A luxury cruise vessel operating in the Kimberley has been sold to pay back creditors, but $4 million owed to unpaid customers will likely not be returned. 

Island Escape Cruises NZ left dozens of customers out of pocket after cancelling voyages up the Kimberley coast last year with little notice.

The company went into receivership shortly after and the vessel was seized at Broome Port.

A recent report to creditors, seen by the ABC, shows the 53.5-metre luxury boat sold for $5.5 million — significantly less than its estimated value.

The urgent sale was conducted by the Federal Court in hopes to pay back international creditors the Bank of New Zealand and Export Finance Norway.

The undersell meant unsecured creditors such as Steven Davies and his wife were unlikely to get refunds for their $23,000 holiday that never eventuated.

"There's always been a lot of talk of the Kimberley, and we've done a lot of research on it. 

"It just looks untouched."

Mr Davies and his wife had planned to take the trip when they were older and international travel became more difficult.

He said he had been diagnosed with cancer since making the booking.

"The health situation was unfortunate," he said.

"Hopefully I'm through the worst of it now."

The company, headed by Erik Helseth, went into receivership in August and investigations into the company's finances commenced shortly after.

It promised 12-night cruises along the Kimberley coast, and many customers were devastated when news of the cancellations circulated.

Quest Maritime Services executive director Shane Male, who is heavily involved in Broome's marine industry, said he was contacted by customers to find out what happened with their cancelled voyages. 

"I knew a person that was on watch of the vessel," he said.

"I just suggested that he get hold of maybe a state sheriff … to put forward your case to arrest the vessel."

Mr Male said he had been contacted by customers at the time the cruises were cancelled.

"They were all incredibly frustrated and disappointed, and really wanting to know why," he said.

"These people have had to come down to the wharf and then find that the boat's not even there and nobody's answering the phone, so they were quite distraught."

He said he felt deeply for the passengers.

"These people are just mums and dads and grandparents that are looking for a holiday and or some of them, it's an added stress that they don't need," Mr Male said.

"They probably wanted to take this charter as a bit of a stress relief."

Mr Male said he hoped the debacle would not impact the marine tourism industry in the region.

"It may make them a little bit more cautious to make a booking in the region," he said.

"[They] pay up front and hope that they'll enjoy themselves in the Kimberley, which is a magic part of the world."

Creditors' questions about sale

The boat, Island Escape, was seized by the Federal Court marshal and an urgent sale was ordered on November 30. 

It was sold to the Paspaley Group for the highest bid of $5.5 million on January 13 and it was handed over on February 22. 

A similar luxury cruise boat had been on the international market for about $35 million.

The condition of the Island Escape had waned, impacting the prospect of its sale.

Federal Court judge James Feutrill ordered the sale.

"The ship has some unusual features that render the pool of potential buyers limited and it is difficult to accurately estimate the value of the ship," he said. 

"I am not satisfied that any alternative process is likely to produce a higher sale price for the ship or a higher overall return, after taking into account continuing costs of the arrest and additional costs of an alternative sale process, than the current highest tender.

"I am satisfied that an order should be made directing the marshal to accept the highest tender."

No refunds for customers

Liquidators Rowan John Chapman and Amanda-Jane Atkins of Chapman Atkins Limited were appointed to oversee the company's finances.

The latest report to creditors outlined the debt to be paid after the sale.

"Subject to confirmation, as at the date of the liquidation, the group owed approximately $20.3 million in total to the financiers," the report reads.

"An amount of $11,851,080 is owing to Export Finance Norway, and approximately $8.5 million is owing to the Bank of New Zealand.

"Due to the sale price of the vessel, there will be a shortfall to the financiers."

In the latest accounts as at May 31, the sum of pre-booked trips in Australia was $4,677,217.

Liquidators concluded a refund to customers would be unlikely.

"Subject to further verification, given the shortfall to the financiers, there will be no distribution to unsecured creditors, including cruise ship customers of the company," the report reads.

Holding on to hope

Mr Davies said it had taken a while for the consequences to kick in.

"One of the directors was promising full refunds so we felt fairly comfortable with that," he said.

"The initial apology from [Mr] Helseth appeared to be quite genuine, so we thought we'll get our money back and re-book elsewhere."

Mr Davies said despite the outcome of the sale, he hoped he could still cruise the Kimberley.

"We haven't lost hope of doing a Kimberley cruise," he said.

"I've got to have a PET scan in approximately 10 weeks' time and if that proves to be all clear, then we'll certainly look at doing the Kimberley through a more reputable and company."