Karlsen Shipping in hands of receiver
Cruise ship Polar Star among company’s assets
By BILL POWER Business Reporter
Wed, May 18 - 4:54 AM
Karlsen Shipping Co. Ltd. was placed in receivership Tuesday and the Halifax tour operator’s prized cruise ship, M/V Polar Star, remains tied up in Spain until authorities on either side of the Atlantic can reach an agreement on its future.
It took Justice Arthur LeBlanc only a few moments to grant a receivership request from the Toronto-Dominion Bank during a Nova Scotia Supreme Court proceeding prompted by the shipping company’s inability to settle a $1.4-million repair bill.
Polar Star suffered damage to its hull when it was grounded in the Antarctic in January.
"A decision on the future of the ship will come after a receiver or equivalent authority is appointed in Spain," court-appointed receiver David Boyd, with PricewaterhouseCoopers Inc., said after the proceeding.
The bank’s lawyer, John D. Stringer, with McInnes Cooper in Halifax, suggested in court that the Polar Star may become part of liquidation proceedings designed to help Karlsen Shipping pay creditors.
Karlsen owes Toronto Dominion about $4.6 million and another $750,000 is owed to Norway’s Sparebank 1 SMN. The shipping company has other debts totalling $3.4 million, according to court documents.
Stringer said it is important that the Polar Star’s value as an asset be preserved.
"It’s become clear the company has become insolvent," he told the court.
A representative of the International Transportation Workers’ Federation attending the court proceeding said the ship’s captain and its crew of about 45 people remain stranded on the vessel.
"We are in the process of contacting authorities in Spain to help make sure the interests of the crew members are protected," said Gerard Bradbury, an inspector with the federation from Halifax.
Bradbury said most of the ship’s crew Ukrainian.
"They are owned about $250,000 in back pay," he said.
There were no paying passengers aboard the Polar Star when it was sent to Spain for repairs.
Bradbury speculated there would not be a big market for a speciality cruise ship like the Polar Star if authorities decided to sell it in liquidation.
He noted the seizure of the Polar Star in Las Palmas, Spain, was similar to the seizure of the Russian touring vessel Lyubov Orlova by Canadian authorities in September last year. In that case, the 49-member crew was stranded for about three months and are still owed more than $350,000 in wages.
"These people were left with nothing and relied on the Salvation Army and local residents for survival," said Bradbury.
Under international law, crew members aboard Polar Star should be entitled to a first claim to any cash raised through a liquidation sale of Karlsen’s assets, he said.
Concern about the future of the Polar Star brought California tour operator Ted Cheeseman, CEO and co-owner of Cheesemans’ Ecology Safaris, to Halifax. He said he was meeting with the receiver and representatives of the bank in an effort to keep the vessel operating through the busy Antarctic and Arctic tour season.
He said the Polar Star is worth more working than it is tied up in Spain and the loss of the vessel will significantly hurt his business.
"Polar Star is a converted icebreaker and ideal for touring these regions," said Cheeseman.
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