Cruise credit risk should the Cruise line file for relief in the bankruptcy court

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Apr 20, 2020
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I’d like an honest opinion on the risk that one would take should you elect to take the credit for a future cruise versus the cruise line filing for relief in the bankruptcy court? Specifically, wouldn’t these credits be worthless in a chapter 11 filing? My analogy is similar to being a shareholder and owning common stock, when the company files for bankruptcy the stock is essentially worthless going forward. A lot of unknown’s right now in the cruise industry, I’m not a big gambler but the $3,000 return on our $12,000 pre paid cruise is sizable enough to seek some guidance. Thanks
 
Apr 10, 2017
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I’d like an honest opinion on the risk that one would take should you elect to take the credit for a future cruise versus the cruise line filing for relief in the bankruptcy court? Specifically, wouldn’t these credits be worthless in a chapter 11 filing? My analogy is similar to being a shareholder and owning common stock, when the company files for bankruptcy the stock is essentially worthless going forward. A lot of unknown’s right now in the cruise industry, I’m not a big gambler but the $3,000 return on our $12,000 pre paid cruise is sizable enough to seek some guidance. Thanks
I am most certainly not an attorney, this is not advice and is my opinion, but I suspect that travel credits would put you on a very, very, very long list of unsecured creditors. Their value would be close to nil.
 
Jun 24, 2019
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I am most certainly not an attorney, this is not advice and is my opinion, but I suspect that travel credits would put you on a very, very, very long list of unsecured creditors. Their value would be close to nil.
Deposits paid by consumers for a pleasure cruise (not a business cruise, such as where continuing education might be offered) may be priority claims up to $2,850 per person as a consumer deposit. The balance would be unsecured. Ahead of consumer depositor claims would be administrative claims (i.e., the lawyers), secured claims, priority wage and pension claims, etc.

As one can imagine, this is a very complicated area.

We had a cruise sailing May 26 cancelled by Azamara. We elected the cash refund because we have no idea if Azamara will offer an itinerary we like when we can travel again, nor do we know what the price of that itinerary will be.

We have a Japan cruise this Fall, paid for with a credit from Celebrity when the Xpedition ran aground last Fall. Whether that cruise goes forward is anyone's guess, and what happens to our credit if that cruise is cancelled is uncertain. (Celebrity refunded 100% of what we paid; the credit was an additional perk.) On the other hand, on Friday we bought round trip air on American to Tokyo as the award price was good and we had promptly (like instantaneously) received back the miles we used to buy r/t tickets to Europe for the Azamara cruise.
 

jsn55

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Dec 26, 2014
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For starters, most ocean cruise lines have no US ties, they are registered in other countries. So what we know about BK here probably doesn't apply. Check to see if your cruise line is an independent company or a subsidiary of another, larger corporation and where they are domiciled. I'll just tell you my experience over the last 45 days. I had the same concerns as you have, with $10,500 at risk for a cancelled river cruise to Normandy. I don't want a refund, so I rebooked another cruise ... my Chase travel insurance will cover for insolvency on the cruise line's part. So your future cruise would be covered by insurance, if the policy you purchase has that coverage. I'm not particularly worried about my cruise line; it's part of a huge travel conglomerate. But I didn't want to take any chances either.
 
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Jun 24, 2019
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Many are headquartered here or in England. It is their ships which are flagged elsewhere. Whether registering your ship in Ecuador (Xpedition) is enough for jurisdiction under Ecuador's bankruptcy laws for the whole company is a question for Ecuadorian lawyers. Carnival and Royal Caribbean are headquartered in Miami. Norwegian is domiciled in Bermuda.
 
May 30, 2019
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Outside of the legal zone, if you take the credit, how do you know that your preferred itinerary will be available before the credit expires? Even if the cruise line remains solvent, it may have to restrict ports of call and routes for many, many months.
 
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Jun 24, 2019
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Outside of the legal zone, if you take the credit, how do you know that your preferred itinerary will be available before the credit expires? Even if the cruise line remains solvent, it may have to restrict ports of call and routes for many, many months.
You don't know if the itinerary will be available.

You don't know the price; it may be more (or less) than what you paid.

You don't know what amenities you get. That liquor package you got as a promo may not be available next year. Or maybe next year, desparate for business, they'll toss in everything.
 

Neil Maley

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Dec 27, 2014
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At this time the major cruise lines don’t seem to be having a lot of trouble with bookings for 2021. One cruise line had their best day of booking ever last week.

We rescheduled our canceled Greek cruise group last week to 2021 and there was only one week left that we could find 10 mini suites left for our group- at a higher price. And that was on a small line. We’ve been booking Christmas cruises for this year.
 
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jsn55

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When I read that cruise bookings were WAY up, I was amazed. But my TA pointed out to me that these bookings are not new revenue for the cruise line, but rebooked cruises from the cancelled ones. So the "news" is a bit misleading. As far as not knowing the details of a future cruise that might be booked, that's a good point. I was fortunate that it was a river cruise 3/20 that cancelled with very few freebies ... and those itineraries don't have wild changes from season to season.
 

Neil Maley

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Dec 27, 2014
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www.promalvacations.com
When I read that cruise bookings were WAY up, I was amazed. But my TA pointed out to me that these bookings are not new revenue for the cruise line, but rebooked cruises from the cancelled ones. So the "news" is a bit disingenuous. As far as not knowing the details of a future cruise that might be booked, that's a good point. I was fortunate that it was a river cruise 3/20 that cancelled with very few freebies ... and those itineraries don't have wild changes from season to season.
Not always true- we are seeing brand new bookings.