A federal bankruptcy court judge officially returned control of the Queen Mary to Long Beach on Wednesday, July 7, and allowed the vessel’s now-former leaseholder to abandon any property left on site, potentially saddling the city with a flooded Russian submarine owned by an unknown party.
The city had asked the judge to prevent Urban Commons Queensway LLC, the company that held the lease to the Queen Mary, from abandoning the submarine through bankruptcy. But the company denied owning the derelict sub and did not list it as property in the proceedings. Wednesday’s ruling made it clear the submarine is not Urban Commons Queensway’s responsibility. But it isn’t the city’s either — at least not yet.
A search is underway to find the actual owner of the B-427 “Scorpion,” the Soviet attack submarine partially submerged next to the historic ocean liner, according to Richard Anthony, a deputy city attorney with Long Beach. The city, he said, believed Urban Commons Queensway owned the submarine until recently.
“We never really knew who owned it. It wasn’t a requirement of the lease for us to know,” Anthony said. “I don’t think anybody ever thought it would become the liability that it has.”
Representatives for Urban Commons Queensway did not respond to requests for comment.
But the firm has agreed to turn over non-confidential documents that could help unravel the mystery. If the city can determine the ownership, there’s a chance the owner is legally obligated to cover the costs of the sub’s removal. City officials did not have an exact figure for removing the submarine, but their court filing estimated it would cost “millions of dollars.”
“We will assess our options, once we know who owns it, to see about getting them to remove it,” Anthony said.
In the filings, the city’s attorneys described the submarine as an “environmental hazard.” The Scorpion is reportedly taking on water, does not have bilge pumps to drain the flooding and could damage the Queen Mary’s hull if it rolls.
For nearly two decades, the B-427 served as a tourist attraction that drew in an average of 7,900 visitors a month during peak summer seasons. It has been closed to the public since 2015, when a hull ruptured and flooded a ballast tank.
The Scorpion operated as an attack submarine during the 1970s and 1980s as part of the Russian Pacific Fleet and was decommissioned in 1994, according to the city’s attorneys. The Australian National Maritime Museum leased the sub the following year with the intent of displaying it near a museum off the coast of Sydney. Three years later, a Palm Springs limited liability company called NewCo Pty bought the sub and transported it to Long Beach at a cost of nearly $1 million.
In 2016, NewCo filed a $10 million lawsuit against Urban Commons Queensway and former leaseholder Save the Queen LLC, arguing the companies had allowed the Scorpion to fall into disrepair. The case was settled quietly and dismissed two years later.
Urban Commons Queensway and NewCo were reportedly in negotiations to potentially sell the submarine to an unidentified buyer in November 2019. But it’s unclear if the deal went through.
A representative for NewCo did not respond to a request for comment.
EHT US1, Inc., the parent entity of Urban Commons Queensway, filed for Chapter 11 bankruptcy in January. After months of uncertainty, the company unexpectedly surrendered physical control of the Queen Mary to Long Beach last month, but a judge did not sign off on the rejection of the lease until Wednesday.
The ruling set the end of the lease retroactive to June and shut down a request by Long Beach to have Urban Commons Queensway cover $309,000 in caretaker costs incurred over the last month.
City officials said they fear the addition of the submarine could add millions more to the seemingly insurmountable cost of repairing the Queen Mary.
Long Beach approved $2.5 million in funding in June to maintain the Queen Mary for the next six months and to plan out the repairs necessary to reopen the iconic tourist destination. The most immediate work necessary to stabilize the ship is estimated to cost $5 million. But more extensive marine surveys in the past put the total cost of repairs needed to preserve the Queen Mary at nearly $300 million.
City staffers are expected to bring a report back this month detailing the city’s options for the Queen Mary. One option being studied is for the Port of Long Beach, which the harbor commission oversees, to take ownership of the Queen Mary and its surrounding properties. The port controlled the Queen Mary until it turned the vessel over to the city in 1993.
Though Long Beach now has full control of the ship for the first time since 1978, Urban Commons Queensway isn’t off the hook completely. The city plans to file another complaint in the bankruptcy case to prevent the discharge of certain debts to the city, namely tens of millions of dollars in repairs.
“The city is still going to attempt to recover as many losses as possible,” Anthony said.
Source: Orange County Register