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Case Study—Queen Mary Docks Safely with $43M Sale
09-Nov-2007
Pillsbury Winthrop Shaw Pittman steered the Queen Mary and its operators through the choppy waters of bankruptcy, and into calmer seas when it helped negotiate a $43 million sale of the famous ocean liner, which now functions as a historic hotel, museum and entertainment venue, and the surrounding 55 acres where it is permanently docked in Long Beach, California to a group of investors known as "Save the Queen." The sale, which closed Nov. 7, will allow Save the Queen to take over the 66-year lease for the ship and allow development of the adjacent land —which has been zoned for hotel, retail, dining and commercial use. It will also pump $2.8 million into renovating and modernizing the 71-year-old Art Deco ship.
"This was an extremely complex, high profile, and at times, frustrating transaction," said Los Angeles Pillsbury insolvency partner William Freeman, who led the legal team which served as Special Litigation Counsel and Special Real Estate Counsel to bankruptcy trustee Howard Ehrenberg. "After two years of uncertainty, the Queen Mary can once again become a world class tourist destination. The surrounding land—a large, undeveloped waterfront property—has tremendous potential, too."
The other members of the legal team were San Francisco environmental litigation partner Scott Sommer, Los Angeles litigation partner Mike Finnegan and Los Angeles senior associate Nadine Youssef.
First built in 1934, The Queen Mary played hostess to the world's rich and famous, including Greta Garbo, Clark Gable, David Niven, and Mary Pickford. With the outbreak of World War II, the Queen Mary transformed into a troopship overnight. By the end of the war, "The Grey Ghost," as she was fondly called, had carried nearly 800,000 troops, traveled 600,000 miles and played a significant role in virtually every major Allied campaign. In February 1946, she began her "Bride and Baby Voyages,” transporting more than 22,000 war brides and their children to the United States and Canada. She even set a standing record for the most passengers carried in one crossing—more than 16,000 troops and crew. She returned to peacetime passenger service in 1947, but as the popularity of airline travel increased the ship was retired in 1967, after completing 1,001 crossings of the Atlantic.
Save the Queen purchased the lease from the ship's former operator, Queen's Seaport Development Inc., which declared bankruptcy two years ago. The sale was announced at a press conference held by the City of Long Beach and Save the Queen on Nov. 8 on the ship's Sun Deck.
This matter was just named "2007 Transaction of the Year" by the San Diego Commercial Real Estate Association, which recognizes top deals based on the size of transaction, complexity, and obstacles overcome.
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