Financial Troubles: Genting Hong Kong Faces Bankruptcy While Navigating Challenging Waters

Genting Hong Kong, a prominent finance company known for its cruise business and partnership in Resorts World Manila, has recently announced its filing for provisional liquidation. The company, which is registered in Bermuda and listed on the Hong Kong Stock Exchange, faced significant debt of US$3.9bn and reported losses of US$1.7bn in 2020, with an additional US$286m in the first half of 2021. The company’s chairman and CEO, Lim Kok Thay, has a substantial financial stake in Genting Hong Kong and its bankruptcy declaration has raised concerns. However, the bankruptcy does not impact Genting and Lim’s casino licenses globally, including their SGD$4.5bn expansion in Singapore and plans to add table games to Resorts World New York City. Regulators in various jurisdictions, such as the Nevada Gaming Control Board and Singapore’s Casino Regulatory Authority, have assessed that the bankruptcy of Genting Hong Kong does not affect the license holders independently. Although bankruptcy raises concerns for regulators, it does not necessarily lead to the revocation of casino licenses. Casino operations typically continue during bankruptcy proceedings, ensuring the continuity of employment and tax revenue. GCB and Commission meetings in March 2022 discussed Genting Hong Kong’s bankruptcy, with Lim answering questions regarding the company. The bankruptcy lawyer, Kingsley Ong, explains that unless Lim provided personal guarantees or indemnities for the company’s debt, he would not become personally liable for Genting Hong Kong’s debts. Gaming regulators generally have significant concerns with individuals involved in bankruptcies as it poses risks for the industry. However, bankruptcies are not automatically considered unsuitable, and regulators conduct investigations before making suitability determinations. While bankruptcy proceedings can be concerning, they do not necessarily disrupt operations, and regulators prioritize financial stability and the interests of creditors. Soft-touch provisional liquidation in jurisdictions such as Bermuda allows companies to continue operating and facilitate restructuring plans. Genting Hong Kong’s debt issues emerged in August 2020 when it suspended debt payments due to the impact of the Covid-19 pandemic. The company’s expansion into the cruise business allowed it to hedge against restrictions on its Genting Highlands resort in Malaysia. However, Genting HK faced losses and sought to improve its balance sheet through various asset sales. The collapse of the restructuring plan, triggered by the shipyard’s failure to receive German government aid, led to Genting HK’s default on its debt. Lim and his family’s personal wealth is at risk in the bankruptcy, with Forbes estimating a significant decline in Lim’s fortune. Genting HK has taken further steps, including shutting down Crystal Cruises and selling its ships. The company’s asset disposals and 2021 full-year results remain undisclosed, and its stocks have been suspended from trading. The future of Genting Hong Kong remains uncertain, but Lim’s involvement with Resorts World Cruises, a separate entity, may provide potential opportunities. Resorts World Cruises, chaired by Lim, recently launched and aims to capitalize on the cruising market in Asia.