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Genting Hong Kong seeks liquidation in German lawsuit

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Genting Hong Kong seeks liquidation in German lawsuit

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The Hong Kong skyline aboard Genting Cruise Lines Genting Dream docked in Hong Kong on Wednesday July 28, 2021.

Lam Yık | Bloomberg | Getty Images

Cruise line Genting Hong Kong said on Wednesday it had filed for liquidation of the company as its cash was expected to run out by the end of January.

This follows warnings last week from the company that it could face potential cross-defaults on financing deals worth $2.8 billion, due to the insolvency of its German subsidiary of shipbuilding MV Werften.

In a Hong Kong stock exchange filing on Wednesday, Genting said the company “will soon be unable to pay its debts as they come due” as liquidity dries up.

The struggling cruise line said it filed the company’s winding-up petition with the Supreme Court of Bermuda, after the company “exhausted all reasonable efforts to negotiate with relevant counterparties under its financing agreements”.

However, the company said in its filing Wednesday that certain businesses — including, but not limited to, cruise line operations by Dream Cruises — will continue.

Genting Hong Kong owns Star Cruises and Dream Cruises, which operate in the Asia region, as well as the Resorts World theme park in Manila. It also owns the Crystal Cruises line which offers a range of round trips from Miami, Antarctica and Barcelona.

“However, it is expected that the majority of the group’s existing operations will cease to operate,” he said.

Genting Hong Kong is part of a larger conglomerate which also includes Genting Malaysia and Genting Singapore. Among its assets, the conglomerate owns the Resorts World chain of leisure parks, which includes those in Singapore, New York and the United Kingdom. It also has 30 casinos across the UK

The company, controlled by Malaysian tycoon Lim Kok Thay, was hit hard by the Covid-19 pandemic as travel came to a halt.

Trading in Genting Hong Kong shares was suspended on Tuesday and will remain halted until further notice, the company said.

Genting shares in Malaysia and Singapore were still trading on Wednesday. Genting Singapore shares rose 0.64% and shares in Malaysia fell 1.72%

Legal battle in Germany

Genting Hong Kong was in the midst of legal proceedings with a regional government in Germany to withdraw an $88 million support facility – or relief funding for a secondary source of reimbursement – ​​linked to MV Werften.

But in a decision this week, the German federal state of Mecklenburg-Vorpommern rejected Genting’s request to access the $88 million, according to Genting’s filing earlier this week.

“The company and the group do not have access to any other liquidity under the group’s debt documents and the company’s free cash balances are expected to be depleted towards the end of January 2022 according to the company’s cash flow forecast”, Genting said Wednesday.

He said he asked the court to appoint provisional liquidators and also sought to authorize the liquidators to undertake the restructuring of the company’s debt.

The company reported a net loss of $238 million for the period ending June 2021, compared to a loss of $742.6 million for the same period in 2020. Genting Hong Kong halted payments on debts of nearly $3.4 billion in 2020, according to Dispatches.

Genting Hong Kong seeks liquidation in German lawsuit

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