Creditors of failed online travel agency Bestjet last week heeded the advice of the company’s receivers and placed Bestjet into liquidation, after the firm’s collapse left thousands of customers out of pocket.
A second meeting of creditors in Brisbane last week resolved to appoint Nigel Markey and Bradley Hellen of Pilot Partners as Bestjet liquidators.
Following that meeting, on 31 January 2019, Pilot Partners released the following statement:
As previously advised, Nigel Markey and Bradley Hellen, both partners of Pilot Partners, were appointed Voluntary Administrators of Bestjet Travel Pty Ltd and its subsidiaries, Wynyard Travel Pty Ltd and Brooklyn Travel Pty Ltd, by a resolution of directors on 18 December 2018.
The second meeting of creditors of Bestjet Travel Pty Ltd and its subsidiaries was held today in Brisbane. Creditors resolved at the meeting to appoint Nigel Markey and Bradley Hellen as Liquidators of Bestjet Travel and its subsidiaries. Creditors also resolved to form a Committee of Creditors in Bestjet Travel Pty Ltd, to consult with the Liquidators about matters relating to the liquidation.
At the previous creditors’ meeting, the administrators recommended that Bestjet be wound up. That was the best course for creditors, as the company was insolvent and has ceased trading, they said.
“Placing the Company into liquidation enables the liquidators to conduct further investigations into voidable transactions that may benefit creditors,” the administrators advised.
According to 9FinanceBusiness News, which has covered the collapse comprehensively, the latest creditors’ meeting was attended by two officials from the Australian Securities and Investments Commission (ASIC).
CVFR Travel Group (Travcom International Group Pty Ltd trading as CVFR Travel Group), the International Air Transport Association (IATA) and the Bestjet Fiasco Travel Group (a group of consumers who lost money in the collapse) were also represented at the creditors’ meeting.
Bestjet, and its subsidiaries Wynyard Travel and Brooklyn Travel, were placed into administration on 18 December 2018.
Bestjet may have been trading while insolvent; it routinely sold tickets for less than their cost, and it failed to maintain client funds in a separate account “resulting in a deficiency in client funds to meet current outstanding to ticket issuers”, according to the report to creditors released on 22 January 2019 by Pilot Partners. See: Administrators’ report makes startling Bestjet disclosures
Rachel James founded Bestjet in 2012, weeks after her husband Michael James’ international budget airline, Air Australia, went under with debts of up to AUD 100 million.
In November last year, Rachel James sold Bestjet to McVicker International. Both owners have subsequently blamed each other for Bestjet’s collapse.
Pilot Partners believe “Mr Michael James may have acted as a de facto or shadow director of the Company.” They laid out reasons for that belief in their report on 22 January 2019, including: “Mr James was a signatory on the Company’s bank accounts up to 20 November 2018. Mr James also had transactional payment rights on the Company’s accounts.”
The ability of Pilot Partners to fully investigate the collapse and the complex circumstances surrounding it may now depend on money.
As the receivers (now liquidators) pointed out in their 22 January advice to creditors:
As at the date of our appointment the Company held bank accounts with the following financial institutions:
- National Australia Bank Limited: AUD 3,607,779
- Commonwealth Bank of Australia Limited: AUD 1917
- Westpac Banking Corporation: AUD 162
- Total balance of funds: AUD 3,609,858
The accounts were frozen shortly after our appointment and the balance of funds, being AUD 3,609,858 have been recovered. We note that IntegraPay (being the Company’s principal payment aggregator) has given notice to us that it asserts an entitlement over the entirety of these funds. Integrapay asserts that the monies it paid to the Company are now held by the Company on trust for it. In essence, Integrapay contends that:
- these monies were paid for the purpose of the Company purchasing tickets for those customers who had made payments to its bank account;
- the Company and Integrapay agreed that, should this purpose fail, these monies would be returned to it; and
- this purpose has now failed, so the Company holds these funds on trust for it.
We are currently seeking legal advice regarding the validity of these claims. IntegraPay has not yet established a basis to these funds. We note that in order to determine this issue, it may be the subject of legal proceedings. Should IntegraPay be successful in establishing the trust over the monies in its favour, this may exhaust all the funds that administration currently holds.
In other words, if all the available cash goes to IntegraPay, there may not be enough left over to fund a full investigation by the liquidators.
Creditors who attended the meeting on 31 January 2019 told 9Finance that liquidator Nigel Markey reiterated that his firm’s ability to fully investigate the collapse depended on money.
Markey also told the meeting that Bestjet’s Xero financial management software had been accessed four times since the company went into administration, although the administrator (now liquidator) has only just got access to Xero.
Consumer advocates looking at the whole fiasco note that under the former Travel Compensation Fund (TCF) and licensing regime that governed the retail travel industry until June 2014, Bestjet would have been subject to:
- Obtaining a licence;
- An annual financial review of externally audited accounts for renewal of licence;
- Approval for the change of ownership to proceed.
If the TCF regime still applied, assuming Bestjet would have held a licence, the three processes listed above would arguably have forced Bestjet to take corrective financial action or cease to trade, or limited the extent of financial losses.
Had Bestjet been licensed and a member of the TCF (as previously required) those processes would have reduced consumer disruption and stress (if not eliminating all losses) and curbed damage to the industry’s reputation.
Written by Peter Needham
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