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Ask Anita
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What
recourse do I have if I'm owed a free cruise on a line that went bankrupt? |
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Dear
Anita,
I was on the doomed Crown Cruise Lines Crown Dynasty,
booking 93596, on Saturday, March 11, 2000. Our charter airline
had mechanical problems that delayed us getting to the ship in
Aruba from Tampa. Needless to say, the ship sailed without 118 of
us, and it was not until very late the following Monday night at
another port that we got on the ship. Plus we went through hell to
get on the ship considering the spring break shore inconveniences
we encountered.
The reason I am writing you is that Crown/Commodore offered us two
free cruises (no refund) that was to expire on March 31, 2001.
Well, the line folded into Chapter 11 in December 2000.
Do I have any options? Do you think the cruise lines will
re-surface? I truly have not given up hope. As a matter of fact, I
was in contact with Mike Smith at Crown, attempting to re-book a
March 2001 cruise. I know now why they would not confirm anything
for me.
Thank you for any reply,
Marcy H. |
Dear Marcy,
This is a very complex issue. To find out if
you have any recourse, I contacted Mark Pestronk, a Fairfax,
Virginia-based attorney specializing in travel law and Travel Weekly
columnist. He states, "Whether a voucher holder is a creditor in
bankruptcy is a complicated question of bankruptcy law, Federal Maritime
Commission (FMC) rules, and bonding law."
The FMC has a certified bond program covering a company with a maximum of
$15 million. However, passengers booked on ships sailing from non-U.S.
ports are not covered. While the FMC administers the program, the cruise
lines, or their underwriters, process claims. My attempts to contact
Commodore were unsuccessful. The best suggestion is to fax a request for
compensation to Commodore Holdings (Parent Company of Crown Cruise Line)
at 954-967-2148. You can also call them at 954-967-2100.
Watch for Red Flags
Long before Commodore Holdings filed for Chapter 11 bankruptcy protection,
there were warning signs. Financial difficulties at Commodore Holdings
became evident last June when the company's filings to the Securities and
Exchange Commission (SEC) showed a net loss of $14.4 million (for nine
months ending June 30). This was a surprising development since the
company posted a $2 million profit for the same period in 1999.
When it purchased the Crown Dynasty for $86.2 million in January of
2000, the company acquired a lot of debt. It also lost a revenue source by
canceling the Enchanted Sun (another vessel it chartered, which was
cancelled due to technical difficulties). The company was expanding too
quickly, and so, it declared bankruptcy in December 2000.
Protect Your Vacation Investment
The best protection for any cruise consumer is to watch for red
flags—even after booking the cruise. This is especially true for trips
on smaller, less established cruise lines. One good way to find warning
signs, besides seeking the advice of a cautious, well-informed travel
agent, is to seek the experiences of other travelers via message boards on
the Internet.
For your best protection against possible bankruptcy, always pay for your
cruise by credit card. Moreover, third-party travel insurance (available
from your travel agent) is a precaution against supplier bankruptcy. If
you purchase the optional insurance offered by the cruise lines, you will
not be covered if the cruise line goes into default.
I hope I've been helpful. Happy travels!
Anita Dunham-Potter
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