The main creditor of Seattle-based Society Expeditions is trying to
force the company into bankruptcy with plans to take over and
expand the one-ship adventure line into a major small-vessel cruise
But the current management team of Society, headed by German
businessman Heiko Klein, says the creditor’s efforts, which include
a Chapter 7 bankruptcy petition, are “groundless.”
The creditor, Patrician Cruises Ltd., filed for the involuntary
bankruptcy Oct. 3 in Washington, said Bruce Fischer, managing
director of Patrician.
Klein’s group hoped to file around Oct. 22 to seek dismissal of
the bankruptcy petition, according to Ute Hohn-Bowen, president of
Society Expeditions International, which oversees the Seattle
Despite the power struggle, Society’s ship, the World
Discoverer, continues to operate and is now cruising in the South
Society is equally owned by Hibernian Nordic Cruise Line and the
Society Expeditions Appreciation Trust, a Bermuda entity headed by
A group of high-powered American investors called Adventure
Expeditions & Travel owns 75 percent of Hibernian Nordic and
100 percent of Patrician.
Patrician at one time owned the World Discoverer and says it was
never paid charter fees and commissions promised by Society in
exchange for Klein’s 45 percent ownership stake in the ship.
Patrician was to receive 30 percent of all sales. “Society never
paid anything on the charter or anything on the commissions for the
past year and a half,” Fischer said.
He says the total due Patrician is now $15 million. Fischer said
Patrician has been trying to negotiate with Klein.
“It came down to a Catch-22,” Fischer said. “We’re trying to
negotiate a takeover of the company, but we’re not willing to walk
away from $15 million. We got tired of dancing with Heiko and his
delay tactics. He’s not even willing to sit down with us.”
Klein’s side maintains it does not owe Patrician $15
“The bankruptcy was filed in an attempt to embarrass Society, to
force payment of that disputed amount and to force the sale of
Society itself,” according to a statement issued by Klein’s
management team. “The facts are that Society is a solvent operation
that pays its obligations, and that the bankruptcy petition is
Fischer said Adventure Expeditions & Travel is comprised of
a “who’s who list of the travel industry,” entrepreneurial business
people with experience in cruise lines, ship ownership, land-based
travel operations and marketing.
He would not divulge the identity of the investors, however,
saying that could jeopardize negotiations to build or buy
Adventure Expeditions & Travel would like to take over
Society, Fischer said, and create a multi-brand, small-ship cruise
“The intent would be to build an 800-pound gorilla,” Fischer
said. “We’re not interested in a one-ship company.”
“If we came onboard with the assets we have, we’d be a major
player in the industry and we’d be positive for the industry,”
If Patrician’s bankruptcy petition proceeds, it could lead to
the liquidation of Society. Adventure Expeditions & Travel
could then step in to buy the assets.
“We’re hoping this can all be put to rest prior to the real pain
and suffering of shutting the company down,” Fischer said. “But
it’s a matter of time before we end up with the company. We’ll end
up with the name, the brand and the marketing.”
The World Discoverer, however, is owned by a Bahamian subsidiary
of the Sembawang Shipyard of Singapore, which renovated the ship
before it began operating for Society.
The shipyard held a second mortgage on the ship; the first was
held by the Bank of Scotland, which arranged the financing for
Society’s purchase and renovation of the ship.
In June, Fischer said, the bank seized the ship in Nome, Alaska.
The shipyard bought out the bank’s ownership of the World
Discoverer and now owns it outright.
However, after missing three or four cruises in June, the
shipyard did charter the ship back to Society, Fischer said.
But the company has been doing “poorly,” Fischer said, with
occupancies of about 60 percent and 2002 revenues of about $10
Once Society responds to the bankruptcy petition, a court
hearing will be scheduled. Resolution could come by year’s end:
just in time for Society Expeditions to celebrate its 30th
anniversary next year.