I like RM sailboats. The design, the conception and building quality are good and they are (or were) a good option for many in what regards the best boat to buy for a specific sailing and cruising program and several have been bought taking into account posts that I made about several models, generally with a very positive appreciation.
But unexpectedly they went bankrupt and I say unexpectedly because they had at the time a long waiting list, one of way more than a year, with many clients with orders and down payments.
The bankruptcy reason had as origin the bankruptcy of another (smaller) shipyard, the one that made the Ofcet 32 and also bad decisions on the RM management regarding building processes.
It had all to to with the new RM model, the 11.80, that surprisingly instead of being, as all the others, a saturated in epoxy plywood boat with an optional kevlar outside layer, had the hull sides in composite material, laminated to a plywood bottom. On the post about RM 11.80 I questioned the rationality of this option but I would never expect it to lead to its quick bankruptcy. You can read the review here:
https://interestingsailboats.blogspot.com/2019/11/beautiful-rm-1180.html
The Ofcet shipyard, the one that provided the composite parts that integrated the RM 11.80 hull, went bankrupt and they had to stop the production of the 11.80, a boat that constituted the biggest part of the orders, while they were looking for another provider.
But they could not find any that was able to produce the parts at a price that would not turn the ordered boats into a financial loss and the several months they took searching for a suitable partner, with the production stopped, increased the losses, leading to bankruptcy.
With so many orders, being a boat with a very good image on the market and with many loyal costumers, everybody thought that it would only be a question of time for the shipyard to find a new owner that would invest heavily, supporting the losses, in exchange for future revenues.
And in fact there was interest from investors and two were accepted by the court: one that represented the company continuity with a new investor, another a takeover from another company linked with yacht production. It was this latter proposal that the court chose as representing the best interest for the recovery and future of RM yachts.
Surprisingly RM (Fora Marine) was bought by Grand Large a company that has already several brands one of them producing boats that compete with the RM on the same market (voyage boats). The Grand Large owns Allures, Garcia, Outremer and Gunboat.
I thought that being bought by a large company and with plenty orders RM was on the way to become successful again but then I was astonished with the knowledge that the new company was neither responsible for the debts of the previous one, nor would they respect its commitments with clients that had ordered boats and had made large down payments.
I could not believe it but it is true, the new company will not respect the previous contracts with clients neither regarding the accorded price nor in what regards the money that was given to the company as down payment. The price to be used as reference will be the last price of the boat(s) before the bankruptcy (not the one at the time of the contract) any special offers made over the price will be void and only 50% of delivered money will be considered.
This will represent a loss that in some cases can be way over 100 000 euros or about one third of the contracted cost of the boat. On several new contracts the clients will be paying 50% more than the initially contracted price. And they think that this is acceptable?
Not many of the boats had already a 60 or 70% down payment but many have down payments of over 30%. Just to give you an idea of the dimension of this, the value that the company has on down payments is of about 2 million euros and what they intend to give back is a million and only if you make a new contract. Otherwise, no matter if they had already paid 75% of the boat, they will lose everything.
The number of clients with boats partially paid or with down payments is 25 and of course, they have associated themselves and moved lawsuits for damages against the company. But because by court ruling the new company has no debts and the old one has no assets (that passed to the new one) they will have very little chance of receiving anything.
In fact the one that should be sued is the French state for having a law that allows this situation, a law that protects workers at the cost of capital, as if capital had no individuals behind and in this case from the 3 million of debts the company had, 2 millions were due to the clients that had ordered boats.
The number of clients with boats partially paid or with down payments is 25 and of course, they have associated themselves and moved lawsuits for damages against the company. But because by court ruling the new company has no debts and the old one has no assets (that passed to the new one) they will have very little chance of receiving anything.In fact the one that should be sued is the French state for having a law that allows this situation, a law that protects workers at the cost of capital, as if capital had no individuals behind and in this case from the 3 million of debts the company had, 2 millions were due to the clients that had ordered boats.
For the state it is in fact a very convenient law that enables a court to allow a take over by a new company that will continue the existence of the shipyard, maintaining the brand, a shipyard that will continue to pay taxes to the state, maintaining 80% of the workers ( that will continue to pay taxes and will not have to be supported by the state through an unemployment allowance) and the "capitalists" that had debts from the company will lose it all since the new company has the assets of the old one, but not the debts.
The court limited itself to choose between the two proposals of take over, the one that would give more chances to recover the company (without paying the debts) maintaining the biggest number of workers and Grand Large proposed to inject 1,5 million €, not to pay the debts (that they don't have) but to give the company conditions to go on. And regarding that the Grand Large groupe has certainly a lot of experience on the management of successful shipyards.
One thing is for sure, this will not do any good to the company reputation, or should I say brand reputation? and because it is not possible to know what the court decision on the lawsuits will be, or even if the court ruling will be considered invalid by the European Court of Justice, the future of the new company may be at risk depending on several factors. So you know as much as I do and if you want to buy a new RM you know what to expect and the risks involved.
https://voilesetvoiliers.ouest-france.fr/bateau/rm-fora-marine/l-avenir-de-rm-stephan-constance-le-patron-de-grand-large-yachting-repond-a-nos-questions-d9a2becc-5a5c-11ea-8e21-392b725afa24
https://www.bateaux.com/article/33179/reprise-de-fora-marine-la-difficile-question-des-acomptes-sur-les-voiliers-en-commande?fbclid=IwAR2IOHHLSXsL_stlZDkchMLouUIKydC_t18o1BVJCwTy1GdfIoN_pzzIVKk
https://www.bateaux.com/article/33179/reprise-de-fora-marine-la-difficile-question-des-acomptes-sur-les-voiliers-en-commande?fbclid=IwAR2IOHHLSXsL_stlZDkchMLouUIKydC_t18o1BVJCwTy1GdfIoN_pzzIVKk
They are here " https://www.bateaux.com/article/33179/reprise-de-fora-marine-la-difficile-question-des-acomptes-sur-les-voiliers-en-commande " commenting the case. And they say the customers they first talked to were offered to recover only 22% of the amount first delivered for commissioning the boat whilst Stéphan Constance, a Grand Large representative, stated afterwards that 50% of the deposit could be recovered. To get back the 22% or 50% (whatever the % would finally be) of the money they had already paid they are due to purchase "again" the boat to a much more expensive price so they would be paying at the end 1.5 times the original price of the boat. In case they don´t reorder the boat they won´t get any money back.
ReplyDeleteThis story will have repercussions well above RM (and Bente too that is going through similar ordeal). I have to admit I myself got scared and may reconsider buying a new boat especially from smaller shipyards the likes of Pog, JPK and insteadd have an harder look at the used market. Apparently having a huge wait list is not guarantee of financial soundness. For most of us a boat is the ultimate expense and we attach to it a lot of our future be it retirement or a new family life and having this on the line and at risk for many months or years while we wait on the list and during the construction it is may be not the safer financial move. Buying a new boat is notoriously "unwise" financially speaking as opposed to buying used which is also bad per se (did I mention money pit?). However we all choose not to look and succumb to emotions as a boat is the ultimate emotional purchase (hey we got one life let's live it at the fullest!). Years ago I was invited by my bank to discuss my retirement investments and they were very surprised I had a robust and safe plan but then I ended the meeting with "having said all of that I just made the worst retirement financial move I could do, i.e. I got a boat !" we all grinned...hahaha
ReplyDeleteYes, buying a boat is a tricky business but if you have read my review about the RM 11.80 you could understand that I was not enthusiastic at all with that crazy idea to have half the hull in fiberglass and half in plywood and personally I would never buy such a boat but if I anticipated some future problems regarding that I would never thought the company would become bankrupt so quickly due to that particular feature.
DeleteRegarding risks I would say that an understanding of the shipyard situation is paramount and the case of a small shipyard that is growing too fast having problems or one that proposes boats to a very low price for the quality, are not unheard and those shipyards should be looked with some care.
But there are other small shipyards that have been making boats for many years, always with a comfortable number of orders and a stable situation were I think the risks are very small. Anyway the contract should be made in a way that the payments correspond to what is actually made on the boat (if possible a bit less) and if possible having a safeguard that will make the boat property of the client if the shipyard goes bankrupt.
i agree that it didnt make sense with composite sides. What puzzles me, that the company didnt revert back to original design 100% plywood. I dont think the customers would mind the change. How embarassing it is .
DeleteWhat puzzle me is people ordering rather pricey objects from very small companies (less than 40 people) without checking the financial side.
ReplyDeleteIt seems that 2017 legal accounts were not published on legal time. Which should ring a serious bell. And when they were later published, they showed huge negative equity.
Paulo, thank you very much for sharing this important piece of information. Needless to say that the attitude of Grand Large is unacceptable. am sure they will pay a price for this in the future due to destroyed customer confidence.
ReplyDeleteInterestingly the slogan that RM chose to promote the 1180 is 'Né pour séduire...' (born to seduce). It seems to me that there is a deeper and certainly unindented truth to this statement. With its sleek lines and tasteful interior the 1180 indeed is a seductive boat. However, as it turns out, it a deceiving kind of beauty. At least for those customers who did a downpayment in good faith and now see RM walk away form their contract. I sincerely hope they will get an acceptable deal and don't have to go through litigation to protect their interests.
Greetings from São Paulo ...
Just to let you know that this post was edited to provide more information or a more correct one.
ReplyDeleteI run a rather successful software company and my goal is to live on and run the business from a performance catamaran in a few years. My shortlist is Outremer 55 or Balance 526. If I go smaller, then the Outremer 45 (hopefully updated soon) or Balance 442.
ReplyDeleteCurrently am still in London working hard so was looking at buying a monohull for in between now and the ultimate dream. JPK 38FC and RM 1180 being the shortlist here.
This RM take-over story shocks me. It is not how I do business and I don't condone it in people I do business with. It is crazy to me that customer deposits are considered "capital" of the same lien as real corporate debt, the holders of which have a reasonable expectation of financial ruin in bad scenarios.
In fact, while the French law aims to "protect" workers, it is actually giving away profitable assets from one group of capitalists to another. It's a very weird dynamic that is being created here.
This story breaks the spell Outremer / Grand Large Yachting had on me, with all their fancy marketing sponsoring La Vagabonde and the Youtube channels detailing their Outremer purchases like Outremer 51 Archer and the Dutch couple buying Outremer 55 hull 4.
Maybe dealing with a USA culture company like Balance will be better. They may be more open to legally sound contracts with escrow and legal protections.
It's not a fun idea to think that when I am finally ready to buy a 1-2 million EUR dream yacht, I need to worry about basic consumer protections not being in place.
You cannot go wrong with the new JPK39C...except in what regards the waiting list, that I bet already exists.
ReplyDeleteBoat building as a business is a very risky one with small margins and if something goes wrong things like this can happen. The only sure way is to have a local bank covering the deal.
That's the only way you will receive your money back if there is a problem and also a good way for you to know how risky it is the deal: if there is little risk they will charge you 3 to 4%, if it is risky or they will not cover it or they will ask you a lot more.
5 YEARS SINCE THE BANKRUPTCY OF RM YACHTS- FORA MARINE
ReplyDeleteIn the midst of so many terrible world events, it may seem trivial to recall a case involving just a few people. The perspective of customers who lost significant sums of money as a result of this bankruptcy is, of course, different. Knowing about this experience could be useful for other potential customers and could lead to some reflection on the part of the French yachting industry.
As a reminder: in December 2019, a few days after the closure of the Paris Boat Show, FORA MARINE maker of RM Yachts declared bankruptcy, despite one of its boats (RM1180) had been named Boat of the Year 2020. A few months later, the shipyard was taken over by Chantier Grand Large for 150,000 euros.
This is a recurring situation in this industry in France and other European countries, and several cases have occurred since then.
Customers with outstanding orders were offered a new contract at a considerable extra cost. If these conditions were not accepted, deposits were lost.
Nautical magazines wrote: ‘the shipyard continues its activity, customers will have to resign themselves to losing their advance payments’. Easy to say with other people's money. Especially when we're talking about thousands of euros in hard-earned savings.
Let's face it: buying a new boat is risky investment and you can lose everything. This is systematically mentioned by the banks when you sign an investment contract, but not at all when you sign a contract to build a boat.
Asking about the financial health of the company could provide information: this is frankly difficult, if there is any unfavourable data it is carefully hidden for as long as possible, even professionals in the sector get trapped (as was the case between our group of 25 clients). After many legal discussions, we still don't know exactly when this company stopped paying.
You can also ask for a deposit to be returned, a safeguard. The answer (case of signatory JB): what are you talking about?
Then there's the liquidators, court-appointed agents, the courts... There's no help or support in a very expensive and complicated process, except for the lawyers you have to hire at your own expense.
In the end, the consumer is completely abandoned in favour of the survival of the company. In our case, the consumers’ interests were not protected. The experts' reports, wich concluded that customer deposits had been misused to cover the company's debts and not to build the boats were never taken into account.
Court cases are very long and expensive. In the end, you end up paying several thousand euros for no-fault of your own other than asking for your own money back, on top of the initial amount lost, lawyers' fees, and so on.
In this case, for example, a very detailed inventory of the company's assets was carried out at the request of its last director. Everything was carefully collected except... the hulls of the boats that had already been built (like ours), the value of which far exceeded the amount paid by the buyer. Strange!
If the situation is complicated for a Frenchman, imagine it for a foreigner. This was our case with clients from several European countries, with a loss of more thar 900,000 euros.
In conclusion, in our experience buying a boat from a French yard has resulted in the loss of all our money, and attempts to recover it through legal channels have very little chance of success.
Buying a boat in France under these conditions is a very risky venture.
Codes of good practice (such as those used by banks) and well-drafted contracts outlining the risks involved should be considered, particularly for foreign clients.
Unfortunately it is not only with french shipyards and my prevision is that things are going to be worse due to the effects that an increasing retirement age is having in new boat sales.
DeleteHowever something that can be done and that's having a bank serving as insurance regarding the money paid to build a boat. This can be made through the shipyard, or at least most shipyards, that will find you a bank that is available to assume the risk.
Of course this costs extra money. About 5 years ago I asked Salona, in the interest of someone else, if they could take car (with a bank) of that, the answer was yes, and at the time it would cost about 5% of the boat cost.
I would very much recommend this while buying a new boat . Boatbuilding is a very risky business, the profits are small and can easily be transformed in losses.
Thank you for your publishing and comment Paulo. In fact I had asked for that, the answer was: what? Maybe due to the financial situation of the company... It was happy time preparing- planning the new boat and I didn't go further in that subject, everything happened so fast...
ReplyDelete