Queen Mary operator files for Chapter 11 bankruptcy
From: Long Beach Post | 02/02/2021
The entity that operates the Queen Mary in Long Beach filed for Chapter 11 bankruptcy this week, throwing the ship’s fate into limbo yet again after several other operators met similar financial troubles over the past five decades.
More than two dozen hotels and other properties, including the Queen Mary, listed as entities under Singapore-based Eagle Hospitality Trust filed for bankruptcy on Monday in Delaware court with a total of more than $500 million debt, according to court records obtained by the Post.
The filing comes as Eagle Hospitality has seen major financial problems since it halted trading on Singapore Stock Exchange in 2019 following a notice of default on a $341 million loan from Bank of America.
The City of Long Beach, which owns the Queen Mary, in a statement on Tuesday said officials are “concerned with this development, as the company has a long-term obligation to ensure the upkeep and operation of the City’s asset.”
The statement said officials would be requesting information from Eagle Hospitality to sort out the entity’s immediate operational plans, “and will take appropriate legal steps in the process to ensure the City and the Queen Mary are protected.”
City Manager Tom Modica will also schedule an open discussion on the issue with the City Council in February, the statement said.
The Queen Mary has been closed to the public since May 7 due to the pandemic.
Among the creditors with the largest claims connected to the Queen Mary include a $2 million claim from San Clemente-based event company Evolution Hospitality, which handles the day-to-day operations on the ship, according to court documents.
The bankruptcy is the latest in a string of problems for the Queen Mary since former operator Urban Commons, a Los Angeles-based real estate investment firm, signed a lease to run the ship in 2016.
Urban Commons in 2019 created a real estate investment entity called Eagle Hospitality Trust to list on the Singapore Stock Exchange, with the goal of raising millions for a massive development project called Queen Mary Island.
But the company hit tensions with the board of Eagle Hospitality and its shareholders when it didn’t fulfill financial obligations and repeatedly failed to pay rent for its portfolio of hotel properties. The problems culminated in September, when Eagle Hospitality’s managers terminated the master lease agreements for Urban Commons’ hotels, including the Queen Mary.
The move essentially removed Urban Commons as the Queen Mary’s operator, though Long Beach city officials have said Urban Commons is still obligated for any problems under the lease agreement.
Meanwhile, claims and lawsuits have been pulling up against Urban Commons for issues ranging from non-refunded wedding deposits to unpaid city taxes.
Eagle Hospitality has faced its own problems. In October, authorities in Singapore arrested several directors on suspicion of failing to make required disclosures to investors. The individuals have not yet been charged with any offenses.
Urban Commons is also under scrutiny by Long Beach City Auditor Laura Doud.
Among the concerns for the audit, the city in 2016 issued $23 million in bonds for emergency repairs for the aging ship, but funds ran out and some projects were sidelined as many critical repairs ran over budget. Doud has said she is looking into how that money was spent.
This isn’t the first time a Queen Mary operator has filed for bankruptcy. A series of companies have failed to make the century-old ocean liner and its surrounding area profitable since it arrived in Long Beach in 1967.
The Diners Club Credit Card Co., which had the first lease to run the Queen Mary, invested $5.6 million in improvements, but it backed out of the project in 1970 before the ship opened to the public. The Walt Disney Co. later owned the ship but quit its lease shortly after the release of a 1992 marine survey that identified $27 million needed for repairs.
Joe Prevratil, who signed a lease to run the ship in 1993, filed for Chapter 11 bankruptcy in 2006 when the city demanded several million dollars in unpaid rent.
Prevratil in 2007 agreed to pay the city $4.9 million in a bankruptcy settlement. Save the Queen LLC purchased the lease through an auction at bankruptcy and then defaulted on its loan in 2009.
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