Underwriter drove French America Line to ruin, company officials say

French America Line is claiming that insurance issues related to repairs on the riverboat Louisiane caused mounting losses and essentially drove it out of business.

The insurers deny the allegations the cruise line made in a Louisiana court in March and want a federal court to hear the case.

The line’s suit does not specify how much it wants, but the insurers say that before the petition was filed the company sent them a letter “asserting a claim for $4,828,523.” The insurers, Lloyd’s of London, say they “conditionally advanced significant sums” to the line.

French America Line chairman Christopher Kyte said this week that he expects “by next spring we’ll be back and running on the Mississippi River.” Meanwhile, he said, the Louisiane may be chartered by a private company to provide accommodations for six to nine months in either Puerto Rico or the U.S. Virgin Islands.

One of the newer players in the booming inland river cruise market, French America Line began sailing in October 2016 but had to cancel trips through that December because of plumbing problems on its second cruise. A sewage tank overflowed and flooded lower crew quarters and the food stores, a company official said.

Then early in 2017, the Avondale, La.-based company delayed a spring start from March 18 to April 22. “Our insurance underwriter for the riverboat just recently requested that we make time-consuming refits to certain areas that had just been re-plumbed during the extensive refit of the vessel last summer,” Kyte said at the time through a spokesman. They cancelled sailings again in the spring saying the plumbing problems had been fixed, but the Louisiane needed Coast Guard approval of not just the work done but the entire vessel, which is docked in Gretna, La.

After the plumbing problem, French America and the underwriters had the damage assessed, the suit says, “however, underwriters unreasonably withheld consent” for the repairs. In December, after the company submitted an additional claim, the underwriters agreed to make certain payments but not the total due under the policy

In February 2017, French America submitted more documentation of the needed repairs. A month later, the suit says, the underwriters said they wouldn’t pay what the line wanted.

As a result of the delayed payments, the company lost its certificate of inspection (COI) and cancelled future bookings, the suit says. The delays also meant late payments to vendors, crew and others, and caused “a default on loan obligations and resulted in other mounting losses.”

“In essence,” the suit says, “underwriters’ ongoing failure to timely pay the claims and failure to act with due diligence and dispatch essentially has caused French America to be involuntarily driven out of business as a going concern in the hospitality industry.”

Louisiane still does not have a COI, “because it isn’t operating yet,” Kyte said. “It’s going to take an entire product relaunch.” Close to $1 million has been refunded to customers whose cruises were canceled, said Kyte, who estimates the line has lost between $10 million and $40 million.

The 150-passenger Louisiane is the former 203’8″x60’x12′ Columbia Queen, which French America Line bought for an undisclosed sum from Xanterra Parks & Resorts, Greenwood Village, Colo. In 2011, Xanterra purchased the vessel and other assets of Ambassadors International Inc., out of bankruptcy court. Ambassadors was the parent of money-losing Majestic America Line, which shut down in 2008.

About the author

Dale K. DuPont

Dale DuPont has been a correspondent for WorkBoat since 1998. She has worked at daily and weekly newspapers in Texas, Maryland, and most recently as a business writer and editor at The Miami Herald, covering the cruise, marine and other industries. She and her husband once owned a weekly newspaper in Cooperstown, N.Y., across the alley from the Baseball Hall of Fame. A South Florida resident, she enjoys sailing on Biscayne Bay, except in hurricane season.

2 Comments

Leave A Reply

© Diversified Communications. All rights reserved.