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Asian tourism and casinos giant Genting’s shipbuilding subsidiaries in Germany filed for bankruptcy Monday, which one union leader described as a “dark day” for the country’s dockyards.

With travel still severely restricted during the COVID-19 pandemic, particularly in Asia, the company has seen demand for huge cruise ships or luxury mega-yachts dwindle.

MV Werften on the Baltic Sea coast and Lloyd Werft in Bremerhaven on the North Sea coast declared themselves insolvent, local courts said.

The larger subsidiary MV Werften took the step after failing to secure funding for the completion of the “Global One” mega-liner, already 80% of the way through construction, according to the company.

Designed to carry close to 10,000 passengers, the huge ship had been due to leave the shipyard in 2021 — but the pandemic has knocked the company’s timetable off course and crimped its budget.

Around €600 million ($680 million) is necessary to finance the completion of the vessel, for which the shipbuilder has been seeking support from the government.

The decision to declare bankruptcy came after lengthy discussions with officials in which the two sides “clearly have not found common ground,” a spokesman for MV Werften said shortly before the filing was made.

The state asked MV Werften’s owners Genting to put forward 10% of the capital, government coordinator for the maritime economy Claudia Mueller said in a news conference.

“On this issue there was no agreement between Genting and the federal government,” Mueller said.

‘Dark day’

The “Global One” sits in Wismar, one of MV Werften’s three shipyards along the Baltic coast of former eastern state Mecklenburg-Western Pomerania, where it employs around 2,000 people.

The collapse of one of the biggest employers in the region poses an early challenge for Chancellor Olaf Scholz’s newly formed government.

“It is very important to us to keep the know-how where it is,” Mueller said, adding that the government saw “big potential” for the development of offshore energy.

In June, the state agreed to take a stake worth €60 million in the business and extended a loan worth €47 million to the company.

In all, the government had offered financial support of around €300 million to MV Werften since the beginning of the pandemic, before negotiations over a new deal began.

The decision by the shipyards to file for bankruptcy was a “dark day for shipbuilding in Germany,” local IG Metall union leader Daniel Friedrich said.

The completion of the “Global One” and the delayed payment of wages for December were priorities for the union, which criticized the “exhaustion of trust” between negotiators.

The cruise ship industry has been shaken by a spate of recent coronavirus outbreaks on liners despite increased health measures, giving new headaches to the pandemic-hit sector.

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