Will DCL go bankrupt?

[ruadisneyfan2]

https://www.nytimes.com/2020/05/04/business/coronavirus-carnival-cruises-returning.html

 

[JTlikestheDuck]

The article said they MIGHT file for bankruptcy. It didn’t say they would liquidate.

It all depends on the type of bankruptcy they file. It’s a foreign corporation so the bankruptcy “rules” we are used to seeing in the news in the US don’t apply. No lawyer here but have gone through bankruptcy with a company I worked for in the US and credits owed back to customers are so way down on the list you might as well consider the money gone.

 

[Kp128]

It all depends on the type of bankruptcy they file. It’s a foreign corporation so the bankruptcy “rules” we are used to seeing in the news in the US don’t apply. No lawyer here but have gone through bankruptcy with a company I worked for in the US and credits owed back to customers are so way down on the list you might as well consider the money gone.

I hope they can stay in business. I've only sailed with them once, but I really liked them.

 

[Kp128]

Does anyone know how a bankruptcy is different for a foreign corporation vs the U.S. ?

 

[Snowwhyt]

I’m sorry about what is really a stupid question. Stupid because I think I know the answer. I know that DCL Corporation is in the Bahamas. I believe Disney has parks in Paris and Hong Kong? But I’m not sure they belong to the Disney stock. (I’m thinking they’re part owned somehow by the respective countries)
So I currently believe if I were to purchase DIS Disney stock, it would include WDW, Disneyland, marvel, Star Wars, ESPN, ABC, and???
But would not include????
Those things not DIS are traded under ### on the stock exchange? . (###?)

 

[JTlikestheDuck]

I’m sorry about what is really a stupid question. Stupid because I think I know the answer. I know that DCL Corporation is in the Bahamas. I believe Disney has parks in Paris and Hong Kong? But I’m not sure they belong to the Disney stock. (I’m thinking they’re part owned somehow by the respective countries)
So I currently believe if I were to purchase DIS Disney stock, it would include WDW, Disneyland, marvel, Star Wars, ESPN, ABC, and???
But would not include????
Those things not DIS are traded under ### on the stock exchange? . (###?)

Not a stupid question. If you buy DIS it would include the cruise line, foreign parks, etc. It all rolls up to Mickey. If you want some "fun" reading, read the SEC quarterly and annual reports on the Disney investor website. Good for when you have insomnia.

 

[dad of 3 addicted to DCL]

Funny thing is that Norwegian is HQ in Miami and DCL in Celebration, FL. Don't confuse the flag they fly (where the ship is registered) with where the company is HQ. They're American companies. If I own land in France, I'm still American. I'll pay French property tax, but no French income tax nor am I necessarily a resident of France. Now that I've beaten that metaphor to death on to our regularly scheduled programming

 

[Doofenshmirtz513]

Funny thing is that Norwegian is HQ in Miami and DCL in Celebration, FL. Don't confuse the flag they fly (where the ship is registered) with where the company is HQ. They're American companies. If I own land in France, I'm still American. I'll pay French property tax, but no French income tax nor am I necessarily a resident of France. Now that I've beaten that metaphor to death on to our regularly scheduled programming

Don't confuse where a company has its HQ with where it is incorporated. DCL (officially, Magical Cruise Company Ltd., it appears) may have its HQ in Celebration, FL, but it actually appears to be a legal entity under UK law, which in turn is owned by subsidiaries of Disney incorporated in the US. While Norwegian may have its HQ in Miami, it is legally incorporated in Bermuda. It appears (based off some high level research) that neither is American, technically. DCL, in particular, is tricky because there are layers of entities from the big parent Disney down to Magical Cruise Company Ltd.

Applying your analogy, then, DCL is a UK citizen that owns land in Celebration, and Norwegian is a Bermudan citizen that owns land in Miami.

 

[TiggerBouncy]

I know that DCL Corporation is in the Bahamas. I believe Disney has parks in Paris and Hong Kong? But I’m not sure they belong to the Disney stock. (I’m thinking they’re part owned somehow by the respective countries)
So I currently believe if I were to purchase DIS Disney stock, it would include WDW, Disneyland, marvel, Star Wars, ESPN, ABC, and???
But would not include????
Those things not DIS are traded under ### on the stock exchange? . (###?)

Not a stupid question. If you buy DIS it would include the cruise line, foreign parks, etc. It all rolls up to Mickey. If you want some "fun" reading, read the SEC quarterly and annual reports on the Disney investor website. Good for when you have insomnia.

Yes... and No.

Yes, all the interests that The Walt Disney Corporation owns in these properties roll up under "DIS" in the New York Stock Exchange.

No, The Walt Disney Corporation (The "parent" company) does not own some of those parks completely. They have a minority share in Shanghai Disney (China owns the majority share).

 

[canadiandisneydadJS]

I'm one of the several thousand folks with a June Alaska DCL cruise that has been cancelled. Trying to figure out whether I should just take the refund, or take the incentive and book for next year.

I've been on 6 previous DCL cruises, and have loved them all. Emotionally I 100% want to take the credit toward a future cruise. So I'm about as far away from a DCL naysayer as you can get. But something occurred to me. Even after strict social distancing and business closures subside, the cruise industry is going to be absolutely devastated in the short and middle future terms. What if DCL goes bankrupt?

Magical Cruise Company is an indirect subsidiary of the Walt Disney Company. They do business under the name "Disney Cruise Lines". It appears entirely plausible that Magical Cruise Company could declare bankruptcy, without triggering liability on the part of the remainder of the Walt Disney Company. That separate corporate liability is one of the main reasons they bothered to make separate corporations for each division, after all.

So, if that were to happen, what would it mean for the folks who have money down on future cruises? Would they be made whole first, or would they get in line with other major lenders to receive pennies on the dollar in reimbursement?

To be clear, I have zero insider knowledge. I'm just a random guy trying to figure out whether it would be safest to take my money and run, or if I should roll my thousands of dollars worth of cruise payments into a 2021 cruise. I'm posting here because I know there are a lot of smart folks who contribute to these boards.

So the questions are, how well capitalized is Magical Cruise Company if cruising completely stops for half a year or more- and then comes back at a tiny fraction of the popularity it had pre-COVID? And, what is the actual exposure to loss that would be experienced by those of us who have significant money down on future cruises, if such a bankruptcy actually happens?

In my opinion, it's better to take the refund. I don't believe they will go bankrupt, however I believe cruise lines will be begging people to cruise when they re-open and will be offering better deals overall than the cruise credit they are offering now.

 

[canadiandisneydadJS]

If you booked through a Canadian Travel Agency, you would be protected under TICO from bankrupcy.

 

[Chemist]

In my opinion, it's better to take the refund. I don't believe they will go bankrupt, however I believe cruise lines will be begging people to cruise when they re-open and will be offering better deals overall than the cruise credit they are offering now.

I took the refund. I don't know what will happen, but I don't want to risk losing all that $. I doubt DCL will disappear, but if they declare bankruptcy and restructure, my credit will disappear.

I'm already busy being upset about the summer camp that declared bankruptcy and disappeared with $1800 of my $. I don't want to lose an order of magnitude more!

 

[FigmentSpark]

If you booked through a Canadian Travel Agency, you would be protected under TICO from bankrupcy.

Is Costco.ca a canadian travel agency?

 

[STH Cruising]

With respect to bankruptcy, the parent company, the Walt Disney Company, is an SEC registered company, would need to file a report called at 8K (Material Event) if it’s subsidiary, Disney Cruise Lines (and all companies related thereto regardless of geographic incorporation) were to go through a bankruptcy event. Not only is that unlikely, the Walt Disney Company DID file with the SEC indicating that it has lines of credit available to build three new ships, but expects the schedule to be delayed. This is not what a company facing bankruptcy would be filing.

 

[brentm77]

With respect to bankruptcy, the parent company, the Walt Disney Company, is an SEC registered company, would need to file a report called at 8K (Material Event) if it’s subsidiary, Disney Cruise Lines (and all companies related thereto regardless of geographic incorporation) were to go through a bankruptcy event. Not only is that unlikely, the Walt Disney Company DID file with the SEC indicating that it has lines of credit available to build three new ships, but expects the schedule to be delayed. This is not what a company facing bankruptcy would be filing.

I will add, that even if a cruise line goes bankrupt, it can choose which debts to discharge. No cruise line that expects to come our of bankruptcy and be profitable again would consider wiping customer's credits off its books. Otherwise, nobody would feel comfortable cruising with them again and it would ensure the death of the line. Any line that survives will honor credits, and Disney is the most likely to survive for many reasons.

 

[STH Cruising]

I will add, that even if a cruise line goes bankrupt, it can choose which debts to discharge. No cruise line that expects to come our of bankruptcy and be profitable again would consider wiping customer's credits off its books. Otherwise, nobody would feel comfortable cruising with them again and it would ensure the death of the line. Any line that survives will honor credits, and Disney is the most likely to survive for many reasons.

Exactly. DCL has a significant cruise line credit facility (over $3 billion in total) to build the three new ships. This was their disclosure on May 5, 2020 for their quarter needed March 28, 2020:
”The Company has credit facilities to finance three new cruise ships, which were to be delivered in 2021, 2022 and 2023 although delays are now expected as a result of the COVID-19 impact on the shipyard”. During April, The Walt Disney Company also entered into additional credit lines totaling $5 billion.

 

[ladyofthetramp]

I took my refund. I need the money more than they do. I do have a deposit on next year's cruise. That is an amount of money I could risk losing if something happened and my credit card company wouldn't refund me for some reason. But do I think they will go bankrupt-no, most likely not.

 

[DCLDVC1]

Never say never.

 

[Mainsail Minnie]

Is Costco.ca a canadian travel agency?

Costco doesn't hold onto the money that you pay for a Disney cruise. That money goes immediately to DCL. So even if Costco were to go bankrupt, it wouldn't impact the money you had put into your DCL cruise via Costco Travel.

 

[Mainsail Minnie]

Yesterday I paid in full for an early July cruise that I'm sure will not sail. If I am offered a refund or a 125% cruise credit, as long as the 100% part of the credit is refundable, then I'm going to take the credit and apply it to our March cruise. I am not worried about DCL going bankrupt. I'm a little worried about what the experience will be like at that point, but not much. I bought DCL's insurance so that even as the cruise gets very close, we can still bail and get 75% toward a future cruise if need be. That's all the security I need.

This too shall pass.