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part 2: Northern Marine 90' Yacht Capsizes Upon Launch...!

Discussion in 'Northern Marine Yacht' started by jaycee, May 29, 2014.

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  1. olderboater

    olderboater Senior Member

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    You hit it. If they'd only put a LifeCall pendant on it, it would have been ok.
  2. Delfin

    Delfin Member

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  3. Kafue

    Kafue Senior Member

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    Smoke and Mirrors

    The use of multiple companies leasing equipment to each other and owning nothing, no assets, and probably at least one offshore entity. A company name that is in fact not the actual responsible company building the boat, and so on.
    This is pre-meditated. Whether that is because of a litigation plagued industry or, more likely because a failure of either finances and or product are anticipated.

    Meantime all of this is hidden from the view of those companies and individuals supplying equipment, parts and valuable time in months to build this failure. Plus, this situation may have only come to light by the boat owners when the first set of problems came to light during construction, likely when a payment was requested ahead of its due time. I can't see anyone committing to such a build with a company that is a web of doubt.

    If all had gone well, it is a Northern Marine success, if not, well then "Caveat Emptor".

    Business as usual for these type of business people. Should be called what it is, premeditated fraud.
  4. Marmot

    Marmot Senior Member

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    Gee, why does that sound so Snead Islandy?
  5. olderboater

    olderboater Senior Member

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    Like a ride aboard Kakawi, isn't it?
  6. Marmot

    Marmot Senior Member

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    I didn't say that. :cool:
  7. NEO56

    NEO56 Member

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    Help! I've fallen and can't get up! I know this much the lawyers involved in this case are either ordering their Porsche 918's, or a new boat of their own.
  8. K1W1

    K1W1 Senior Member

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    Hi,

    If as seems to be the case by what's available to see online there are sloping shoulders and corporate veils everywhere this may be a little premature don't you think?
  9. NEO56

    NEO56 Member

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    From what I understand, based on this Forum, NM is just a shell with no real assets, leasing the molds, etc. Somebody is going to want to get whole on this deal,(most likely the insurance underwriter) and attorneys are designed for this....could take years (billable hours) to close the book on this one. So I figure they are going to be the only winners on this one.
  10. K1W1

    K1W1 Senior Member

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    Hi,

    Even the freshest attorney out of school must realise that if there is nothing to grab and turn to cash the likelihood of getting their hands on large sums of the aforementioned cash are slight indeed.

    If the actual beneficial owners of the assets have them wrapped up under enough layers of LLC's and other shrouds that divert and or absolve them of any responsibility then the chances of a big payday for anyone including the Owner of this ill fated yacht are even more remote than someone buying the wreck and re fitting it.
  11. olderboater

    olderboater Senior Member

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    Before this event the lawyers for and against New World and NM have already collected quite a bit.

    While New World may have limited assets, there is substantial value in the potential insurance settlement and the partially completed boats on the property. Who owns or is entitled to each piece can be a matter of litigation. Then there is the question of whether any entities other than New World can be held liable.

    This brings up one additional matter. Let's say there is disagreement over who should get the insurance settlement. Insurer may then hold up paying until the courts resolve that issue.
  12. K1W1

    K1W1 Senior Member

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    Hi,

    Does anyone know in this instance at what stage during construction the ownership of the partially completed vessel becomes the Owners property?

    I am familiar with refund guarantees for the first two payments and then title transfer on the third but don't know how it works in the US.
  13. ArielM

    ArielM Senior Member

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    i would think even if the vessels under construction had become the property of the owners, there would still be substantial liens placed on the vessels by outside contractors and suppliers.
  14. olderboater

    olderboater Senior Member

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    It depends on the specific contract. There is no universal rule. If the contract does not specify the security interest of the buyer then the money paid may be treated much as a deposit and their rights to what is in construction limited. Many contracts however do specify that the progress payments give them a security interest in the construction. In the case of Baden, the buyer had actually recorded a lien on parts and equipment in early 2013. Of course in most cases the progress payments exceed the value of the work completed to date.

    The other factor that can complicate the picture is whether payment has been made on the major equipment such as engines. Some are just sold on account but in other cases a UCC financing statement may be filed with a lien on the equipment until it's paid for.

    Then there is any financing the business may have obtained. Often that financing gives the lender a security interest in some inventories.

    Situations like this can be clear cut based on contracts and no other issues, but they can be very complex with multiple persons claiming a security interest on the same item.

    Fairness and equity says the buyer should have the interest in the partially completed boat and typically that will win out in the end. Where the specific contracts or law is unclear courts are generally going to rule based on equity.

    In the case of Baden though, the value of the boat in construction has dropped significantly and in the mind of the buyer might be zero. But that's where the battle could ensue on the insurance settlement. Did the buyer have a separate policy? Did the contract cover a situation like this giving him rights to the insurance proceeds? Then you get into what the insurer pays, whether they claim the boat is salvageable and to what degree. Whether they argue if any of the situation fits any exclusions. And what they place as the value. Was it insured at cost? The value the insurer places on it will likely be far less than has been paid to date.
  15. olderboater

    olderboater Senior Member

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    Other things that one can know only by seeing the contract. What is the governing state. For those not in the US, each state has different laws, much like countries. In most cases the builder would make it their state. And in case of a dispute how must it be resolved? Many contracts today have arbitration clauses either before or instead of courts. Not likely on a boat.

    Now liens by suppliers have been mentioned. It's not beyond the realm of possibility that the buyer would gain ownership of the boat but still subject to any recorded liens. This is much as if you bought a car or boat or house that had liens on it, you would be required to pay those if the seller didn't. Now there may be no liens at all. In fact, I wouldn't be surprised if they weren't having to pay on delivery for major items like engines and seldom do you find liens on small items.
  16. NEO56

    NEO56 Member

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    K1W1, I guess time will tell...this story is long from over.
  17. NEO56

    NEO56 Member

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    To quote olderboater:
    In the case of Baden though, the value of the boat in construction has dropped significantly and in the mind of the buyer might be zero. But that's where the battle could ensue on the insurance settlement. Did the buyer have a separate policy? Did the contract cover a situation like this giving him rights to the insurance proceeds? Then you get into what the insurer pays, whether they claim the boat is salvageable and to what degree. Whether they argue if any of the situation fits any exclusions. And what they place as the value. Was it insured at cost? The value the insurer places on it will likely be far less than has been paid to date.

    The insured at cost issue is this...the Buyer contracted at 7 million, and it cost NM 10 million to build it. So that puts NM in the hole for 3 million right off the bat. Obviously, NM doesn't have 3 million in their operating account, or anywhere else for that matter (I'm guessin'). This whole deal is so convoluted at such an early stage....I can't wait to see how this plays out. I have a buddy of mine in the industry out in Washington, and he'll keep me abreast of developments long after the initial speculation has died down. This will be one that goes down in litigation history, and hopefully will provide knowledge for all of us.
  18. olderboater

    olderboater Senior Member

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    No, this won't go down in litigation history. It's no different than what happens every day. Happens in all industries and occasionally in this industry. Let's not forget that this isn't Northern Marine's first time (different ownerships, different names, but a lot the same). Guess it's New World's first. And as far as people not getting their boats finished by the yard that started them, that's more common than one thinks too.

    There were several outstanding suits before this and most didn't know. This will likely drag on and on. But ultimately not anything unusual. It's said things like this are so common as a lot of people get hurt. The company can protect itself through bankruptcy if and when they choose. There's nothing that remedies things for customers, suppliers or employees.

    The knowledge is don't buy the PR of builders or anyone else. Investigate. Choose not just the boat but the company. And protect yourself with your contract and insurance.
  19. NEO56

    NEO56 Member

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    Sage advice oldboater...I realize that we live in a litigious society, but this is surrounded by an unusual set of circumstances. Getting ready to put myself into the role of Buyer, I guess I have a personal interest in this, and will file this away when it comes to contract time.
  20. milo12

    milo12 Member

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    Any updates? Have you locals seen any work on the boat or is it still sitting and rotting?