are suddenly without jobs and possibly stuck far away from home. Not sure if this has been posted yet, but is a good read: https://www.seatrade-cruise.com/finance/crystal-cruises-done-assignee-appointed-handle-liquidation

Hopefully you paid by credit card.

From the article linked above: "Anderson said a 'significant majority of customer money is being held in trust by VISA, Mastercard and American Express' — he estimated well over $100m. Moecker will be working with these credit card companies to approve refunds. Anderson estimated 75% to 80% of customers had paid by credit card."

Jim

 

[tiltrider1]

Customer deposits are unsecured creditors. That makes you the bottom of the list. The fuel supplier has perfected their position under maritime law. I do not believe customer deposits would even end up in maritime court. This would put you way at the bottom.

 

[SteveK]

Deposits should be held in a trust, not spent in the general operation of the business. The operator needs to know a future offering is sold, and the consumer needs to know the deposit will only be used to complete the transaction.

Of course the reality is much different.

 

[tiltrider1]

Deposits should be held in a trust, not spent in the general operation of the business. The operator needs to know a future offering is sold, and the consumer needs to know the deposit will only be used to complete the transaction.

Of course the reality is much different.

Should be and reality are two different things. Spend any time in Bankruptcy Court and you will see that the highest risk of loss money is advanced deposits. People have paid cash for cars, drove off with the car only to find that the bankrupt dealer treated the funds as a deposit. Despite all the documents signed the car get repossessed by the bank who holds title and the customer is out the car and the money.

 

[twistedtree]

Customer deposits are unsecured creditors. That makes you the bottom of the list. The fuel supplier has perfected their position under maritime law. I do not believe customer deposits would even end up in maritime court. This would put you way at the bottom.

I think the Arrest of the ship as associated liabilities will pass through to the owners of the ship, and that's not Crystal. Crystal was chartering the ships. Deposits, on the other hand, would be a crystal liability and likely handled through the receiver company. I don't know if that makes it any more likely to get recovered, but I do think they are different pools of liability held against different entities.

 

[JLD]

As I posted in #61, it appears that 75 - 80% of the deposits were being held in trust by the credit card companies. This is money that should make it back to the customers. From the article linked above, "Starting in July 2020, Crystal went for an extended period when it did not accept customer deposits, reversing that policy only when a restart plan was implemented. Then, in an unusual arrangement intended to secure customer payments, the line established reserve accounts with these credit card companies that did not release the funds to the company until after the cruise operated."

Thus, if one paid by credit card, as most of the customers did, one should be made whole. If one paid by cash, I would not count on seeing a return of any monies.

This is one reason I am hesitant to put deposits down on a large purchases, as you never know the financial health of the company involved.

Jim

 

[m10brink]

@Jim: The last couple years have definitely made deposits on anything a gamble. We'll see what happens with the credit card deposits: there have been a lot of cruise itineraries rolled over from cancellations from the last few years, which may not get refunded by the credit card companies. We may see part of it back, but likely not all. In any case, we have lots more years for adventures, so we'll end up all right either way.

 

[OldDan1943]

It appears Covid wiped out an entire industry.

 

[Delta Riverat]

That sounds like if you paid your deposit by CC, you stand a chance of refund. But in the end it's all assets and liabilities.

 

[SteveK]

That sounds like if you paid your deposit by CC, you stand a chance of refund. But in the end it's all assets and liabilities.

IF you have a credit card that offers an insurance. If where they deposited is empty, how would they get it back.

 

[BandB]

IF you have a credit card that offers an insurance. If where they deposited is empty, how would they get it back.

It seems that the card companies cut Crystal off some time ago, refused to process. Then they agreed to hold the funds until the cruises sailed, so in this highly unusual case many of the deposits were still being held by the credit card companies. All three major cards apparently joined in on this. Perhaps a sizable percentage of deposits held by them. Now, it's a matter of which ones they held vs those forwarded to Crystal, mostly prior to them putting Crystal on hold. So those who paid longest ago, perhaps pre-pandemic, may be at the highest risk.

 

[SteveK]

It seems that the card companies cut Crystal off some time ago, refused to process. Then they agreed to hold the funds until the cruises sailed, so in this highly unusual case many of the deposits were still being held by the credit card companies. All three major cards apparently joined in on this. Perhaps a sizable percentage of deposits held by them. Now, it's a matter of which ones they held vs those forwarded to Crystal, mostly prior to them putting Crystal on hold. So those who paid longest ago, perhaps pre-pandemic, may be at the highest risk.

Perfect, third party holding funds. They saw the problem coming.

And we can learn from this, if something you want cannot accept credit card, buyer beware.

 

[CaptTom]

It appears Covid wiped out an entire industry.

I don't think so. The bigger lines seem to have weathered the storm to some degree. And I do believe the passengers will come back. Look at the folks crowding into football stadiums, theaters, restaurants, etc.

 

[twistedtree]

It seems that the card companies cut Crystal off some time ago, refused to process. Then they agreed to hold the funds until the cruises sailed, so in this highly unusual case many of the deposits were still being held by the credit card companies. All three major cards apparently joined in on this. Perhaps a sizable percentage of deposits held by them. Now, it's a matter of which ones they held vs those forwarded to Crystal, mostly prior to them putting Crystal on hold. So those who paid longest ago, perhaps pre-pandemic, may be at the highest risk.

So the CC companies knew something that consumers didn't? Clearly they saw a big risk? The Crystal exec made it sound like Crystal did it to protect their consumers, not that the CC companies forced it on them. But it wouldn't be the first instance of corporate PR spin.

 

[BandB]

Perfect, third party holding funds. They saw the problem coming.

And we can learn from this, if something you want cannot accept credit card, buyer beware.

Reminds me of one industry that doesn't accept credit cards normally and if they do must be well in advance, the wedding venue industry. I've seen so many of those fail and the wedding parties lose everything they'd paid, thousands of dollars to each of them.

 

[OldDan1943]

CaptTom, I sure would avoid sporting events. But then I have always tried to avoid crowds. It doesn't take much for a peaceful crowd to become a mob.

 

[CaptTom]

CaptTom, I sure would avoid sporting events. But then I have always tried to avoid crowds. It doesn't take much for a peaceful crowd to become a mob.

I probably go much too far out of my way to avoid crowds. Nothing to do with the pandemic or unruly mobs. I just hate crowds.

 

[OldDan1943]

I probably go much too far out of my way to avoid crowds. Nothing to do with the pandemic or unruly mobs. I just hate crowds.

BINGO

Plus I do not want to be in any area where an unruly mob who wants to go Christmas shopping with a rock or the current fad of 'smash and grab.'