After the insolvency of the German shipbuilding subsidiary, Genting Hong Kong Ltd. has filed to shut down the company after failing to secure funding to help it stay afloat.
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The Supreme Court of Bermuda has ruled in a statement to the Hong Kong stock exchange on Wednesday after the firm exhausted all reasonable efforts to negotiate with its creditors and stakeholders.
Genting Hong Kong flagged on Tuesday that it plans to file for provisional liquidation with courts in Bermuda, where it is registered, unless it received credible proposals for a solvent, consensual and inter-conditional restructuring solution. Covid 19 has wiped out travel demand, and cruise operations were among the first to be stopped at the beginning of the epidemic in early 2020. Travel restrictions have resulted in a number of restructurings and insolvencies among travel sector companies. Genting Hong Kong, like many operators, reported a record loss of $1.7 billion in May, which was the result of a cruise-to- nowhere trend. The latest liquidation developments came as Hong Kong imposed some of its strictest virus curbs since the epidemic began.
Genting Hong Kong's indirect wholly-owned shipbuilding subsidiary, MV Werften, filed for insolvency in a local court in Germany last week. After salvage talks broke up amid a dispute between German authorities and Genting, both parties blamed each other for the collapse of MV Werften. The Hong Kong cruise firm warned investors that cross-defaults could be worth $2.78 billion.
According to MV Werften's website, the shipbuilder has more than 2,900 staff and has delivered more than 2,500 vessels for deployment in the tourism sector, the Arctic region and the logistics and offshore marine industries from its shipyards in Wismar, Rostock and Stralsund over the past 75 years.
In its exchange filing, Genting Hong Kong said on Tuesday that a German court rejected an application that would have given MV Werften access to a $88 million lifeline. The company considers that it has exhausted all reasonable efforts to negotiate with the relevant counterparties under its financing arrangements.
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