The owner of Baltimore's tallest tall ship, Clipper City, has filed for bankruptcy protection in U.S. District Court to forestall a federal seizure of the schooner and allow him to continuing operating its public sails and charter trips.
Lawyers for Clipper City Tall Ship LLC owner John Kircher and its main creditor, Regal Bancorp Inc. of Owings Mills, confirmed yesterday that there is an outstanding debt of $750,000, and that the monthly mortgage payments are in arrears.
Kircher, 59, bought the schooner -- which stands 13 stories above the water line -- and its business operation three years ago for $800,000, he said yesterday.
"It's been difficult to service the debt, and we couldn't keep up," Kircher said. "I'm three months behind in my mortgage payments. "
The Chapter 11 bankruptcy process requires the parties to disclose and settle their differences in federal court. It also allows companies that declare bankruptcy to continue to operate during the process.
The $9,000 payments were hard to make in the nonpeak winter months, when upkeep and repair bills were high, and a new deck was a major expense, the owner said. His strategy for catching up on payments is the warm-weather season, when visitors flock to the harbor area, Kircher said.
J. Stephen Simms of Simms Showers LLP, the lawyer representing Regal Bancorp, said the two sides reached an impasse in negotiations last week, leading the bank to send federal marshals to seize the ship Friday.
"A maritime-secured creditor must be much more vigilant than other creditors," Simms said. "Unlike a house, ships move around and go places."
Simms expressed concern about whether the ship, decked at a pier near the Maryland Science Center, is in good condition. It was built in 1985 and can accommodate 140 passengers.
Hours after Regal Bancorp sought the ship's seizure, Kircher filed the bankruptcy petition, said his lawyer, Shannell Kathleen Harleston.
"Without notice they tried to seize the vessel," she said. "We met face-to-face to plan, reorganize, restructure and repay the debt. They were uncooperative."
The Clipper City operates its public and charter sails with 18 employees between April and October. The brief seizure by U.S. marshals caused a cancellation lasting one afternoon.