Windstar Cruises Bankrupt, But Still Sailing

In a not too unexpected move after trading in its stock was suspended by NASDAQ last Friday, Ambassadors International, Inc, owner of Windstar Cruises, announced that it has voluntarily filed petitions for reorganization under Chapter 11 in the U.S. Bankruptcy Court. It has also entered into an agreement with a private investment firm, Whippoorwill Associates, Inc,  as agent for its discretionary funds and accounts. Under the terms of the agreement, Ambassadors proposes to sell substantially all of its assets, including its principal operating unit, Windstar Cruises, through a court-supervised sale process.

Ambassadors and Windstar intend to continue normal business operations during the sale process, which is proposed to be completed in approximately 45 days. Windstar also plans, subject to court approval, to continue to:

-- Operate all Windstar cruises as scheduled;
-- Maintain all of Windstar's customer programs and policies;
-- Honor all Windstar fares and reservations, including charter contracts;
-- Provide commissions and payments to its travel partners as usual and employee wages and benefits without interruption; and
-- Pay all Windstar vendors and suppliers for goods and services received both before and during the reorganization process in connection with the sale.

Whippoorwill, with over $1 billion under management, intends to maintain Windstar's business and operations and invest in Windstar's growth following completion of the anticipated sale.

Winners in this situation? Hopefully, booked passengers, both present and future.

Losers? It is expected that Ambassadors' stockholders and holders of Ambassadors' convertible notes will not receive any distribution following the sale and these securities will likely have little, if any, value following the Chapter 11 proceeding.