M/V Polar Star – Update 05 Dec 2012

There is news regarding the M/V Polar Star, the former icebreaker tour ship. She was WC’s ship for a trip to the Southern Ocean two years ago. For the story of what happened to her, please read the earlier posts at the links at the end of this blog post.

The Polar Star’s owner, Karlsen Shipping Company, is in Canadian receivership. We’d say “bankruptcy” in the United States. A receivership is administered by a Receiver under supervision of a court. There has been a change of receivers in the Karlsen Receivership. It was Price Waterhouse. It is now Grant Thornton Limited. The substitution of receivers was at the instance of something called 3264741 Nova Scotia Limited. According to pleadings in the receivership case, 3264741 Nova Scotia Limited had previously purchased from Toronto Dominion Bank the lien of that Bank on the Polar Star.

In October 2012, Grant Thornton applied for an order approving the sale of the M/V Polar Star to 3264741 Nova Scotia Limited. The purchase price was $200,000. Pocket change. At some point in the process, it appears 3264741 Nova Scotia Limited assigned its rights to another company called NumberCo. The exact relationship between 3264741 Nova Scotia Limited and NumberCo isn’t clear. But as a guess, it’s an effort to put some legal distance between the owners of the M/V Polar Star and the bills owed by the ship itself.

According to Grant Thornton, Astican Shipyard is charging some 34,500 Euros (about US$45,000) a month for storage. The original repair expenses were apparently never paid. And it’s estimated that it will cost US$1.7 million to get the Polar Star re-certified to carry passengers. While the ship has been in dry dock, according to Thornton, the ship broker who valued the ship at $8-10 million in May 2011 now values it at less than half that amount.

So NumberCo, whatever and whoever that may be, now owns the M/V Polar Star, free of Toronto Dominion Bank’s ship mortgage, but subject to the lien for repair of the ship (still incomplete) and the substantial storage fees accumulated at Astican Shipyard. Recall that Price Waterhouse had abandoned the ship entirely.

The purchase price paid by NumberCo, combined with its acquisition of the ship mortgage, seems too high for the ship to be scrapped. And NumberCo and its parent/affiliate, 3264741 Nova Scotia Limited, obviously is highly motivated. Not only did it spring for $200,000; it went to the trouble of finding a new Receiver and seeking substitution for Price Waterhouse. It seems nearly certain that NumberCo has negotiated some kind of deal with Astican Shipyard; it would have been imprudent for NumberCo to move forward otherwise.

WC has done a lot of legal work in bankruptcies and receiverships. You develop a kind of sensitivity to skanky conduct through that kind of experience. And this sequence of events is just a little bit skanky. At a minimum, the information available in the on-line pleadings is less than all of the story. It’s not necessarily legal wrong-doing. It’s likely nothing illegal. Just a bit … skanky.

WC suspects it will now get even harder to track development regarding the M/V Polar Star. We’ll see.

Previous posts on the M/V Polar Star:

The Sad End of the Polar Star
A Depressing Update on the M/V Polar Star
A Second Update on the M/V Polar Star
A Brief Update on the M/V Polar Star