January 14, 2022: -Shares of embattled cruise operator Genting Hong Kong plunged more than 50% after the company announced that it might not be able to pay its debts and other obligations.

Genting says that in a filing to the Hong Kong stock exchange that there’s “no guarantee that the Group will be able to meet its financial obligations as and when they fall due.”

“If the Group is not able to meet its obligations to repay any debts as they decrease because to agree with its relevant creditors on the renewal or extension of its borrowings or any related alternative arrangements there is a material adverse effect on the Group’s business, prospects, financial condition, and operating results,” it said.

On Thursday, the development came as its German shipbuilding subsidiary MV Werften filed for insolvency. It sparked a warning from Genting that there could be a potential cross-default on financing arrangements worth $2.8 billion due to bankruptcy.

Genting Hong Kong, a subsidiary of the Genting Group, is amidst a court battle with a regional government in Germany.

The ongoing legal proceedings include the drawdown of a $88 million backstop facility that’s related to MV Werften.

Genting stated in its filing that the German federal state of Mecklenburg-Vorpommern had withheld those funds, which is pending the upcoming ruling on Monday.

The cruise operator, which can be controlled by Malaysian tycoon Lim Kok Thay, has been struck by the pandemic as travel hit a standstill due to global Covid cases rising. According to news reports, Genting Hong Kong halted payments on debts of $3.4 billion in 2020.

The company reported a $238 million net loss for the period ending June 2021 compared to a $742.6 million loss for the same period in 2020.

Genting Hong Kong is part of an enormous conglomerate that includes Genting Malaysia and Genting Singapore.

Among its assets, the conglomerate owns the Resorts World leisure park chain, including those in Singapore, New York City, and the United Kingdom. It has 30 casinos across the U.K.