Sweden Yachts Group insolvency: What yacht buyers can learn from the recent shipyard failure

He has created two A4 folders. They contain all the misery that Georg Wrobel has lived through so far. Order, purchase contract, equipment lists, technical drawings, correspondence with shipyard manager Mattias Rutgersson, payment receipts. If his boat purchase had taken a happier turn, the expected turn, he might have sunk into reading it later on cold winter evenings, happy about the decision to have ordered a Malö 43, his dream yacht, for his retirement.

But the folders also contain emails from Paula Save, the insolvency administrator who is currently winding up the Sweden Yachts Group. Messages from his lawyers, an ad hoc policy from Pantaenius for what only remotely resembles the construction number 140 he ordered. Because Georg Wrobel has been shipwrecked in a figurative sense, albeit with comparable pain - just like other owners who have transferred hundreds of thousands to the boatbuilding island of Orust. Victims of a bankruptcy that, in retrospect, appears to have been systematically engineered. At least, that's what YACHT's research suggests, having spoken to several of those affected and gained deep insights into Rutgersson's business practices.

Building a new boat is a "high-risk business

The case highlights the risks that buyers take when they invest a large part of their liquid assets in the construction of a new boat. Dr Heyko Wychodil from the law firm Uhsadel in Hamburg, who has long specialised in yacht law, even speaks of a "high-risk transaction".

Because there can sometimes be a year or two between the first instalment and delivery, especially in the case of small shipyards or large, complex boats, he strongly recommends taking contractual precautions and closely monitoring the construction process. And even then, losses can only be minimised, but not completely ruled out. Especially when, as in the case of the Sweden Yachts Group, economic incompetence in management is compounded by nefarious behaviour and operations are only maintained for years using a kind of chain letter method.

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As YACHT online was the first trade magazine worldwide to report in mid-March, there is no hope for the affected buyers to get out of the mess left behind by Mattias Rutgersson.

According to the insolvency administrator, there are no significant assets in kind or cash to service outstanding debts or asset claims. The shipyard, which had once secured the naming rights to highly renowned yacht brands, has virtually imploded economically. The last account balance according to the investigation report of 4 April: 137 Swedish kronor, equivalent to 11.95 euros; outstanding debts and outstanding claims: 53 million kronor, 4.6 million euros.

Was the insolvency deliberately concealed?

Rutgersson has not submitted any proper annual financial statements since 2021, as he would have been legally obliged to do. He brought three boxes of invoices, reminders and receipts with him to the insolvency hearing, a blatant violation of every requirement of proper accounting. This supports the suspicion that the shipyard boss either deliberately refused to recognise the financial imbalance for years or even wanted to conceal it. He is also in debt to the Swedish tax authorities, who will probably also come away empty-handed.

Georg Wrobel was actually hoping to take his Malö 43 out on a cruise this season. The handover, originally promised for 2022, had been postponed several times, most recently to spring 2024. He had deliberately opted for the moderate short keeler with the legendary solid mahogany interior, which looks like a cosily furnished fortress in bad weather.

The doctor from Lippstadt travelled to Kungsviken several times to follow its progress. This soon came to a standstill in the wake of the coronavirus pandemic. Nothing unusual, thought Georg Wrobel, as there was talk of delivery problems everywhere. Every now and then, shipyard boss Rutgersson would send him mobile phone photos of the construction progress, usually accompanied by the invoice for the next instalment - without the agreed work having been completed, or even started. The tone of the correspondence was friendly, they were on first-name terms.

By the end of last year, Wrobel had transferred a total of 522,000 euros, trusting in the reliability of the Swedish boat builders, whom he had experienced as competent and likeable. Only the final instalment, which would not have been due until the finished yacht was handed over, was still missing.

Wrobel's loss is around 450,000 euros

Now the doctor is facing a fiasco. Because, as he discovered on his last visit to western Sweden, there is nothing more than a partially completed GRP hull. The Yanmar diesel, which Rutgersson had specifically asked him to pay for in advance, is just as non-existent as the rig, sails, installations, on-board electronics, upholstery or deck fittings. The optional stern thruster, which had of course been calculated and paid for in advance, is also missing. Only the cut-out in the hull is a reminder of this. "The shell is probably not worth much more than 70,000 euros," fears the pensioner.

Measured against his loss of at least 450,000 euros and the perfidy with which he was duped, he seems surprisingly composed when he visits YACHT. But the trauma has by no means been overcome, at best repressed. Wrobel still feels all the nuances of grief, anger, disappointment and rebellion.

He is considering possibly having the hull built to completion so that he does not have to give up his long voyage plans. One of Rutgersson's boat builders has already made him an offer, but he has completely lost confidence in the workforce. He also wondered how the employee got his contact details. It is just one of the countless inconsistencies that characterise this case.

On the advice of Paula Save, the insolvency administrator, he had his fragment moved from a ship to another hall at the end of March. This was a precautionary measure to avoid losing the last bit of substance he had left in case Rutgersson or one of his followers illegally claimed the boat for themselves, as was the case in an earlier insolvency in 2016 with CR Yachts.

A sum of between three and four million euros for nine injured parties

Wrobel is not alone. Initially, there was talk of a total of six bruised buyers. So many boats were still in various stages of production at the time of the insolvency: in addition to the Malö 43, two Sweden 45s, a Sweden 42, a CR 490 DS and a Regina 40. In fact, however, Rutgersson had apparently sold even more models that were still in production - and here, too, partial payments were made early: another CR 490 DS and three CR 390 DSs, although one of the owners cancelled the purchase. This brings the total number of injured parties to nine.

It is not possible to put an exact figure on the total amount of money embezzled. It is estimated to be between three and four million euros. A German buyer who was interested in a CR 490 DS is said to have helped Rutgersson out with a bridging loan at the end of last year - presumably also a total loss due to the insolvency.

How is it possible for a small business owner to rip off so many well-off and well-educated customers over several years? That he continues to obtain instalments in advance despite repeatedly failing to meet deadlines and fulfil contract components, even though all the alarm bells should have been ringing for the buyers long ago?

The answer to these questions is complex. On the one hand, Rutgersson benefited from the pandemic, which fuelled the desire for a new boat among many who could afford it. This fuelled demand, but also provided an argument for the irregularities in production.

Rutgersson signed new contracts even though Sweden Yachts Group was already facing insolvency

And then there's the Bullerbü factor of the western Swedish archipelago that envelops you on Orust. It's impossible to suspect evil in this idyllic idyllic world, in which the sympathetically disorganised Malövarvet business also fits in. Especially as the shipyard boss is a prudent boat builder who, unlike his father Charles, is rather gruff and quiet, but authentic and direct.

Mark Ryland, one of the bruised buyers who ordered build number 1 of the new CR 390 DS, says: "He was always a sensible, nice, smart guy - someone you trust." He found out about the insolvency via YACHT online - only shortly after he had tried unsuccessfully to arrange an appointment with Rutgersson to sign a cancellation clause regarding his order because the start of construction had been postponed time after time.

The 65-year-old from Guildford, who first came into contact with Rutgersson eight years ago and called him every month, sometimes even more often, to find out about the status of the development, says that he was nevertheless "very surprised" that the shipyard would come to such an abrupt end.

Mark Ryland doesn't want to talk about the amount of his loss, only that it was "significantly more than the deposit". In a way, the shipyard boss used it to finance the moulds, which were never fully completed. On his last visit to Kungsviken in November last year, the hull mould was well advanced, but the deck mould was only about 75 per cent complete. Rutgersson made no mention of the fact that the Sweden Yachts Group was already on the verge of liquidation at the time.

"It's a terrible experience," says Ryland. "I don't think we have any choice but to write the whole thing off." He and his wife take comfort in the fact that life always holds risks and that they have been more lucky than unlucky overall. Nevertheless, he seeks contact with others who have been affected. Perhaps this is his way of grieving.

Parallels to the insolvency of CR Yachts

One person who is not surprised by the latest bankruptcy is Christoph Baldus, who also fell victim to the questionable business practices of the Rutgersson family. The Bavarian, who lives in Chiemgau and worked on hairy non-compliance cases for major international corporations in his professional life, experienced the bankruptcy of a yacht buyer between 2014 and 2021. The legal disputes over the return of the boat he had paid for in full, a CR 480 DS, alone dragged on for five years. It was an experience that clearly eclipsed everything he had experienced in his job.

In this context, it seems almost negligible that the ship was not delivered on time, that it had serious defects and did not even have the CE certification required in the EU. Baldus initially left his boat in Sweden at the shipyard, which was supposed to carry out repairs in the winter of 2014/15. He even covered the additional costs for the required recertification and had the yacht entered in his name in the shipping register as a precaution. But instead of completing the work, Rutgersson resorted to blocking it. Even back then, he was already in dire financial straits.

When CR Yachts went bankrupt in 2016, the boat, which had already been transferred as collateral, threatened to become part of the bankruptcy estate. Baldus only managed to transfer his boat in a cloak-and-dagger operation thanks to a ruse and extensive legal support. Friends had posed as prospective buyers for a new build and insisted on a trial run. In return, Rutgersson launched Christoph Baldus' CR 480 DS - and he in turn took the opportunity to go on board and exercise his ownership rights. He expelled Charles and Mattias Rutgersson from the boat, which they responded to with furious threats. But in the end they had to let the owner go.

The machinations of the Rutgerssons are obviously systematic

Those experiences are now far behind him. But when he learnt of the new bankruptcy, the 67-year-old Bavarian's old memories came flooding back. "I had sleepless nights for years because of the ship," says Baldus. "I never really talk badly about other people. But Mattias Rutgersson and his father are the most corrupt people I've ever met in my long professional life. I never knew anything like it before." The family does not even feel bound by the decisions of the Swedish judiciary.

It worked in his favour that he wrested private liability from Junior in the tussle over the rectification of defects and CE certification. The mortgage on Rutgersson's house in Uddevalla was to pay off years later in the legal investigation into the case.

At the time, Baldus was in contact with a Norwegian family who had experienced a similar situation with CR Yachts. However, they did not want to take part in the legal dispute. According to research by his lawyers, the Rutgerssons' machinations were systematic: "As soon as CR Yachts became insolvent, Mattias founded the Sweden Yachts Group." Both companies had virtually no assets that could be enforced. The shipyard hall was merely leased. According to Baldus' information, however, the leaseholder is said to have been a straw man, at least in 2016. Paula Save must now investigate whether this also applies to Malövarvet. The insolvency administrator, who is currently determining the bankruptcy estate, has six months to do so.

Doubts about Ruttgerson's seriousness are now public

At least one thing is different this time: the case is causing a stir - and for the first time open indignation about the unscrupulousness of the deception. Since the regional media and, a week later, the sailing magazines have reported on the case in great detail, it seems unlikely that Rutgersson will once again be able to bring the otherwise impeccable reputation of western Swedish boatbuilding into international disrepute. Even an indictment for fraudulent delay in filing for insolvency is conceivable.

Doubts about its seriousness have only ever been expressed behind closed doors, and never to customers who have come to Orust from all over the world to commission their dream yachts here. Georg Wrobel, the owner of the Malö 43, still resents the locals afterwards. During his visits, "nobody ever pointed out to him that the shipyard and its boss could not be trusted," he says. It was only when it was too late that he was told: "Yes, Mattias, you have to be careful."

Engine suppliers such as Yanmar and mast builders such as Seldén had long since stopped supplying Rutgersson directly because they were aware of his delinquency. Instead, the owners had to order directly from the manufacturers - a clear indication that something was amiss.

What is irritating: Despite the ongoing insolvency proceedings, there is no reference to the suspension of normal business activities on the shipyard's homepage. It continues to advertise quality boatbuilding as if nothing had happened: "The Sweden Yachts Group is one of the world's leading yacht builders. We are the proud builders of CR Yachts, Sweden Yachts, Malö Yachts and Regina Yachts."

Please note before concluding the contract!

Three tips that can save sleepless nights and bitter losses - this is what yacht law expert Dr Heyko Wychodil advises boat buyers to minimise their risk:

Purchase price protection

A bank guarantee should be a condition of purchase, especially for higher-value yachts. Dealers and shipyards are sometimes reluctant to do so. However, against the background of declining order numbers, this form of security is generally recommended. The costs are negligible in relation to the price of the yacht and the amount of the instalments.

Contract details

Many purchase contracts from dealers and shipyards leave gaps. For this reason, a supplementary agreement should secure the transfer of ownership after the progress of construction has been paid, or at least expectant rights. Otherwise, a boat that has been paid for in full or in part but not yet transferred is at risk of being lost in the insolvency estate. Seek legal advice for this!

Construction supervision

Make sure that the necessary work has actually been completed when you call off instalments. Do not be fobbed off with photos showing sister ships. It is best to arrange personal visits to the shipyard. The time and travelling expenses invested in this will be well spent.