Without doubt, for many travel business COVID-19 has a great deal to answer for, with a myriad of well-known and what previously appeared to be well established and secure brands and companies hitting the wall.
I remember well when I worked in a Big 4 consulting firm doing some work for a part of the company that was called corporate recovery team, which was really administration, when we were looking at the administration of Traveland, with the partners that I reported to incredulous that the net profit was well below 5%! I explained that was travel and not unusual, with their response being, why would you bother for only 5%.
In any case, when its Swiss parent company STA Travel Holding AG collapsed, it appeared that there was no alternative for STA Travel in Australia, but to also hit the wall, with the company placed into administration last August, closing its online travel agency and its 27 bricks and mortar shops across Australia.
On 17 September the administrators recommended in its report to creditors that the company be placed into liquidation as it was insolvent and there was no proposed deed of company arrangement, with claims against the company totalling $69.8 million, with the administrators’ report saying that to estimate any pay out outcome for creditors and customers, was very difficult and that the company’s assets and financials were complicated and in need of ongoing investigation.
The administrators’ report also explained that STA Travel did not own the IT infrastructure, the customer database or the STA Travel brand, with access to those assets to the company through a license agreement.
The administrators also reported that they had made contact with the Swiss parent to ascertain whether a global restructure may be put forward, but as of the date of the report, they had received no response and therefore considered any potential for a global restructure unlikely.
Nevertheless, the report also said that the administrators considered the company may have sufficient realisable assets to enable payment of a dividend to priority unsecured creditors in the event the company is placed into liquidation and that there may be refunds due to certain classes of customers/creditors if they can establish that certain amounts are held on trust for customers.
As a result, the creditors of STA agreed with the administrators’ recommendation that STA Travel be wound up…another sad day for the Australian travel industry.
A report by John Alwyn-Jones
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