April 22, 2005
Sounds like things are starting to spiral downwards.... seems my dec review aftre visting the QM were a bit too accurate a feeling:
"Queen Mary Operator's Bankruptcy Starts Court Journey"
By Harry Saltzgaver Executive Editor
A schedule of bankruptcy hearings for Queen's Seaport Development Inc. should be set by the end of the week, according to QSDI President and CEO Joseph Prevratil. QSDI filed for Chapter 11 bankruptcy protection last month, forestalling a notice of default on its lease with the city for the landmark Queen Mary and 55 acres of surrounding land.
City officials and Prevratil have been battling for the last year over $3.4 million in rent credits the city claims were taken inappropriately. Prevratil countered that the credits were specifically approved. But an independent audit last year sided with the city, and negotiations for a settlement began.
In late February, nine months after talks first were conducted, the city stepped away from the table and notified Prevratil it intended to declare the lease in default. On March 15, the day before the default was to take effect, QSDI filed for bankruptcy. At the time, both Prevratil and City Attorney Robert Shannon said the move might actually resolve the rent credit dispute sooner than if the lease defaulted and the issue went to civil court. "We just want the judge to set a date to rule on the rent credits," Prevratil said this week. "Once that is done, we can set up a schedule to deal with everything. But the first order of business is to rule on the credits."
Prevratil met with his attorneys on Tuesday and said he expected to have a proposed hearing schedule before the bankruptcy judge by the end of the week. By filing bankruptcy, QSDI also has stalled payment of any rent due this year. The lease requires that financial statements for the preceding year be completed by March 31 and turned over to the city, along with the rent due, which is $25,000 a month base rent plus a percentage of profits.
The city had estimated a payment of about $900,000 in its budget projections, according to Finance Director Mike Killebrew. Those financial statements still aren't complete. Prevratil said they should be done by the end of the month, but the issue is moot because no rent payment can be made until the bankruptcy court approves a restructuring. City Manager Jerry Miller said he could not comment on the Queen Mary case specifically.
The current year's Tidelands Fund, where the Queen Mary rent payment would go, should still make budget, he said, thanks to the spike in oil prices and the corresponding increase in revenues for the city. In a related issue, the Internal Revenue Service last week issued a "Notice of Tax Levy" for almost $500,000 against the RMS Foundation, the nonprofit that subleases the Queen Mary from QSDI and operates the ship itself. The levy was for unpaid taxes in 2000. Prevratil said the levy had been issued in error, and noted that the tax question had been resolved more than a year ago. He said that the IRS had been contacted and the levy should be removed within the week.