Yacht Path International, a Fort Lauderdale-based yacht transport service plagued by allegations that it took money for yachts that were never shipped or did not pay the freight costs after the yachts shipped, consented to have a trustee run its businesses to settle claims “amicably” and avoid incurring additional litigation expenses.
Documents filed Wednesday in U.S. Bankruptcy Court’s Southern District of Florida show that Soneet R. Kapila of Fort Lauderdale was appointed as the Chapter 11 trustee of Yacht Path International and its other three entities — Unity Shipping Lines, Yacht Path Palm Beach and Unity Marine.
Yacht Path consented to the appointment of a Chapter 11 trustee in papers filed last Thursday.
“While disputing the merits of the appointment of a Chapter 11 trustee, [the debtors] believe that this settlement agreement will prevent the debtors’ estate from incurring additional expenses and costs relating to litigation of the trustee motion,” court documents showed.
The companies also said they wanted “to avoid the high costs and uncertainties of litigation without admitting any fault or liability whatsoever ... [and] desire to settle this matter amicably” by participating in “good-faith settlement negotiations,” the documents showed.
The trustee will perform a complete review of the case and examine all of the financial history, one of the attorneys involved in the case told Trade Only Today.
“What it does is it takes away management from the family and puts an independent person in who will do a complete examination of where money is and what happened and independently sell the business,” the attorney said, who did not want to be named while the case was still open.
The bond fixed in each of the jointly administered cases is $150,000 for the Unity Shipping Lines case and $50,000 for each of the others.
The company took in $7.9 million from customers who say their yachts were never shipped or they were unable to take ownership of the yachts upon arrival because freight charges hadn’t been paid by Yacht Path, the lawyer told Trade Only earlier this month when the request for a trustee was made. 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 exceeds $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 suit to force Yacht Path and sister company Unity Shipping into involuntary Chapter 7 bankruptcy.
That prompted Yacht Path and related entities to file for Chapter 11 bankruptcy protection on March 20.
— Reagan Haynes