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Law360 (June 22, 2020, 12:08 PM EDT) -- Cruise ship operator Royal Caribbean Group said Monday it is seeking to reorganize its Pullmantur Cruceros joint venture cruise line in a Spanish court, saying the headwinds of COVID-19 travel restrictions were too much for the company to overcome.
Royal Caribbean said it and joint venture partner Springwater Capital, a Spanish investment fund, had begun the insolvency proceedings in the face of the "unprecedented impact" of the COVID-19 pandemic, which has virtually shut down the cruise business worldwide for months.
"Despite the great progress the company made to achieve a turnaround in 2019 and its huge engagement and best efforts of its dedicated employees, the headwinds caused by the pandemic are too strong for Pullmantur to overcome without a reorganization," the Pullmantur board said in a statement.
Founded by Madrid-based travel agency Pullmantur, the cruise line was purchased by Royal Caribbean in 2006. In 2016, Royal Caribbean sold a 51% share in Pullmantur and the France-based Croisières de France cruise line to a Springwater-affiliated holding company.
Based in Spain, Pullmantur offered cruises to Mediterranean, European and Latin American destinations on three ships.
Royal Caribbean said all cruises through November on Pullmantur have been canceled, and that passengers will be given the option to book a future cruise on Royal Caribbean or its Celebrity, Azamara and Silversea cruise lines.
The company said it would ensure its remaining employees, which it said are maintaining "minimum maintenance levels" on Pullmantur's ships, will return home safely.
Last month, Royal Caribbean floated a $3.9 billion debt offering to deal with the disruptions caused by the COVID-19 pandemic. It had announced in March it was cancelling at least the next two months' worth of sailings, and said about half of the passengers on those cruises had requested cash refunds instead of future bookings.
Its competitors in the industry face a similar set of financial woes. Norwegian Cruise Line raised $2.2 billion in early May through a raft of fundraising transactions, and Carnival Corp. said in April that it planned to raise about $6 billion in a series of stock and note offerings.
--Additional reporting by Elise Hansen. Editing by Marygrace Murphy.
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