Buyers Trapped in Feud with Sunseeker...

Or as ob suggested, make payments direct to the mfg'r. Maybe new boat buyer's will take notice, don't let the middle man handle the money on new build.

That's a big suck up. Easy for you to spend their money. We can't look at their balance sheet.

Interesting, how would a letter of credit helped here? Payment conditioned on the actually delivery of the vessel to the purchaser?

Yes, that's exactly it. Throughout the build process, milestones can be established that trigger when specified funds are released to the builder with final payment withheld until delivery. Custom yachts are almost always built this way.

"Follow the money". My bet is ultimately the money is only partially recoverable. The process that leads to full or almost full discovery will continue for some time. One of the questions that I keep thinking about is "Was Obey conducting business as an agent of Sunseeker?" If so, by what definition? An agency contract between Obey and Sunseeker or a determination made by a judge. If a judge, whose court ? The Brits? Our feds? FL? CA? or ????? I have no knowledge of this saga - just reading what to me, is a cautionary tale.

I don't disagree. To the casual observer, Sunseeker is taking a hit. BUT honestly, in other industries that employ a dealer model, this kind of thing is not unheard of. It happens with car dealerships (in terms of lost earnest money deposits because of insolvency or fraud) more frequently than you might imagine and almost never (never, really) does the manufacturer interject itself into the process to make the consumer whole. Of course, there are more consumer protections for the buyers of autos than there are for boat buyers. And honestly, one of the reasons any manufacturer has a dealer network is to insulate themselves from the consumers transaction so hesitancy to intercede is understandable and predictable, frankly. It's hard to imagine any production boat company eating $4M just to avoid some bad press.

This is such an incredibly weird situation where someone has paid a dealer a handsome 7-figure number essentially for the promise of a boat delivery. As I mentioned earlier in the thread, in the boat industry (in most states) that's a dangerous business decision because boat dealers only have to be bonded for a surprisingly small amount of escrow (I think it's around $30K). So, if you give a boat dealer $4M and that boat dealer goes belly-up before delivery of the yacht, your escrow is only insured for $30K and the rest you'll have to settle with the bankruptcy court like any other vendor. Maybe you're treated as a secured creditor but maybe you're not. I'm not sure how the law in FL treats the buyer in this situation.

The dealership contract between Sunseeker and Obey almost certainly has a choice of law provision. I would only be guessing, but I'd wager country specified in that contract is the UK. So, it would essentially be a US federal judge applying British law to this contract, something that happens with surprising frequency in international contract litigation. There's also a chance that a choice of law provision exists in the contract between the dealer (Obey) and the consumer. This is not uncommon not only for the sale of the boat but for warranty disputes as well.

Don't be too quick to assume who is doing what to whom. We may only be seeing a very small part of the total situation. In fact, the first thing we read said that there were at least six boats involved. In fact, there were apparently 12 boats Obey ordered as spec boats for inventory. In this case, the buyer was not even known to Sunseeker. We have no idea how many people have purchased new or used and may lack clear title. What about the suit by American Marine Publishing against Obey or the one by Imokaye. There is even a history of legal battles back to the time of Atlantic Yacht and Ship, which Obey was a partner in.

Also, Obey claims his problems were a result of Sunseeker illegally terminating their agreement with him. Now, we know nothing about that but ask yourself if they terminated the agreement in March with no reason for doing so or what they were concerned about at that time.

Still if I was Sunseeker I'd be doing all I could to get the person a boat. However, I suspect that among the boats involved there are many entanglements over legal ownership at this point with some having been transferred to Obey, some to customers and some still held by Sunseeker. Then you have the complication of multiple legal entities in the US and in the UK. These cases get quite complex. Sunseeker may have even encouraged the buyer to have the boat arrested. As Capt J said in post #13, tip of the Iceberg kind of thing.

Also, as to "Judgment Proof." I assume from a civil standpoint they are. This isn't the first or only recent litigation against them. However, there could be potential criminal charges involved if those things alleged are true.

Now, having focused on Obey, what about Sunseeker. What is their financial situation and what is their legal situation. Financial first. Well, it may not be strong enough to handle this situation better and to release the boat and others. Their profit was around $1.4 million in 2017 and $8.4 in 2018. Cash wise, this is offset by tremendous capital expenditures. As of December 31, their Assets were $86 million less than their liabilities. Cash in the bank at that time was $15 million. In the scope of large manufacturing companies, they're still a small company even though very large by industry standards with sales around $380 million per year. The point is that the money at stake on this situation may very well be more than their entire annual profits. It may be money they don't have and that they'd have to borrow. As we talk buying direct, that's only as safe as the company is and very few boat builders are really that safe. Who knows if Wanda (owners) wants to put more money in Sunseeker. Buyers either need to be able to sustain the losses or use LC's or insure their purchases or take other actions. It's sad that after several years of consistent growth, the industry of Yacht Building is still not a strong industry. Builders are highly leveraged and one downturn could put many of them at risk. The money in question in the Sunseeker vs Obey situation is greater than the annual profits of Sunseeker in their best year under current ownership.

Perhaps their management can't or doesn't have the authority to resolve this. Political conflict even plays a role. Wanda has tremendous foreign investment including AMC theaters in the US. Roughly two years ago, the Chinese government restricted the state owned banks from making loans to private Chinese firms as they wanted to limit their foreign investment. Wanda sold over $10 billion of assets in 2017 and 2018 as a result.

While I still criticize Sunseeker's handling of this, perhaps they just simply can't afford to do better. That would be a sad commentary. However, there is no evidence in the case of the arrested boat that Sunseeker has done anything wrong. They sold a boat to Obey, who they feel hasn't paid, so they haven't turned it over to them. By all that is apparent, Obey no longer is in business. Sunseeker may not legally be able to turn the boat over to the end buyer. In fact, if they released it to Obey does it then just get involved in a bankruptcy? Has Sunseeker then compromised the creditors? Sunseeker would have to re-establish ownership of the boat and then how do they apply money and a trade paid to Obey? If you go to an auto dealership and order a car and pay today and they go out of business tonight, the manufacturer doesn't give you a car. Your arrangement was with the dealer and you're now a creditor. My point is that it looks bad for Sunseeker, but at this point, their hands may well be tied.

I don't fault the buyers at all when you're buying from one of the largest builders in the world through their largest dealer. Inherently, that should be safe. I will add one other word of caution for buyers. Many trade in boats, even yachts. In so doing, you're always paying less money than the dealer must pay to the builder. The dealer may have the ability to handle that. More often, the dealer may need to sell trade in A to pay for purchase B and trade in B to pay for C. A legitimate business strategy can quickly become a Ponzi scheme. This has happened over and over with dealers and brokerages. Obey and Sunseeker is just one more, albeit major, example.

This is another sad reflection on the industry. It's Obey and Sunseeker today but could be any number of dealers and builders in the future. Just use the best lawyers you can before making the deal so you don't need them at this point. It's scary ordering a new boat in this price range. Even with the best research, you know so little about the people you're dealing with and you're always asked to pay most of the price long before delivery. This issue is far greater than Obey and Sunseeker.

I'd agree that terminating your dealer agreement with your largest distributor is rare but when you've got someone with deeper pockets, a publicly traded company offering to buy more volume than what your current distributor buys, greed sets in. Don't take everything in that article as fact. There is a ton more to this story...

I won't argue with you for a moment that there's a ton more to the story. I'm sure plenty of blame to go around to all parties and lawsuits that may take years to resolve.

Lots and lots of billable hours. I should have listened to my mother and gone to law school.

A lawyered up situation. The buyer says he paid the progress payments, Obey had an obligation to forward funds to Sunseeker. Sunseekers is saying they did not receive funds and holding the boat from delivery. Why Sunseeker did not notice the buyer for non payment is surprising (or did they?). Rumors Obey is no more? Can it get any worse? Probably! RER is right, this will likely affect contracts on Sunseekers and others, plus another negative image for the industry. Hope the buyer gets his boat….

Obey has quickly blacked out Rick Obey and Associates and slid over to Rick Obey Yacht Sales. Rick Obey and Associates is a fictitious name of Marine Consulting Associates, Inc. and Rick Obey Yacht Sales is of Specialized Nautical Services, Inc. It's fictitious name filing was made on July 9. The corporation was formed on June 18. So, all as part of this.

Now, here's what may well be the sad reality for the buyers. Rick Obey and Associates may be judgment proof at this point. Sunseeker may be entirely clear as not a party to the transaction and as owner of the boats, having received partial payment from Obey. Obey chose not to pay more to try to offset amounts he claimed they owed him. Problem is all he felt he was owed was business costs, while he owed Sunseeker for Collateralized and Titled assets. This could drag on for a long, long time. The buyers may be in the same shape as the boaters who shipped via Yacht Path. They'd paid YP, but YP hadn't paid the ships. If they wanted their boats, then they had to pay the ships.

If you're Sunseeker, how much would you spend or pay or lose to protect your reputation? Would you go to $12 or $13 million? As a British company owned by a Chinese company would you? That's more money that they make in two years.

First test will be does the arrest of the boat hold up. Will Sunseeker go along with it or will they claim it's their boat and they haven't been paid and Obey sold a boat to the buyer that Obey didn't own.

Another question is knowing all this and knowing there is a possibility Sunseeker did wrong or a possibility they did nothing wrong, would you buy one? As a former owner of a Manhattan 65 and prospective buyer of a Manhattan 66 for our next loop trip, I can say that although out planned purchase is still a year or two out, we're looking harder at alternatives. I would not today buy one until I see all this untangled.

I have been retailing boats for a long time. The comments above about a weak Marine industry can be pretty spot on. The way I see it when a customer writes me a check that is between me and them. If I can’t produce the boat on time, right color, right motor, free of defect for delivery that is my problem not the manufacturers as far as the customer is concerned. Unfortunately the balance sheet of most marine retailers is nonexistent, the glitz and glamor of a fancy boat show booth doesn’t get you very far when you have to pony up a refund especially when a trade may be involved. The ordering process for these uk yachts usually involves some pretty detailed stage payments in my experience. I doubt this boat was shipped stateside with any intention of being a sold boat as far as sunseeker was concerned.

All of the interaction between Obey and Sunseeker is publicly accessible. One of the good reads is about 219 pages long.