Gold Coast boat builder Pacific Motor Yachts’ $23m collapse leaves customers high and dry
A Gold Coast firm making ‘six-star’ luxury motor yachts in China, where designers commanded up to $300,000 per year, has gone under, owing an estimated $23m.
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A Gold Coast builder of luxury yachts has collapsed leaving customers’ million-dollar vessels stranded in Chinese boatyards.
The company’s vessels, costing up $1.9m to purchase, are manufactured in China where pandemic lockdowns and supply chain issues boosted costs and increased delays.
The Coomera-based group also operated a new and used boat dealership in NSW and Victoria, selling Bennington, Cobalt and Pursuit motor yachts.
Administrators Glenn Livingstone and Alan Walker were appointed to Pacific Motor Yachts and related companies in late August which has debts in excess of $23m.
According to a report filed with ASIC by the administrators, the company’s director, Brett Thurley, blamed the collapse on delays in manufacturing, shutdowns and border closures due to Covid-19 as well as adverse foreign exchange movements and expenses to hire engineers in China.
Comment has been sought from Mr Thurley, who established the business in 2015, after a career in the boating sector in the US and at Queensland boatbuilding company Riviera.
In promotional material, the company said that its Clipper range of “luxurious motor yachts resemble 6-star resorts” with plush soft furnishing, polished wood, large cockpits, and “master staterooms that would rival luxury hotel suites”.
The failure of Pacific Motor Yachts underscores the risk of manufacturing and sourcing products overseas. The global luxury yacht sector is expected to expand to US$13.67bn by 2030 but had faced severe headwind during Covid-19 due to border closures and economic uncertainty
The report said freight rates out of China had increased by at least fivefold with a downturn in the business in the first half of 2023 impacting cashflow.
Pacific Motor Yachts said it faced rising labour costs in China, including hiring full-time supervisory staff and design engineers at a cost about $300,000 a year. It also had incurred price rises of more than 25 per cent during the worst of Covid-19 for its US-made boats.
Pacific Motor Yachts owes unsecured creditors, including the Australian Taxation Office and customers, more than $23.7m. The ATO is owed $487,000 while customers are owed about $10.7m.
According to the report to creditors lodged with ASIC by the administrators, the company had contracts to build 11 yachts with a sale price of $16.7m.
These vessels were in various stages of construction in China and had deposits totalling $9.5m paid by customers. Creditors will meet on October 4 to decide whether to wind up the company or implement a deed of company arrangement.
“Should the company be wound up at the meeting, a liquidator would be unable to complete these contracts having regard to the available funds in the administration,” the administrator said.
“However, a liquidator may be able to facilitate the completion of nine yachts where the current contract remains feasible.”
It said customers were encouraged to seek independent advice in respect to any claims they may have against Pacific Motor Yachts.
The report said the Chinese boatyards in Ningbo and Guangzhou are owed more than $1.8m by the company.
“Based on our investigations, it appears Pacific Motor Yachts has not maintained a separate profit-and-loss account for each individual contract and appears to have commingled progress payments across the different vessels in construction and other business expenses,” the report said.
“As such, cashflow problems appear to have been created.”
The company operated from a purpose-built facility at Gold Coast City Marina in Coomera.
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Originally published as Gold Coast boat builder Pacific Motor Yachts’ $23m collapse leaves customers high and dry
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