You may recall, especially if they owed you money, that STA Travel Australian ceased trading in August 2020 with Deloitte appointed as Administrators.
I always feel sorry for creditors when I hear of a company ceasing trading and the appointment of administrators, especially one of the flashy, top of town big four or five or however many there are left, with some seeming to me rather like vultures circling, waiting for companies to be in trouble, and one thing is for certain their fees will be substantial and will always be paid ahead of creditors.
It is not the administrators’ fault I suppose, as that is the way it is in administration or what these companies often call “corporate recovery” with “recovery” it appears to me, the last thing on their mind, with their fees at the top of the list, but it does irritate me when this happens as the chances of creditors getting anything is most of the time remote.
So, here we go again, with Deloitte as administrators of STA Travel Australia, confirming according to the recently released Liquidators Statutory Report there are likely to be no funds available for distribution to creditors, with more than 37,000 consumers owed almost $50m.
They also revealed that the company, had no major assets, not even the brand as that was under licence from its Swiss parent which also provided all IT infrastructure, so nothing to sell there and I imagine offices were rented, equipment leased, etc., etc.
Deloitte said that potential customer claims totalled $48 million, but that was likely to decrease because some clients may have arranged a refund or credit with the relevant air and land supplier directly, and as such are not a creditors of STA and also the completion of successful credit card chargebacks means they are also no longer creditors.
Other big creditors include the $14 million fine by the Australian Competition and Consumer Commission, levied when it was concluded that STA misleading with the MultiFLEX product, but what appears to be recognition by the ACCC that there is no point in wasting their time and more money, as the STA bucket is empty, the ACCC has advised that it does not intend to pursue claiming the fine.
The report also says that Deloitte is currently in control of the company and therefore it is entitled and obligated to take all reasonable steps to recover debts due and payable, including refunds for cancelled travel booked by STA on behalf of its customers, but to date, out of all that, only $1.2 million has been recovered, with Deloitte currently reconciling the payments, with any customer distributions that can take place advised in Quarter One of 2021 and subject to a court process.
What is for certain is that there will be sufficient in the pot for Deloitte to be paid and what will also be for certain is that they will be some pretty impressive fees with Deloitte signalling that by saying, the administration had been complex and difficult with the reconciliation process, involving a substantial amount of work and time.
K’ching!
What is interesting is that other than the ACCC, the Commonwealth Bank of Australia [CBA] appears to be the most substantial individual creditor due to customers lodging chargeback disputes with the merchant.
The report says that therefore, the CBA has provided funding to STA Travel for the Administrators’ and Liquidators’ professional fees and separately expenses associated with the winding up of the business of the Company including costs for the retention of data, so it appears CBA is investing in getting its money back or at least some of it.
The report goes on to say that the funding that has been provided by the CBA is $265,964, made up of administrators’ and liquidators’ professional fees of $96,036, expenses of the external administration appointments, wages and on costs of $161,678 and data retention costs of $8,250 a total including GST of $265,964, with the funding provided by the CBA paid into a specific bank account that was established by the Administrators and Liquidators of STA Travel and has been used in accordance with the funding requests.
If you are interested in reading Deloitte’s report CLICK HERE.
What this and other administrations signal, at least to me, is the great care that needs to be exercised when entering relationships and purchasing decisions need to be considered and handled with companies such as this to ensure that creditors’ funds are protected.
A report by John Alwyn-Jones
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