Queen Mary Adrift Financially
The company that runs the Queen Mary in Long Beach filed for Chapter 11 bankruptcy protection Tuesday, casting uncertainty over the future of the historic attraction.
The action comes just weeks after Long Beach declared Queen’s Seaport Development Inc. in default of its lease, saying that the firm owed $3.4 million in back rent. The city had set today as the deadline for payment.
The bankruptcy filing marks a troubling turn in the history of the Queen Mary, which was brought to Long Beach Harbor 37 years ago with hopes that it would make the city a tourist magnet. But it has struggled to make money.
The Art Deco ocean liner, once considered the fastest ship on the seas, is an imposing presence along Long Beach’s skyline with its three red smokestacks towering over the harbor. But repeated efforts to create large developments around it -- ranging from high-rise apartments to a Disney amusement park -- have failed to materialize.
Officials said the bankruptcy filing would not affect operations on the ship, which features a hotel, restaurants, bars and tours.
The city owns the ship and has been battling with the operator for months over money that officials say is owed to Long Beach. The debate has prompted some community activists to ask whether the city is spending too much on the Queen Mary.
On Tuesday, city leaders vowed to keep the ocean liner in Long Beach.
“This is an icon to our city, and I know many people would just as soon it be gone, people who consider it a drain on city finances,” said Councilwoman Rae Gabelich. "[But] I think she’s majestic and deserves to be taken care of.”
The operator has leased the ship from Long Beach since 1993 and has run all on-board enterprises.
At the time, the 1,000-foot ship that some architecture and history buffs consider an Art Deco treasure was boarded up and abandoned by Disney, which had ditched its plan to incorporate the ship into a sea-themed amusement park on 55 acres beside the Queen Mary.
Queen’s Seaport Development Inc. was formed by businessman Joe Prevratil, who vowed to realize the city’s dream for the ship. The Queen Mary has been host to more than a generation of weddings, proms and conventions.
But Long Beach hoped that Prevratil would develop the lucrative and coveted acreage surrounding the ship’s berth, and he has talked of various plans, from a science fiction museum to, more recently, time-share condominiums and a marina.
It was as an incentive to such development that the city granted Prevratil rent discounts for any work and investments toward that end. The current dispute over the back rent centers on whether work the firm did toward those potential developments qualifies for rent discounts.
In a press statement faxed late Tuesday, Prevratil said the city’s default action gave him “no alternative but to protect our lease and our investments by filing ... a Chapter 11 reorganization proceeding.”
Prevratil said that City Auditor Gary Burroughs drew up an amended lease that allowed Queen’s Seaport Development Inc. to receive the rent discounts now in dispute. But the City Council said it never voted on the amended lease.
“The fate of our employees and the icon that is the Queen Mary will now be worked out in the rational and non-hysterical environment of the Bankruptcy Court,” Prevratil said in the statement released Tuesday. “It’s a sad day for us.”
Building next to the Queen Mary has proven difficult for several reasons. Any new development needs the approval not just of the City Council but of various state agencies, including the California Coastal Commission. The land is removed from downtown Long Beach, at the edge of the harbor amid massive port equipment.
The city did get a boost in recent years when Carnival Cruises’ Mexico line decided to move its home from Los Angeles Harbor to a berth next to the Queen Mary.
Queen’s Seaport Development notified the state’s fifth-largest city that the company had filed for bankruptcy protection in a fax Tuesday afternoon to Long Beach City Atty. Robert E. Shannon.
The legal move follows the end of nine months of private talks between the firm and the city over the rent discounts.
The city had encouraged further negotiations with Prevratil. But the city also was prepared to file suit in Los Angeles County Superior Court to recoup the back rent, Shannon said. Now, because of the bankruptcy filing, the issue will probably be settled in Bankruptcy Court.
“They owe us over $3 million,” Shannon said. “And under no circumstances will we accept substantially less.”