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Cruise ship arrested as bank moves in. Last domino falls.

August 20, 2014 Cruise, Headline News 2 Comments Email Email

The murky behind-the-scenes dealings of banks, venture capitalists, owners and management companies is something few cruise passengers are ever aware of.

Report by Roderick Eime

The recent change of ownership with Orion is a case-in-point where background shenanigans between banks, owners and charter operators are largely invisible to regular travellers who just want to get aboard and have a great experience.

2350GRT, 68m, 1988-built Yorktown is rated two stars by Berlitz.

The quiet arrest of the former Cruise West vessel, Yorktown (IMO: 8949472)* in Jacksonville, Florida last month is the latest incident where a bank seized a vessel in order to reclaim funds owed.

The bank in question, KfW IPEX-Bank, a specialist financier for the German and European export industry and regular financier of newbuild ships is the ‘Export and Project Finance’ arm of the larger KfW Group which announced a total business volume of EUR 31.7 billion in the first half of 2014.

Money problems began for Explorer Maritime Cruises LLC when they
ordered Orion in 2003 from German yard, Cassens Werft.

KfW IPEX-Bank claims it is owed a reported US$9.85m by Explorer Maritime Cruises, controlled by Vasos Papagapitos, co-president of Travel Dynamics (TD). TD was the operator of Clelia II (IMO: 8708672) before it became Orion II. Now, after that sad chapter, TD is operating the vessel again as Corinthian, but only after selling it to Boston-based Grand Circle Cruise Line which converted its charter into a purchase in March this year for an undisclosed amount.

According to reports in both TradeWinds and SeaTrade, KfW IPEX-Bank originally issued the loan to Explorer Maritime Cruises so it could order the original Orion (IMO: 9273076) at Cassens Werft in 2003.

KfW had the vessel seized in Florida and auctioned July 30 in Jacksonville, where it was acquired through credit bid. The German bank is now trying to sell the vessel. Asking price is believed to be around US$1.5 million.

If this convoluted chain of events sounds like a massive, multimillion-dollar, domino effect, then you’d be right.

What happens when a ship is arrested?

Ships are arrested or impounded for several reasons which could include illegal activity like smuggling or safety violations, but often it is unpaid bills. Money could be owed to the bank which financed the build, like in the convoluted case of Orion, Yorktown, KfW and Explorer Maritime Cruises, or simply staff wages as with the now vanished, presumed sunk, MV Lyubov Orlova.

In the case of Yorktown, cash problems for Explorer Maritime Cruises caused her to be laid up.

“KfW formally demanded payment, accelerated the obligation and declared the entire amount of indebtedness under the loan obligation to be immediately due and owing,” wrote Michael Moore, the lender’s lawyer at Florida law firm Moore & Co.

In other words, the mortgage was foreclosed by the bank.

*An IMO number is like a car’s VIN. Even if the name and owner change, the IMO (International Maritime Organization) ID remains linked to that ship’s hull for the life of the vessel.

Compiled from the following sources:  Marine Traffic, TradeWinds, Marine Insight, SeaTrade Insider, Expedition Cruising News

Currently there are "2 comments" on this Article:

  1. dave says:

    there is noway that vessel is for sale for 1.5 million, are you sure its not 15 million I think it’s a typo?

  2. Rod says:

    I’m afraid it’s not a typo. The poor old ship must be in bad shape.

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