Discovery Again!

[Tranona]

Good to know. Is he the one trying to sell it or has he bought it to complete? Looks like a mother of a job!

Assuming it is this one we are talking about harbouryachts.co.uk/Boat-Details/SEKP%201517/Oyster%20495/ if so he has owned it for some time and done quite a bit of work but long term does not want to use it. So will sell or complete for the new owner. Looked at it a couple of years ago and feeling was it would cost more to complete than it would be worth and it was not a particularly popular model. Of course the potential value might have changed but it sits on a mooring doing nothing and costs to complete will only go up!

 

[Buck Turgidson]

Assuming it is this one we are talking about harbouryachts.co.uk/Boat-Details/SEKP%201517/Oyster%20495/ if so he has owned it for some time and done quite a bit of work but long term does not want to use it. So will sell or complete for the new owner. Looked at it a couple of years ago and feeling was it would cost more to complete than it would be worth and it was not a particularly popular model. Of course the potential value might have changed but it sits on a mooring doing nothing and costs to complete will only go up!

yep, that's the one.

 

[Tranona]

Ideally no broker would be permitted to trade without belonging to a trade insurance scheme,yes members would have to pay to bail out the negligent or corrupt but it might lead to a higher degree of financial competence . I doubt bmf would want to introduce such a scheme but some simple regulation of the marine industry is long overdue in summary .

No broker involved here - brokers by definition have no financial interest in a boat. Discovery is a manufacturing company acting on its own account as a limited liability company just like thousands of others in all sorts of industries. Can't think of any other industry where insurance against failure is compulsory. Why should boat building or dealing be any different?

Of course as I said some industries do have voluntary insurance based schemes, but these are usually industries (home improvements for example) where failures resulting in loss to customers are common, so being able to offer an independent guarantee is often essential to get business. No such thing as a free lunch though and the customer pays the premium - and insurers who back the schemes can determine premiums based on a history of claims.

Despite the well known failures in boat building/dealing the number of people affected (and the amount of money involved) is very small in relation to the total volume of boat buying and selling. It is a case of caveat emptor - buyers almost by definition in this sector of the market are financially aware people and should carry out their own due diligence and risk assessment before committing and mitigate the risk where they can, for example by having a contract such as that described earlier. It is not fool proof as it still requires the buyer to put in place a mechanism that ensures he only pays for work done and that what belongs to him is clearly identified in the works.

When I worked for a builder managing this type of contract it was normal to have each stage inspected by the buyer's agent and all work done and due to be paid for checked and noted before the stage payment is drawn down. However this really only happened properly with customers like overseas governments or other big buyers where the contract was also often covered by a bank letter of credit which we could not draw on without such verification. Private buyers with the same basic contract were often very lax - after all they were buying the dream and what dreamer wants to go through all that hassle. Much more important to agree the upholstery and make sure all the bespoke crockery matches!

 

[Daydream believer]

As a contractor I occasionally had to put up an "on demand" bond before I could work on contracts over £1m. Some LAs knew us well & stopped asking. An "on demand" bond did not require liquidation etc. but could be triggered if the client was dissatisfied with performance.
These were eventually phased out following industry objection & just ordinary performance bonds are the norm now.
I sometimes worked in later years for a company turning over £ 120m PA & a bond of £4m plus was not uncommon for a £40m contract. The contractor having to finance this until the client agreed everything was absolutely completed. Used to cause friction getting them signed off as they can limit the amount of work a company can take on. Insurance companies will only issue bonds up to a certain total limit.
I can imagine if a boat builder had to have these they could only sell certain amount of boats at a time. At least it would force them to get them finished a bit quicker.

 

[dunedin]

As I understand it, the problem was a sub standard hull moulding produced by a subcontractor for a particular model of Oyster. That is not necessarily "corner cutting" by the Oyster company, other than possibly a failure to check the subcontractor's work during construction. Perhaps I have this wrong. I am sure others will correct me if I am & there will be no need to resurect old news
Apart from that , are you suggesting that Oyster made many other instances of dubious "cutting of corners". Or are you just letting your dislike of one particular person spill out.
I ask because it puts a whole new slant on the second hand market for Oyster yachts & current owners might have something to say about that

There were quite a number of issues with the Polina Star, well documented by some independent investigators / reporters at the time (but not the UK yachting press, mostly international reports as the UK press seemed disinclined to report on this). Think it included a ton or so of rough material in the bow as counter weight? Not sure that it would be accurate to lay the blame purely or indeed primarily at the sub contractor.
Also the owner‘s claims for redress also related to the way their initial reports of keel problems were dealt with, or otherwise. AFAIK Polina Star had already aborted its planned voyage and heading back to seek more investigations when the boat broke up.
Any builder is accountable for its product and after sales support. That includes selection and supervision of any sub contractors.

 

[Parabolica]

As I understand it, the problem was a sub standard hull moulding produced by a subcontractor for a particular model of Oyster. That is not necessarily "corner cutting" by the Oyster company, other than possibly a failure to check the subcontractor's work during construction. Perhaps I have this wrong. I am sure others will correct me if I am & there will be no need to resurect old news
Apart from that , are you suggesting that Oyster made many other instances of dubious "cutting of corners". Or are you just letting your dislike of one particular person spill out.
I ask because it puts a whole new slant on the second hand market for Oyster yachts & current owners might have something to say about that

i can only tell it as i saw it (and at great cost to myself too), but Tydeman‘s style of running the business was to try and break his suppliers down by providing drawing information that would enable Orders to be placed then upspec everything to that of what he really wanted then argue when the supplier wanted payment for said variation. For those suppliers that had no choice i would guess that inevitably they had to find a way through and this way, inevitably led to a building of sub-standard components and whilst the company might have happily claimed they were making such amazing yachts (they would wouldn’t they), and buyers had no reason to disbelieve that claim either (why would they if all “looked” good), the reality is that he brought the companies troubles on himself because of the way he did things.

I can only hope that his time as CEO of Fairline was cut short because he was found out very quickly by team members who knew full well that his way was not what their brand stood for and they spoke up, but more importantly someone listened.

You are right in that i dislike the man (intently), but only because he earned that place of his own doing. Nasty piece of work.

Boat building brands should avoid at all costs. Sadly, one recently hasn’t but i’m fairly certain that he’ll f*ck himself over again all too soon as it’s inherant in him to not do right by others.

 

[burgundyben]

What has happened to boats that were in build with Discovery?

 

[Buck Turgidson]

What has happened to boats that were in build with Discovery?

Mostly available through Berthons Brokerage ?????

 

[ashtead]

I don’t really think that there is much difference between a dodgy broker going bust and that of a dodgy builder. Dodgy brokers could be legally obliged to ring fence deposits in a client account with industry protection provided by others-it would soon clean out the poor practices if the rest of the industry had to support consumers ripped off by these practices. Clearly we all know boat builders will go bust but given the amounts involved some form of protection should be available to treat customers fairly. Just needs a bit more regulation to protect the innocent boat buyer really. This might lead to a regulatory cost but given all the other business manage with a levy of this sort I doubt it would kill off brokers somehow. Estate agents have been regulated after all .

 

[Tranona]

I don’t really think that there is much difference between a dodgy broker going bust and that of a dodgy builder. Dodgy brokers could be legally obliged to ring fence deposits in a client account with industry protection provided by others-it would soon clean out the poor practices if the rest of the industry had to support consumers ripped off by these practices. Clearly we all know boat builders will go bust but given the amounts involved some form of protection should be available to treat customers fairly. Just needs a bit more regulation to protect the innocent boat buyer really. This might lead to a regulatory cost but given all the other business manage with a levy of this sort I doubt it would kill off brokers somehow. Estate agents have been regulated after all .

A world of difference between "brokers going bust" - which in reality does not happen with sufficient frequency to even register as an issue. I can only recall 2 instances in the last 20 years and both were properly dealt with by the courts. Don't quote Opal Marine either as no brokerage clients lost out - it was the dealership part of the business that went bust. Brokers and builders are completely different entities and the law treats them differently. I would imagine that you would find it extremely difficult to find a broker now who does not hold client's funds in a proper trust account - members of the YDSA and BMF have to do it as a condition of membership.

Boat builders are no different from any other business that takes money from customers in advance of delivering the goods. Businesses of all sorts go bust all the time taking with them customer's money. For example the amount of money lost in the Courts furniture bankruptcy (remember that?) would dwarf the amounts lost by customers through failed boat building businesses. No law or regulation preventing retailers from taking deposits with no security. What do you think is so special about boat builders that justifies "regulation" or special treatment that does not apply in any other business? Estate agents do not hold client's money, their regulation is about their business practises. The big bit of the house trading market that is regulated is conveyancing - and the legal profession in general. This indeed does have compulsory insurance as part of regulation - that is because legal practitioners regularly and frequently (as a class, not individuals) defraud clients. A broker is closer to a conveyancer as it is that part of his role where the potential risk lies. Unlike property conveyancing and other financial activities that the legal profession handles the opportunity for fraud is extremely limited, both in terms of the amounts involved and the short timescales funds sit in an account without being accounted for, therefore you will struggle to find any concrete examples of fraud by brokers.

What confuses the issue is that many businesses in the marine trade fulfil different functions - notable failures like Opal and Dickies are good examples where they are brokers dealers on their own account, retailers, marina operators and even builders. Each of these businesses operates to different rules both in patterns of trading and as legal entities. It is easy to think they are all one and when things go wrong it is often difficult for outsiders to see the real issues. Less so with a builder like Discovery where the basic problem is that it was undercapitalised for the type of business it undertook and relied on short term credit, customers advance payments and supplier credit to keep going. At some point the spinning plates fall and there is not enough cash to meet pressing outgoings.

Boat buyers are not innocent people - particularly those who have sufficient financial resources to commit such huge sums of money to buy a non essential frippery like a boat. Of course they should expect to get their boat, but I am sure they also recognise that it is a high risk activity - but why should they expect others to bail them out if it goes wrong? Who is going to bail them out anyway? Certainly not other members of the same industry - what is in it for them to pay into a fund that will only pay out to customers of failed businesses? As I said earlier industry schemes are backed by insurers who pool risk. Historically the risk of failed boat purchases is extremely small and it mainly happens with high value custom or semi custom builders whose business is highly volatile and returns on investment difficult if not impossible to achieve. If individuals don't like this risk then keep out, but if you do join in don't expect somebody else to bail you out if it goes wrong.

BTW think about the thousands of boats that are bought and sold every year without any problems - that is far more important than the tiny number of transactions that go wrong.

 

[Concerto]

Less so with a builder like Discovery where the basic problem is that it was undercapitalised for the type of business it undertook and relied on short term credit, customers advance payments and supplier credit to keep going. At some point the spinning plates fall and there is not enough cash to meet pressing outgoings.

Every company director has a legal duty to ensure a company is not allowed to continue trading when it cannot pay its debts. This is classified as "Unfit Conduct" and the directors can be fined, prosecuted or disqualified from being a company director.
Running a limited company

It seems Discovery had reached the end of trading without the promised additional capital from the owner. He decided his best option was to follow the law and shut Discovery down and the limited company status meant he limited his losses. However he has restarted the business in an almost identical form with most of the existing products and staff, something I feel that should be made illegal under the same ownership. This is what we all feel is wrong in this situation.

For the buyers caught up in this mess, I hope they get their boats completed properly and at a similar total cost.

 

[Tranona]

Every company director has a legal duty to ensure a company is not allowed to continue trading when it cannot pay its debts. This is classified as "Unfit Conduct" and the directors can be fined, prosecuted or disqualified from being a company director.
Running a limited company

For the buyers caught up in this mess, I hope they get their boats completed properly and at a similar total cost.

That is the point I was making - I know company law. Laws are already in place to regulate businesses, and in the case of brokers to cover the operation of trust accounts.

It is difficult therefore to think of what "regulation" will do that is a greater deterrent than prison sentences for transgressions!. Leaving aside the lack of any real evidence of the sorts of malpractice some people imagine takes place, protection of consumers from suffering losses as a result of business failures would stifle business. Think of all the people who have placed deposits for Eneos Grenadiers, or paid in advance for Christmas hampers, funeral plans, new carpets, or close to home deposits for new sails etc. All (and countless more everyday transactions) are unsecured creditors of the businesses they have mad payments to.

A handful of rich people who took a risk on having a boat built by an unstable company real don't figure much in the whole scheme of things!

 

[Parabolica]

Every company director has a legal duty to ensure a company is not allowed to continue trading when it cannot pay its debts. This is classified as "Unfit Conduct" and the directors can be fined, prosecuted or disqualified from being a company director.
Running a limited company

It seems Discovery had reached the end of trading without the promised additional capital from the owner. He decided his best option was to follow the law and shut Discovery down and the limited company status meant he limited his losses. However he has restarted the business in an almost identical form with most of the existing products and staff, something I feel that should be made illegal under the same ownership. This is what we all feel is wrong in this situation.

For the buyers caught up in this mess, I hope they get their boats completed properly and at a similar total cost.

My feelings exactly. It is a fraudulent situation in every way. I just want my products back and yet even with retention of title stated on them and having informed that to the liquidator, as no payments have been made for them at whatsoever, the NewCo is doing all it can to keep hold of the goods like they have some rights over them. I had to remind them that they are a totally separate company with no connection and as such, it’s none of their business.

 

[Tranona]

My feelings exactly. It is a fraudulent situation in every way. I just want my products back and yet even with retention of title stated on them and having informed that to the liquidator, as no payments have been made for them at whatsoever, the NewCo is doing all it can to keep hold of the goods like they have some rights over them. I had to remind them that they are a totally separate company with no connection and as such, it’s none of their business.

Good luck (in the nicest possible way). Liquidations are messy with so many competing claims. The liquidator has to identify the failed entitie's assets (including your unpaid for goods) to offset against its liabilities. Despite the goods not having been paid for they legally belong to the failed company unless you are able to enforce your retention of title, which based on past attempts is very unlikely. If you want to go down that route then you need professional advice. Otherwise the liquidator will sell the goods, probably to NewCo which needs them. Retention really only works if you get your goods out before the administrator takes over.

 

[Parabolica]

Good luck (in the nicest possible way). Liquidations are messy with so many competing claims. The liquidator has to identify the failed entitie's assets (including your unpaid for goods) to offset against its liabilities. Despite the goods not having been paid for they legally belong to the failed company unless you are able to enforce your retention of title, which based on past attempts is very unlikely. If you want to go down that route then you need professional advice. Otherwise the liquidator will sell the goods, probably to NewCo which needs them. Retention really only works if you get your goods out before the administrator takes over.

Not so, but thank you for the well wishes too. As long as your Terms & Conditions are well written and ours are. I will take my possession back very shortly.

 

[John R B]

Not sure if it's related, but I received an email from Northshore (from the address hitherto used for Southerly brokerage updates) announcing a new "Southerly Speedwave 40RST" swing-keeler for delivery in 2023. Price is announced as £508k including VAT.

 

[Buck Turgidson]

Not sure if it's related, but I received an email from Northshore (from the address hitherto used for Southerly brokerage updates) announcing a new "Southerly Speedwave 40RST" swing-keeler for delivery in 2023. Price is announced as £508k including VAT.

I like the fact that their new website features waves rolling up and down a beach but no boat until you scroll down the page ???
Southerly Speedwave | Swing keel cruising yachts | Chichester

 

[Parabolica]

Not so, but thank you for the well wishes too. As long as your Terms & Conditions are well written and ours are. I will take my possession back very shortly.

As an update and apologies as this was a few weeks back now, I went and recovered my goods. No obstruction was put up and the people there were actually very courteous and understanding.

 

[Seven Spades]

So who is going to finish your Hull?

 

[E39mad]

Not sure if it's related, but I received an email from Northshore (from the address hitherto used for Southerly brokerage updates) announcing a new "Southerly Speedwave 40RST" swing-keeler for delivery in 2023. Price is announced as £508k including VAT.

Interesting - maybe Northshore purely sold the rights (moulds) of the then existing range to Discovery without the full rights to the Southerly name and keel design. Canny move if that was the case.