A Potential Princess Bankruptcy: A Look and What That Could Mean For You

[SCOOTERNINJA]

A question arose in a separate thread about FCC (Future Cruise Credit) and how it may be impacted by bankruptcy.

 

I would compare FCC to airline miles and here is an article right on point for those that may be interested:   https://www.marketwatch.com/story/airlines-are-on-the-brink-of-bankruptcy-what-happens-to-your-voucher-travel-miles-and-airline-credit-card-if-they-go-belly-up-2020-05-13?link=MW_latest_news  .

 

Long story short - it appears possible that FCC is fully discharged in bankruptcy but I guess we would need to see a bankruptcy court ruling to know for sure.

[npcl]

27 minutes ago, SCOOTERNINJA said:

Thank you for your thoughts, much appreciated. The alter ego/piercing the corporate veil arguments are relatively difficult when dealing with sophisticated publicly traded companies because they tend to be good at not commingling their assets.

However, if you look at corporate structure (Princess operations somewhat intermixed with HAL, Seabourn, P&O) in the HAL group.  The way corporate handles debt.  It would be very difficult for Princess to really claim that they are operating totally independently from other components in the CCL corporate structure.  Once can certainly argue, probably successfully that it is a single business enterprise.

 

There is no benefit for Princess to declare BK independently of the Corporate structure.  

 

[SCOOTERNINJA]

1 minute ago, npcl said:

 

There is no benefit for Princess to declare BK independently of the Corporate structure.  

 

Really?  I would tend to believe that there may be some claims worth going after for those that died or got really sick quarantined on docked Princess ships.  I guess we will have to keep our eye out on those pesky personal injury attorneys.

[SCOOTERNINJA]

5 minutes ago, npcl said:

 

 

There is no benefit for Princess to declare BK independently of the Corporate structure.  

 

I'd also question what brand's customers are likely to resume cruising sooner rather than later...Carnival or Princess?  Hmmm...

[voljeep]

1 minute ago, SCOOTERNINJA said:

I'd also question what brand's customers are likely to resume cruising sooner rather than later...Carnival or Princess?  Hmmm...

tldr - just kidding … as soon as Carnival starts doing those 3-4-5 days cruises out of Port Canaveral - those will fill up rapidly

 

I think Princess could do some shorter cruises out of PE/FLL to Princess Cay and St Thomas with a totally different crowd / age / demographic ...

 

as far as bankruptcy goes … without getting into the technicalities … pretty much all signs are headed that way, unfortunately

 

layoffs for shoreside staff, crew going home, ports still closed, lack of refunds … no transparency 

 

sad

[SCOOTERNINJA]

1 minute ago, voljeep said:

tldr - just kidding … as soon as Carnival starts doing those 3-4-5 days cruises out of Port Canaveral - those will fill up rapidly

 

I think Princess could do some shorter cruises out of PE/FLL to Princess Cay and St Thomas with a totally different crowd / age / demographic ...

 

as far as bankruptcy goes … without getting into the technicalities … pretty much all signs are headed that way, unfortunately

 

layoffs for shoreside staff, crew going home, ports still closed, lack of refunds … no transparency 

 

sad

I think you have some good insight.  I can't be alone in saying that I personally don't fear a fun filled and lively cruise within the next year or two but I can't say the same for my elderly mom to whom I am unlikely to let anywhere near a cruise to see the world until we know things are absolutely safe with an effective and proven treatment/vaccine.

[npcl]

19 minutes ago, SCOOTERNINJA said:

Really?  I would tend to believe that there may be some claims worth going after for those that died or got really sick quarantined on docked Princess ships.  I guess we will have to keep our eye out on those pesky personal injury attorneys.

Compared to the big picture not that much. About the only way that a case can be proven to be land based is if they prove negligence prior to boarding.  For those that occurred at the end of the cruise the control for disembarking passengers was not strictly under Princesses control.  In the case of the Diamond it was Japanese Authorities, In the case of the Grand it was the health authorities in the US.  Same with the Coral.

 

So either it was an event at sea (damages very limited, primarily to loss of future wages) or at the end of the voyage (under control of land based  authorities).  So for any kind of major damages they would have to prove that Princess was negligent in either cruising or in boarding the cruise.  A fairly high hurdle when airlines were flying, mass events were still scheduled, 

 

So at most the potential for damages is really pretty low and if they were to get damages Princesses operations are intermixed with the other lines so they are unlikely to be able to limit the access to assets.  Especially since HAL would have similar cases due to the Zaandam.

[npcl]

23 minutes ago, SCOOTERNINJA said:

I'd also question what brand's customers are likely to resume cruising sooner rather than later...Carnival or Princess?  Hmmm...

But what exactly does CCL save by having Princess declare BK?  The debt loading is not at the Princess level, it is at the CCL level.  There are no outlyers with Princess that makes it a benefit for it to declare BK independently.

 

Better for the parent to declare BK, and rightsize all of the lines together.

 

I think it is highly likely CCL will declare BK, but very unlikely that an independent brand will declare independently.

 

Makes no difference which brand starts earlier.  The issue is the entire corporate debt load. If all of the brands cannot start up and return to a reasonable level of profitability with a couple of years the entire corporation will be BK.

[SCOOTERNINJA]

1 minute ago, npcl said:

Compared to the big picture not that much. About the only way that a case can be proven to be land based is if they prove negligence prior to boarding.  For those that occurred at the end of the cruise the control for disembarking passengers was not strictly under Princesses control.  In the case of the Diamond it was Japanese Authorities, In the case of the Grand it was the health authorities in the US.  Same with the Coral.

 

So either it was an event at sea (damages very limited, primarily to loss of future wages) or at the end of the voyage (under control of land based  authorities).  So for any kind of major damages they would have to prove that Princess was negligent in either cruising or in boarding the cruise.  A fairly high hurdle when airlines were flying, mass events were still scheduled, 

 

So at most the potential for damages is really pretty low and if they were to get damages Princesses operations are intermixed with the other lines so they are unlikely to be able to limit the access to assets.  Especially since HAL would have similar cases due to the Zaandam.

You make a lot of conclusions.  I've learned long ago to not try and question a personal injury attorney's creativity.  They often 'win' if they can make it past a motion to dismiss stage. When many millions of dollars are at stake, I wouldn't underestimate the personal injury firm.

 

How much is a death that was caused, or believed by a jury to be caused, by confinement to a room aboard a cruise ship?  I don't know but I am guessing that is not cheap.  PG&E certainly didn't want to learn how much 85 deaths caused by a power line was worth.

[XBGuy]

3 hours ago, SCOOTERNINJA said:

 

Overall:  If you are at all worried about losing your money for Princess insolvency issues - - you really ought to consider the credit card chargeback process

 

 

I'd like to take the opportunity to focus on this item.  I am aware that many have already started this process.  It appears that they are getting some sort of immediate credit to their account, but that seems to be conditional.  I may be incorrect, there.

 

Something has come up in my mind.

 

Let's suppose that all these credit card holders call their credit card companies, make their claims, and get their money.  Suppose further that the cruise line does declare bankrupcy and gets relief from their debts.  It sounds to me that, now, the credit card companies are going to lose their money.  Do they have any recourse?  Is there a scenario where they can "claw back" the money from their customers?

[SCOOTERNINJA]

1 minute ago, XBGuy said:

 

I'd like to take the opportunity to focus on this item.  I am aware that many have already started this process.  It appears that they are getting some sort of immediate credit to their account, but that seems to be conditional.  I may be incorrect, there.

 

Something has come up in my mind.

 

Let's suppose that all these credit card holders call their credit card companies, make their claims, and get their money.  Suppose further that the cruise line does declare bankrupcy and gets relief from their debts.  It sounds to me that, now, the credit card companies are going to lose their money.  Do they have any recourse?  Is there a scenario where they can "claw back" the money from their customers?

In my post I mentioned the theoretical clawback for a 'preferential payment' that is made to a creditor within 90 days of a bankruptcy filing.  This is one of the reasons that acting sooner rather than later might make sense if there ultimately is a bankruptcy filing.

[npcl]

14 minutes ago, SCOOTERNINJA said:

You make a lot of conclusions.  I've learned long ago to not try and question a personal injury attorney's creativity.  They often 'win' if they can make it past a motion to dismiss stage. When many millions of dollars are at stake, I wouldn't underestimate the personal injury firm.

 

How much is a death that was caused, or believed by a jury to be caused, by confinement to a room aboard a cruise ship?  I don't know but I am guessing that is not cheap.  PG&E certainly didn't want to learn how much 85 deaths caused by a power line was worth.

PG&E did not have the protection of marine law.

 

Unlike PG&E the cruise lines do not have the State of California working to block any settlement that they did not agree with and to a large degree was looking at taking over the company.

 

In the case of PG&E the majority of the settlement was not the deaths but the property loss costs. Something that is not present in these cases.

 

Totally different ball game or for that matter court case.

 

On December 6, 2019, PG&E reached an agreement to payout $13.5 billion to settle claims arising from the Butte Fire in 2015, the Ghost Ship Fire in 2016, the Wine Country/North Bay Fires in 2017 and the Camp/Paradise Fire in 2018, subject to bankruptcy court approval.

Edited May 18, 2020 by npcl

[SCOOTERNINJA]

7 minutes ago, npcl said:

 

 

In the case of PG&E the majority of the settlement was not the deaths but the property loss costs. Something that is not present in these cases.

 

 

Are cruise deposits and other cruise reimbursements not property?  Some of what you say seems to be a stretch.

[npcl]

17 minutes ago, SCOOTERNINJA said:

Are cruise deposits and other cruise reimbursements not property?  Some of what you say seems to be a stretch.

They are property, how ever there is nothing unique in Princess concerning deposits than with the other lines.  So why would Carnival pick out one line, were declaring BK would gain them nothing except that lines deposits, when it has the exact same issues with every other line.  HAL has the exact same issue.

 

You are saying that I am stretching in my analysis, I would say that you are stretching in saying that Princess has unique problems that are more likely for it, and not the parent to declare BK.

 

Since the rest of CCL, including all of the other lines are in exactly the same business, and since CCL has substantial operational impact it would not be as difficult as you indicate to go after parent company assets.

 

There are plenty of documented cases indicating the degree of interaction between the parent and subsidiary.  For example in the Princess environmental case

 

Today, Princess Cruise Lines Ltd. (Princess) and its parent, Carnival Cruise Lines & plc (together “Carnival”) were ordered to pay a $20 million criminal penalty and will be subject to enhanced supervision after admitting to violations of probation attributable to senior Carnival management in a case in which Princess had already paid $40 million.

 

Again odds of CCL declaring BK somewhere in this process fairly high.  Individual brand not so much.

 

You don't seem to be refuting the points only saying they are a stretch.  If you are an attorney identify some similar situations or even if you are not find a similar situation where the wholly owned sub declared BK.

Edited May 18, 2020 by npcl

[npcl]

35 minutes ago, XBGuy said:

 

I'd like to take the opportunity to focus on this item.  I am aware that many have already started this process.  It appears that they are getting some sort of immediate credit to their account, but that seems to be conditional.  I may be incorrect, there.

 

Something has come up in my mind.

 

Let's suppose that all these credit card holders call their credit card companies, make their claims, and get their money.  Suppose further that the cruise line does declare bankrupcy and gets relief from their debts.  It sounds to me that, now, the credit card companies are going to lose their money.  Do they have any recourse?  Is there a scenario where they can "claw back" the money from their customers?

However, keep in mind that if a vendor were to declare BK, the fact that they declared BK and not provided a service still allows for the customer to file a dispute.  Basically the credit card company first goes after the merchants bank (the acquirer) in the case of a dispute. That is clearly defined in the rules established by the card networks.

 

You can expect by this time that Princesses bank for processing credit card transactions in upping the percentage of the transactions it is holding.

 

[SCOOTERNINJA]

12 minutes ago, npcl said:

However, keep in mind that if a vendor were to declare BK, the fact that they declared BK and not provided a service still allows for the customer to file a dispute.  Basically the credit card company first goes after the merchants bank (the acquirer) in the case of a dispute. That is clearly defined in the rules established by the card networks.

 

You can expect by this time that Princesses bank for processing credit card transactions in upping the percentage of the transactions it is holding.

 

Whoa!  This is definitely not accurate and is going to be card dependent.  Many banks/credit card companies have limited chargeback obligations for the 'financial insolvency...of a travel supplier'.  The question on those cards is what is financial insolvency and when is it determined. Is it determined from the time that a company announces 'the ability to continue as a going concern' or from the time of actual bankruptcy filing.  I tend to view it as the former rather than the latter. 

 

https://thepointsguy.com/news/chase-trip-cancellation-interruption-changes/

 

Yikes!  Please don't give broad stroke legal advice in this thread that may or may not be accurate for any individual person.  I'm trying to keep it informative without misleading anyone.

Edited May 18, 2020 by SCOOTERNINJA

[npcl]

57 minutes ago, SCOOTERNINJA said:

Whoa!  This is definitely not accurate and is going to be card dependent.  Many banks/credit card companies have limited chargeback obligations for the 'financial insolvency...of a travel supplier'.  The question on those cards is what is financial insolvency and when is it determined. Is it determined from the time that a company announces 'the ability to continue as a going concern' or from the time of actual bankruptcy filing.  I tend to view it as the former rather than the latter. 

 

https://thepointsguy.com/news/chase-trip-cancellation-interruption-changes/

 

Yikes!  Please don't give broad stroke legal advice in this thread that may or may not be accurate for any individual person.  I'm trying to keep it informative without misleading anyone.

I would give you the same advice.  The article you quoted had nothing to do with disputes.  If you read the article it was a change in the insurance coverage provided by Chase cards such that vendor default was no longer a covered reason under the trip cancellation and interruption coverage.

 

Unfortunately, one popular perk from Chase — trip cancellation and interruption coverage — took a small hit recently. As noted by Doctor of Credit, certain cards have now removed a key covered reason for invoking this protection. If you are forced to cancel a trip because your airline or tour operator goes under, you’re no longer eligible for reimbursement for other nonrefundable, prepaid travel expenses.

 

If you further down the article you find

 

We reached out to Chase for additional information on the changes, and a spokesperson provided the following statement:

“A cardmember can continue to submit a dispute as a result of financial insolvency, as they have always been able to. We always want to help our customers when they are experiencing issues and will work with them to find solutions.”

 

Here are a few other references that at least deal with disputes with a BK Company

 

https://www.creditcards.com/credit-card-news/deposit-refund-bankrupt-company-1267.php

 

https://www.chicagotribune.com/business/ct-biz-business-closed-customer-lost-money-03162018-story.html

 

Now in Europe travel providers had different requirements then in the US so in those cases there are specific sections of the credit card network master agreements.  In the US travel providers are considered to be the same as any other mechant.

Edited May 18, 2020 by npcl

[DaveSJ711]

This lawyer says "relax" to both of you.  And no, I will not give legal advice on this thread.

[npcl]

3 minutes ago, DaveSJ711 said:

This lawyer says "relax" to both of you.  And no, I will not give legal advice on this thread.

Hey he is the one that started down the path of Princess is likely to declare BK more than CCL and then talking as if you better dispute now because you will lose the ability and bringing claw backs into the discussin.   I was just posting counter arguments.

 

If anyone is treating what they read on CC are sound legal advice they have more to worry about than a refund.

[npcl]

If anyone is interested in reading more about what an acquiring bank is and its role in the credit card process, here is an article that explains it in pretty basic terms from a company that offers charge back management services.

 

https://chargebacks911.com/the-acquiring-bank/

 

 

As with anything please do your own research and make your own decisions.  If you have any doubts contact the dispute department of your CC company and ask them about any concerns you might have.

 

CC posts are for entertainment value only.

 

Edited May 18, 2020 by npcl

[SCOOTERNINJA]

5 minutes ago, npcl said:

If anyone is interested in reading more about what an acquiring bank is and its role in the credit card process, here is an article that explains it in pretty basic terms from a company that offers charge back management services.

 

https://chargebacks911.com/the-acquiring-bank/

 

 

As with anything please do your own research and make your own decisions.  If you have any doubts contact the dispute department of your CC company and ask them about any concerns you might have.

 

CC posts are for entertainment value only.

 

Yes, thank you!  Individuals should always contact their own credit card companies for any questions regarding the terms of their individual card.  

[caribill]

11 hours ago, npcl said:

 

Today, Princess Cruise Lines Ltd. (Princess) and its parent, Carnival Cruise Lines & plc (together “Carnival”) were ordered to pay a $20 million criminal penalty and will be subject to enhanced supervision after admitting to violations of probation attributable to senior Carnival management in a case in which Princess had already paid $40 million.

 

 

The parent of Princess Cruises is Carnival Corporation & PLC.

 

Carnival Cruise Line also has the parent of Carnival Corporation & PLC.

[happy cruzer]

So does anyone have an update on the lawsuit filed by CA by the couple on the Grand?  Or any other one?  Is it going to court or being settled out of court?

 

Carnival Corp. seems to be trying to go forward with Carnival ship cruises in August.  That effort may tell how the corporation and/or Princess fares.

[SCOOTERNINJA]

4 hours ago, happy cruzer said:

So does anyone have an update on the lawsuit filed by CA by the couple on the Grand?  Or any other one?  Is it going to court or being settled out of court?

 

Carnival Corp. seems to be trying to go forward with Carnival ship cruises in August.  That effort may tell how the corporation and/or Princess fares.

There have been multiple lawsuits filed in California federal courts against Princess and I believe including one class action.  Being that they were filed in March and April, my guess is that those cases are still at the Motion to Dismiss stage but those who are really curious can check the status of those cases at https://www.pacer.gov/ for a fee.   Courts have really been slowed down and in some places came to a halt the past few months. 

 

Here is an older article:  https://www.nbcbayarea.com/news/coronavirus/grand-princess-passengers-sue-for-alleged-negligence-in-coronavirus-exposure/2270081/

[happy cruzer]

The case I saw before is in this link provided originally by Cruiseraider (thank you!)

 

https://www.nbcdfw.com/news/coronavirus/crowley-woman-sues-princess-cruises-after-husband-dies-from-coronavirus/2352268/

 

Wonder how it ends.