RHR Highlights – An insight into asset realization in the leisure industry during the COVID-19 pandemic

The global Covid-19 pandemic has negatively impacted many businesses over the course of the last two years, and particularly those operating in the tourism and leisure sectors. In April 2020, as the initial wave of the pandemic took hold, members of the R&H Restructuring (RH R) team were appointed liquidators of a Cayman Islands based company that provided excursions and underwater tours to tourists in its submarine, Atlantis XI and in its semi-submersible vessel, Seaworld Observatory. With this liquidation, one of the biggest challenges faced was coordinating a sales process and finding buyers for the company's principal assets - the submarine and three other marine vessels, including the glass bottomed Seaworld Observatory. One of the issues that liquidators often face in this situation is the ongoing preservation and maintenance of specialised assets whilst a managed sales process is undertaken. In such a situation, a balance often has to be struck between the reduced realisations likely in a “quick fire" sale versus the potential increase in realisations that might be achieved in a more extended sales process, taking the associated increased costs into account. When faced with this type of scenario a liquidator must continually assess and appraise the position to ensure the best possible return to stakeholders. For this specific case, the liquidators were acutely aware of the ongoing high maintenance and insurance costs associated with continuing to hold the submarine, all of which had to be paid as an expense of the liquidation. Following an extensive marketing and negotiation process, and with the assistance of local agents, a successful sale of the submarine was concluded, shortly before hurricane season, which allowed the former employees to be repaid in full. RHR‘s experience in preserving niche assets and facilitating managed sales processes was key to this successful outcome. Our team has a wealth of experience in dealing with unusual assets and has a proven record of delivering value to stakeholders in the most challenging scenarios.