I think it's probably "working as intended." The storyline is that English Bill's ships are blockading Boot Hill to keep you out - you can't dock there until you sink twelve of them. Unfortunately, this means you you need to either have finished Old Scratch's promotion first, or you'll have to wait until you can dock again. (You'll also be locked out of any of the other sidequests that require you to visit Boot Hill, and I think there's a couple of them.)

If you've been doing most of the other sidequests, I think you should have a couple Cool Ranch companions that are pretty close to your level, and possibly higher level than Old Scratch. You might need to move them higher in your crew for a little while. Also, you could try finding another captain or two that will help you sink the ships without boarding them. (You loose out on the treasure from defeating the crew, but you can get ship parts and nautical XP. And sinking ships is usually a lot faster than boarding them, especially with help.)

In any case, I don't think this is really "broken." Unlike one of the other companion promotions, which apparently requires you to fight Scurvy Dogs. If you don't do that promotion right away then you might not be able to finish it at all, because the Scurvy Dogs will eventually become friendly and will be impossible to attack. In that case, the mission actually *does* break and can't be finished. (Unless there's a batch of hostile Scurvy Dogs hiding somewhere that you can still fight, and that count for the mission.)