Empress Heads for Chapter 11

Day-cruise company Adventure Seaways d/b/a Empress Cruise Lines has until Oct. 20 to file a plan to re-organize under Chapter 11 bankruptcy.

Meanwhile, since the June 20 filing, Empress and its creditors are telling dramatically different stories.

Among the disputes is a $3.2 million settlement won by Casinos Austria for breach of contract damages and repayment of about $1.6 million which the finn loaned Empress for repairs.

Empress’ executive vice president Espen Tandberg claims Empress and Casinos Austria had a six-year, $1.35 million deal for Casinos Austria to operate the gaming aboard the Royal Empress out of Miami, a route which never launched. He said Casinos Austria placed “faulty and antiquated equipment on our ship which many people go on board for the sole purpose of gaming.” And, he noted, Empress has repeatedly offered to return the $1.35 million concession fee to Casinos Austria, which the gaming firm has elected not to take.

Ship Charter

Empress also has a dispute with Color Line of Oslo, Norway, regarding the Seminole Empress (ex­ Jupiter). The vessel, which was previously on a South American charter, was to have inaugurated Empress’ new Florida-to-Mexico ferry service while another ship, the Winston Churchill, was undergoing conversion in Norway.

Color Line said Empress never paid the $1 million fee for a six-month charter and that Empress reneged on loan repayments on about $1.75 million. However, Tandberg said that Empress and Color Line had a partnership agreement for an 80-20 ownership arrangement in the ferry company – Emerald Empress Cruise Holdings – and its two ships. As part of the deal, Empress would pay $2 million to upgrade the Seminole Empress, while Color Line was liable for any underwater problems. He said that the Seminole Empress was delivered in poor shape with rotting tanks and rusted decks and that the $1.75 million claim by Color Line was for repairs in those areas; Empress has so far invested $5.5 million in the vessel, he added.

Also, the City of St. Petersburg wants approximately $600,000 in past-due port-related fees, accordmg to Richard Badgley, an attorney for St. Petersburg. However, Tandberg contends that the city is looking to collect on unfairly inflated tie-up rates. He noted that St. Petersburg increased charges for three Empress ships tied-up at the port from $100 per ship per day to an “astronomical” $1,400 per ship per day for “no good reason.”

Additionally, the day-cruise firm is also contesting an $11 million claim by the Florida State Department of Revenue for back taxes relating to that state agency’s ruling years ago that cruises-to-nowhere are a form of entertainment, not transportation, and are therefore subject to sales tax.

What this latest bankruptcy filing underscores is the tenuous state of affairs within the day cruise market which has been riddle with various Chapter 11 filings -­ most recently of Seascape Cruises and Palm Beach Cruises – as well as with the abrupt closings in the past two years of such outfits as Starlite Cruises in San Diego, Gold Star Cruises in Galveston, Texas, and Lucky Star Cruises in Miami.

Once considered a viable one-day alternative to land-based attractions, day cruises, which were priced at $49-$69 per person a few years, are now selling for $10-$19.

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