Owner of embattled Dream Cruises starts new firm hiring laid-off staff, offers 'goodwill' vouchers to affected customers
SINGAPORE — Malaysian billionaire Lim Kok Thay, who previously ran embattled Dream Cruises, has launched a new Singapore-based cruise firm, Resorts World Cruises, which will set sail next month.
A view of the main swimming pool onboard the Genting Dream cruise liner.
- The owner of an embattled cruise operator and its parent company has started a new cruise company here
- Resorts World Cruises will set sail in June
- The firm has hired about 70 per cent of the employees laid off by Dream Cruises
- The Genting Dream ship will initially do "cruises to nowhere", though regional destinations are planned for later in the year
- The new firm distanced itself from Dream Cruises but is offering "goodwill" vouchers to customers whose cruises did not proceed
SINGAPORE — Malaysian billionaire Lim Kok Thay, who previously ran embattled Dream Cruises, has launched a new Singapore-based cruise firm, Resorts World Cruises, which will set sail next month.
The firm's ship Genting Dream will initially offer the popular "cruises to nowhere" from June 15, with the aim of adding regional destinations such as Phuket and Bali from September this year.
Announcing the launch on Wednesday (May 18), the firm distanced the new operation from Dream Cruises, and its parent firm Genting Hong Kong, which is undergoing liquidation.
However, Resorts World Cruises is hiring employees previously laid off by the former operator and is offering vouchers to customers who had bookings when Dream Cruises announced that it would cease operations in March.
At a media conference, Mr Michael Goh, president and head of international sales of the new firm, said that Resorts World Cruises has hired about 1,700 workers laid off by Genting Hong Kong, which makes up about 70 per cent of the Genting Dream's crew as well as on-shore staff in the Singapore office.
During the winding-up process for Genting Hong Kong, some creditors have reportedly claimed that they have not been paid various expenses. These matters will be dealt with by their former companies, and not by Resorts World Cruises, Mr Goh said.
Mr Goh was the former president of Dream Cruises.
Customers of Dream Cruises who had made bookings for trips that did not proceed will also be able to get "goodwill" complimentary cruise credits for the new cruise liner.
Resorts World Cruises will launch its first voyage on June 15 via cruise ship Genting Dream, which was previously owned by Genting Hong Kong.
FINANCIAL TROUBLES
Cruise ship World Dream, which was owned by Dream Cruises, ceased operations after its final sailing returned to Singapore on March 2.
The cruise liner first said on Jan 23 that it would be suspending bookings for its cruises here, after its beleaguered parent company, Genting Hong Kong, applied to be wound up.
Genting Hong Kong, which is part of Malaysia's Genting Group, reported a net loss of US$238 million (around S$320 million) in the first half of last year, as operations continued to be affected by the Covid-19 pandemic. It reported a net loss of US$1.7 billion in 2020.
Mr Lim resigned as the company's chairman and chief executive officer in January, after the company filed for provisional liquidation.
The Straits Times reported in March that since Genting Hong Kong ran into financial troubles, at least 60 of its staff members were terminated.
It also reported that 57 staff members from companies related to Genting Hong Kong were seeking unpaid notice pay and encashment of unconsumed annual leave, among other expenses, and that it had raised the issue with the Tripartite Alliance for Dispute Management (TADM).
Asked if any of these issues would be resolved by the new company, Mr Goh said: "The dispute that they have is with another cruise brand."
He added that the dispute "is being managed" by the liquidator and TADM.
In response to TODAY's queries, TADM said it has successfully helped the claimants to recover their salaries.
But it added: "Unfortunately, some other claims like pay in lieu of notice and unconsumed leave could not be resolved in time before the company went into liquidation. For the unresolved claims, TADM has helped the claimants to file them with the appointed liquidator."
Mr Goh also confirmed that Resorts World Cruises will be under shareholder Two Trees Family Holdings, which lists Mr Lim and his son Lim Keong Hui among its directors, and is a separate entity to Genting Hong Kong.
World Dream customers who have not received refunds for bookings on the defunct cruise will be offered complimentary cruise credits.
"As a gesture of goodwill, passengers who are affected by World Dream, we will give them cruise credits that will allow them to come onboard from June 15 to March next year," Mr Goh said.
Affected customers may write in to Resorts World Cruises at reservations.en [at] rwcruises.com.
There will also be a new payment process where payments are kept in a separate account, and will only be drawn during the day of the cruise.
"The amount that (customers) pay will only be drawn during the actual dates that they are cruising, so that's definitely a very good assurance to our cruisers," Mr Goh added.
'LEGALLY SOUND, ETHICALLY QUESTIONABLE'
Lawyers and academics interviewed by TODAY said that the move by the owners of Resorts World Cruises to wind up their previous company and launch a new one is perfectly legal, even if the previous company owes expenses to their employers.
Ms Charmaine Neo of Forte Law LLC said that in corporate law, there is a concept of separate legal entities — which means that the two distinct firms, such as Dream Cruises and Resorts World Cruises, are entirely separate entities.
"All of the liabilities incurred by Dream Cruises and Genting Hong Kong will be dealt with in that separate liquidation... by separating up their separate company they have ring-fenced their liability and exposure."
Ms Neo, who is an associate director at the firm specialising in dispute resolution matters, added that even if they are owned by the same person or people, the liabilities are tagged to the company and not the people.
"Even though it is run by the same guy, it doesn’t touch him personally, because he's just either a shareholder or director, or both. It is not him who is personally responsible for the debt of the company."
The only exception is if there is any evidence of wrongdoing such as fraud, in which case criminal charges may follow the owner or owners of the company, which may prevent them from starting a new firm.
Agreeing, Mr Justin Yip, who is a partner for restructuring and insolvency at law firm Withers KhattarWong, said that while it is true the firms are legally separate, there are some limitations to this.
"If the new company or business is in the same line as the company in liquidation, it would be advisable for the owner or shareholder to make sure that assets of the company in liquidation are not being used in the new company or business."
Though it did not state its reasons, the ship World Dream that was under Dream Cruises was not acquired by Resorts World Cruises. A distinct ship, Genting Dream, was utilised instead.
The lawyers also added that employees cannot claim any owed expenses from the new company since they are considered fresh hires, but will have to take it up with the old company as is being done now.
Ms Amarjit Kaur, a partner at Withers KhattarWong specialising in labour and employment, told TODAY that unless otherwise stated in the previous contract, the "re-hired" employees at the new company are treated as new hires.
"As such, they will no longer be able to rely on tenure under the old employment agreement for the purposes of claiming retrenchment benefits, for example, if they find themselves in such a situation with the new employer down the road."
However, because it is an entirely new firm, the "re-hired" employees have the right to continue pushing for unpaid expenses.
"Given that the employee's claims are for monies due and owed to them by the old cruise company... it would be within their rights to continue to pursue such claims," Ms Kaur said.
However, just because the move is legal, it does not mean that it is ethical, one academic said.
Professor Lawrence Loh, director at the Centre for Governance and Sustainability at National University of Singapore Business school, said that the move by the owners of the new firm could be seen by some as using a "loophole".
"Even if they found a legally feasible way to do things, it may not be the right way from an ethical stance," he said.
"You are owing so many of your staff money and then you set up another (business) somewhere that is totally legally distinct.
"Even though it's legally possible, from a purely doing-the-right-thing (standpoint), it is definitely something that needs to be looked at carefully."
TRIPS TO REGIONAL DESTINATIONS
While the mode of the initial cruise voyages will be the default "cruise to nowhere" that has become popular over the course of the pandemic, Resorts World Cruises will be looking to restart destination cruises in September.
The cruise liner plans to expand its itineraries to nearby destinations such as Langkawi and Penang in Malaysia, Phuket in Thailand, and Bintan and Bali in Indonesia.
"We have been very actively engaging the Thailand, Indonesia and Malaysia authorities, to work out the arrangement to have the restart of destination cruises as early as possible," Mr Goh added.
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