Northshore in trouble???

[Bosun Higgs]

How about the double Queens award to industry winner, Oyster Yachts.

As is the UK construction industry

Have a look at this post about Oyster http://www.ybw.com/forums/showthread.php?305063-quot-Oyster-Marine-quot-sold-to-Dutch-Investors

 

[Bosun Higgs]

This sums up why business ethics have been gone to the wind in this day and age. By deliberately ring-fencing assets essential to the operation of the business, you are deliberately transferring risk to customers without letting them know. The fact that you did your homework and didn't buy, only supports this. You saw this making the business more fragile, more likely to harm customers as well as removing an incentive from the directors to manage the business well.

I did what any sensible person considering spending that much would have done. If anyone is daft enough to pay up front for that sort of purchase without reading the accounts and doing searches then they deserve everything they get. You really cannot stumble through life expecting everyone to protect you. You protect yourself which is not what you do when you

like most of us here, spending a very large proportion of their wealth to fund their boats

. I reckon is your boat is more than 10% of your spare cash ie after deducting the house, you're spending too much on it.

And it doesnt remove the directors incentives as the directors have shown in the way they built up Southerly using a fair bit of their own money.. Personally I think they were daft to invest hard earned money in such a dodgy business as boat building but like the rest of us in life they make their own judgements and live or die by them.

 

[longjohnsilver]

I did what any sensible person considering spending that much would have done. If anyone is daft enough to pay up front for that sort of purchase without reading the accounts and doing searches then they deserve everything they get. You really cannot stumble through life expecting everyone to protect you. You protect yourself which is not what you do when you . I reckon is your boat is more than 10% of your spare cash ie after deducting the house, you're spending too much on it.

And it doesnt remove the directors incentives as the directors have shown in the way they built up Southerly using a fair bit of their own money.. Personally I think they were daft to invest hard earned money in such a dodgy business as boat building but like the rest of us in life they make their own judgements and live or die by them.

Well we all have our opinions and I might think much the same as you but would not express it in such harsh terms. No one, regardless of whether they've carried out due diligence, deserves to lose hard earned cash when a boat builder/broker goes pop.

And as for your 10% judgement, that's entirely up to you. Others may have a very different view.

And as for investing in boat building, thank goodness someone has otherwise they'd be no boats being built. Then where would we be?

 

[sailorman]

Have a look at this post about Oyster http://www.ybw.com/forums/showthread.php?305063-quot-Oyster-Marine-quot-sold-to-Dutch-Investors

The VC lot paid too much in the first place & could never afford the interest on leveraged funds

 

[fireball]

I reckon is your boat is more than 10% of your spare cash ie after deducting the house, you're spending too much on it.

So - £30k for a (second hand) 30'er ... you reckon ppl should have 300k in cash/assets excluding the house before buying one?
Or £120k for a new AWB - you'd expect ppl to have £1.2 mil in cash?!

Well - there was a good business in marine mortgages and I know many ppl re-mortgage their own properties to fund the capital purchase of a vessel - so I think your 10% is way off ...

 

[Colvic Watson]

I reckon if your boat is more than 10% of your spare cash ie after deducting the house, you're spending too much on it.

So I should have £500,000 in spare liquid assets? Bizzare.

 

[Ex-SolentBoy]

I think more than 10% of your total net worth is more realistic.

 

[maby]

I think more than 10% of your total net worth is more realistic.

As they say, you can't take it with you! Our boat cost more than our house - and is more important to our life than our house is.

 

[sighmoon]

Wow, this thread has covered so many themes. Every time I think I might reply, it's about something else.

I don't know about a boat being a particular percentage of assets, but personally, I wouldn't go near a loan for buying a boat. I'd rather have a cheaper boat. It needs to be ours, so that if we want, we can just keep going over the next horizon.

Apart from anything else, borrowing £120k over 10 years, at 3.5% works out at nearly £1200 a month; that would be stretching both the sailing budget and marital harmony.

Each to their own though.

 

[sailorman]

Wow, this thread has covered so many themes. Every time I think I might reply, it's about something else.

I don't know about a boat being a particular percentage of assets, but personally, I wouldn't go near a loan for buying a boat. I'd rather have a cheaper boat. It needs to be ours, so that if we want, we can just keep going over the next horizon.

Apart from anything else, borrowing £120k over 10 years, at 3.5% works out at nearly £1200 a month; that would be stretching both the sailing budget and marital harmony.

I fully agree, have what you can afford with cash funds only.
a boat is for enjoyment but not it it turns out to be a mill stone

 

[maby]

Wow, this thread has covered so many themes. Every time I think I might reply, it's about something else.

I don't know about a boat being a particular percentage of assets, but personally, I wouldn't go near a loan for buying a boat. I'd rather have a cheaper boat. It needs to be ours, so that if we want, we can just keep going over the next horizon.

Apart from anything else, borrowing £120k over 10 years, at 3.5% works out at nearly £1200 a month; that would be stretching both the sailing budget and marital harmony.

Each to their own though.

You need to change your wife - it was mine who told me to go out and buy a bigger boat!

 

[TiggerToo]

Having read most of this very enlightening thread (and some of SB's earlier one as it unfolded), my thoughts are:

1) Like others, I feel sad and sorry for the guys/gals at Northshore who have made - through the years- boats that I have lusted after and dreamed about. I hope they will somehow get back on track.

2) Why would anyone want to buy a new boat? When so many nice looking SH ones can be had. Shirley the refit costs, however high, are unlikely to go over the top of a new buy. Just the stress involved in the uncertainty is enough to put me off (anyway I would not have the money)

Edit: sorry this is Thread Drift. Don't respond to (2), I'll open a new thread.

 

[sighmoon]

You need to change your wife - it was mine who told me to go out and buy a bigger boat!

Part of the deal for buying the current boat is that I'm never allowed to sell it, because every boat we buy costs about ten times more than the one before it. Sensible lass. I'm not sure I'd be solvent without her.

To be honest, I don't really feel the need to trade up. Our boat can do everything a bigger, newer boat, (say the Gunfleet 58 which makes an appearance on every thread) can do, but most things (mooring, hauling anchor, reducing sail, coping with power failure) are probably easier on a smaller boat. The big Gunfleet doesn't even have any more berths; just more room for swinging cats (which in our case, we do not have).

 

[fireball]

Apart from anything else, borrowing £120k over 10 years, at 3.5% works out at nearly £1200 a month; that would be stretching both the sailing budget and marital harmony.

Each to their own though.

Indeed - each to their own - £1200/month for a new boat would be a lot to find for most - but, say if you were able to buy your new boat now knowing that you'd retire in 10 years and sail off somewhere then it may be a consideration for you.

I fully agree, have what you can afford with cash funds only.
a boat is for enjoyment but not it it turns out to be a mill stone

I disagree about the cash funds - you'd need to be cautious about the loan value & repayments, but for many there is a good argument to buy it on credit - and get the enjoyment out of it whilst you can.

 

[Tranona]

That is the flaw in the subtle difference. My experience of companies in trouble is that most will attempt anything that is not outright illegal. Therefore client accounts aren't enough.

Seems like Twister Ken has the answer - a bank guarantee. Of course that means customers are likely to walk a way from builders who are struggling because the guarantee cost will be too high - only increasing the pace of the companies demise.

Like many others I think the boating industry really needs to properly sort out this boat buying mess. Savvy buyers are being turned away from sales and others are getting caught out.

No, the subtle difference means the opposite of what you seem to think it means. Client accounts are ring fenced and cannot be used legally for other business activities. That is what the Peters judgement clarified and why the current style of client account structure is robust and little different from an escrow account in practical terms. The potential weakness is that the broker is a signatory to the account rather than an independent person. However if he does use the funds for his own purposes (or his business) it is fraud. In practical terms it is difficult to take from client accounts and hide the fact as the money is normally only there for a very short period of time before he has to account for it. The account is not a homogeneous pot, but a series of individual trusts where each client has title to a specific amount deposited in the account.

When paying a deposit, the payment should be made to a named client account and evidence obtained that it has gone into that account. This is normal practice and ensures that the money is always traceable.

This is all very different from buying a new boat either from a builder or a dealer where there are many different ways of arranging the contract and payment terms. Some have been mentioned already. However, not all are practical or feasible. Bank Guarantees are good from the buyers point of view, but not necessarily for the builder or the bank. The bank is assuming the risk without security unless he takes a charge over the builder's assets, which reduces the builder's borrowing capacity. This practice is more common with Scandinavian builders who sell directly to individuals rather than dealers, but impractical for mass producers whose selling model is to use independent dealers who buy and sell on their own account.

Buying a new boat like a Southerly is more akin to having a house built and the payment structures are similar, as are the risks. Having been through an individual house build with a builder tottering on the edge of bankruptcy before the house was finished I feel for those who have part complete boats in Southerlys.

It is difficult to see how one can remove all the risk (on both sides) in such complex and high value custom building activities. It is simply not like a mass produced consumer product, much as people might like to see it that way. The reality is that the vast majority of build contracts do go smoothly, but the risks are always there. There have been significant improvements in recent years in recommended contracts reflecting difficulties in the past. Equally the choice of builders (in the UK at least) has declined rapidly as the risks deter people from entering the market.

For most there is no need to buy a new boat (even if they could afford it) as there is a plentiful supply of used boats where arguably the risks attached to buying and selling are smaller - or rather they are different and more easily managed. However, that is a rational way of looking at things and not all decisions are made on a rational basis when buying a boat an dthere will always be people who value a boat built just for them.

 

[maby]

...
The big Gunfleet doesn't even have any more berths; just more room for swinging cats (which in our case, we do not have).

Part of our justification for upgrading was that we gained a cat - just tipped us over the edge to needing a bigger boat!

 

[Daydream believer]

Sadly not. under English Law, except for real property i.e. land and trusts, property passes at the point of agreement not when payment is made. This means that when supplier x delivers the product s/he no longer owns, s/he has no right to recover. This is the reason why the sites of bankrupt builder/ developers are usually secured and have on-site security; to prevent the removal of materials delivered and even installed. It is a brutal business!

Have you never heard of "romalco clause" ( think i have spelt it right) . i have seized goods that have not been paid for.

If the quote says" good remain property of seller until paid for " & the order accepts this then seller can recover
The clause is named after a chap called Romalco who went to court having had that clause in his terms.
He got the goods back

 

[davidej]

Have you never heard of "romalco clause" ( think i have spelt it right) . i have seized goods that have not been paid for.

If the quote says" good remain property of seller until paid for " & the order accepts this then seller can recover
The clause is named after a chap called Romalco who went to court having had that clause in his terms.
He got the goods back

Romalpa - see post #61

 

[rwoofer]

No, the subtle difference means the opposite of what you seem to think it means. Client accounts are ring fenced and cannot be used legally for other business activities. That is what the Peters judgement clarified and why the current style of client account structure is robust and little different from an escrow account in practical terms. The potential weakness is that the broker is a signatory to the account rather than an independent person. However if he does use the funds for his own purposes (or his business) it is fraud. In practical terms it is difficult to take from client accounts and hide the fact as the money is normally only there for a very short period of time before he has to account for it. The account is not a homogeneous pot, but a series of individual trusts where each client has title to a specific amount deposited in the account.

When paying a deposit, the payment should be made to a named client account and evidence obtained that it has gone into that account. This is normal practice and ensures that the money is always traceable.

This is all very different from buying a new boat either from a builder or a dealer where there are many different ways of arranging the contract and payment terms. Some have been mentioned already. However, not all are practical or feasible. Bank Guarantees are good from the buyers point of view, but not necessarily for the builder or the bank. The bank is assuming the risk without security unless he takes a charge over the builder's assets, which reduces the builder's borrowing capacity. This practice is more common with Scandinavian builders who sell directly to individuals rather than dealers, but impractical for mass producers whose selling model is to use independent dealers who buy and sell on their own account.

Buying a new boat like a Southerly is more akin to having a house built and the payment structures are similar, as are the risks. Having been through an individual house build with a builder tottering on the edge of bankruptcy before the house was finished I feel for those who have part complete boats in Southerlys.

It is difficult to see how one can remove all the risk (on both sides) in such complex and high value custom building activities. It is simply not like a mass produced consumer product, much as people might like to see it that way. The reality is that the vast majority of build contracts do go smoothly, but the risks are always there. There have been significant improvements in recent years in recommended contracts reflecting difficulties in the past. Equally the choice of builders (in the UK at least) has declined rapidly as the risks deter people from entering the market.

For most there is no need to buy a new boat (even if they could afford it) as there is a plentiful supply of used boats where arguably the risks attached to buying and selling are smaller - or rather they are different and more easily managed. However, that is a rational way of looking at things and not all decisions are made on a rational basis when buying a boat an dthere will always be people who value a boat built just for them.

We are probably getting into the diminishing returns of a debate here. Suffice to say I agree that a client account run properly is good. I just don't think clients accounts as a whole are good enough - they are still open to abuse by less scrupulous dealers in a number of different ways that the customer might not be aware of. Only through life experience of getting stung more than once (not just boating) do I know enough to be wary of anything that relies on the honesty of the other party.

 

[Tranona]

We are probably getting into the diminishing returns of a debate here. Suffice to say I agree that a client account run properly is good. I just don't think clients accounts as a whole are good enough - they are still open to abuse by less scrupulous dealers in a number of different ways that the customer might not be aware of. Only through life experience of getting stung more than once (not just boating) do I know enough to be wary of anything that relies on the honesty of the other party.

That opens up another distinction that is often ignored. A dealer is not a broker. They are two different entities, although the same person can act in both capacities. The opportunities for dishonesty or poor management leading to losses are far greater when somebody is a dealer, that is trading on his own account. Most losses for clients occur when they have entered into a contract with a trader, paid money in advance of receiving the goods or service and ended up as unsecured creditors when the business goes bust. This is what happened to most of the people that lost money in Peters and in the other collapses, whether it be in the boating business or in retail failures such as Courts furnishers.

Using a BMF new build contract avoids becoming an unsecured creditor (apart from perhaps the holding deposit) as any payments are secured against the boat in build. Does not deal with the practical issue of an unfinished boat, but at least the legal title is clear in exactly the same way as it would be in an individual new build contract on a house - for example in my new build I bought the land first from the builder then had a series of stage payments at different points in the build. Still sweated a bit as he went bust the week after completion!

When an individual acts as a broker in a transaction he has no financial interest and the money is never his as it would be if he were trading on his own account and taking deposits, nor does he have any title to the boat. The opportunity therefore for wrongdoing is very limited - he would actually have to steal the money and (possibly) do a runner. Don't think anybody is likely to do that for 10% of the boat value! Equally there is actually no need to have final payments passing through the client account as it is easy to arrange a direct payment to the owner.

A lot of the perceived problems of buying and selling boats arise from a lack of understanding of the legal framework and particularly not understanding the nature of the transactions. It is not difficult to get advice from bodies such as the RYA, YDSA, BMF etc. You are right to be wary, but following the well established procedures will remove most risks - and if you remain unhappy with what is on offer, do what a number of people have suggested here and keep away.