A U.S. Bankruptcy Court judge this week set a hearing to determine whether a trustee will be appointed to run Yacht Path International, a Fort Lauderdale-based yacht transport service beleaguered by allegations that it took money for yachts that were never shipped or did not pay the freight costs after the yachts shipped, forcing customers to pay the charges twice.
Documents filed in U.S. Bankruptcy Court in the Southern District of Florida by Judge Paul Hyman Jr. show that a hearing to determine whether a trustee will take over Yacht Path was set for May 22.
If one is appointed, oversight of the company will be revoked from the owners and placed in the hands of an independent party that will do a complete examination of where the money is and what happened and potentially sell the business, a lawyer involved in the case told Trade Only Today.
The company took in $7.9 million from customers who say their yachts were never shipped or that they were unable to take ownership of the yachts upon arrival because freight charges hadn’t been paid by Yacht Path, said the lawyer, who didn’t want to be named while the case is still open. Most of the customers, about 80 percent, had yachts that never shipped, he said.
Court documents filed in April show that the company’s total liability for all five pending cases is in excess of $21 million. On April 24, creditor Henry Mandil filed a motion for the court to appoint a trustee, documents show.
Yacht Path president Dennis Cummings said in an email to clients that a failed merger and lawsuit resulted in a writ of garnishment being placed on Yacht Path’s bank accounts, restricting the company’s access to funds.
Due to frozen accounts, Yacht Path couldn’t pay freight charges in February and March, Cummings said. That led to shippers filing liens on several yachts, in some cases having U.S. marshals “arrest” them upon delivery until yacht owners paid the charges, even though the owners had already paid to have them shipped. In all, 10 yachts were seized, forcing owners to double-pay shipping charges. Another 16 yacht owners averted seizure, again, by double-paying charges.
Fort Lauderdale lawyer Robert McIntosh sent a letter advising clients of his who were involved in the litigation over their yachts to join in filing a suit to force Yacht Path and sister company Unity Shipping into involuntary Chapter 7 bankruptcy.
That prompted Yacht Path and Unity Shipping to file for Chapter 11 bankruptcy protection on March 20.
— Reagan Haynes