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Cruise line in Chapter 11
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December 28, 2000: 9:45 a.m. ET
Parent of Commodore and Crown cruise lines files for bankruptcy
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NEW YORK (CNNfn) - The parent company of Commodore Cruise Line and Crown Cruise Line has filed for bankruptcy protection and suspended all cruise operations.
Hollywood, Fla.-based Commodore Holdings Ltd. said Wednesday it filed for protection from creditors under Chapter 11 of U.S. bankruptcy laws and that it planned to consolidate its debts and file a reorganization plan. Chapter 11 holds out hope for future operation of the business, as opposed to Chapter 7, which leads to liquidation.
Commodore's (CCLN: Research, Estimates) financial problems started last spring when it spent $27 million refurbishing the 433-foot Enchanted Sun and offered gambling day cruises from San Diego to Mexico. The operation was suspended after two months. It had averaged 250 passengers on the 850-capacity ship and never reached its planned schedule of trips.
 The company canceled cruises on the Enchanted Capri beginning Sunday, and on the Enchanted Isle and Crown Dynasty starting Saturday. The Enchanted Capri and Enchanted Isle offered two-, five- and seven-day cruises sailing from New Orleans and the Crown Dynasty sailed to Aruba. These cruises will be cut short and all passengers on board the vessels will be returned to their original ports of embarkation, the company said in a statement.
"We deeply regret having to take this action, but we had no other choice," Fred A. Mayer, Commodore's chief executive officer, said. Mayer said negotiations with the lenders holding the company's mortgages could not be resolved in time to avoid the cancellations.
Choppy financial waters likely for industry
The cruise industry is likely to see choppy financial waters in the coming years, especially if the economy slows demands for its services. There has been a building boom taking place as the industry anticipated that aging baby boomers would turn to cruises for the first time, a trend that has yet to prove itself.
 About 50 new ships are now planned, according to some estimates, including the Queen Mary 2, a $780 million ship that would be the largest in history which is planned by Cunard Line, a unit of industry leader Carnival Cruise Lines (CCL: Research, Estimates).
In October, Royal Caribbean Cruise (RCL: Research, Estimates) launched its Explorer of the Seas ship as the world's largest cruise ship. With a capacity of 3,114, it will continue to hold the most passengers even after the Queen Mary 2's planned launch in 2003, although it will be 112 feet shorter.
This was the second major bankruptcy in the sector this year. Florida-based Premier Cruises, which operated the Big Red Boat ships, halted operations in September when creditors, including Donaldson, Lufkin and Jenrette, seized its six ships. The seizures stranded Premier's passengers from Halifax, Nova Scotia to Cozumel, Mexico.
After Premier halted operations, one of those six ships, the Seabreeze, was heading without passengers from Halifax to Charleston, S.C., for engine repairs last week when its engines failed in heavy seas about 200 miles off the Virginia coast. The ship sank, although fortunately the Coast Guard barely managed to rescue the crew of 32 using helicopters.
The Nasdaq Stock Market halted trading of Commodore shares Wednesday. It fell 3 cents to 16 cents before the announcement, well below its 52-week high of $5.43. 
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