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Staff shine light on internal workings of collapsed Bestjet

February 20, 2019 Headline News No Comments Email Email

Defunct online travel operation Bestjet routinely stalled refunds for six months or more and released them only when customers “hounded” consultants, former Bestjet employees have claimed.

Alleged details of the internal workings of liquidated Bestjet are being revealed as journalists continue to probe the collapse.

In the latest disclosures, the ABC reports that former Bestjet staff, speaking on condition of anonymity, have told it that while Bestjet’s terms and conditions warned customers that refunds for cancelled travel might take 12 weeks to be processed, Bestjet would allegedly receive the money back from airlines and hang onto it for much longer.

“The refunds were only paid when clients asked for them; they had to ring up,” one ex-staff member told the ABC.

“Some refunds were held for well over six months.”

Above: Extract from adminstrators’ report to creditors of Bestjet Travel Pty Ltd


According to the ABC, ex-staff have claimed that Michael James, husband of Bestjet director Rachel James, was constantly in the office and actively involved in the business, despite a three-year disqualification from managing corporations after his budget airline Air Australia folded in February 2012, leaving debts of nearly AUD 100 million. The disqualification lasted until December 2016. For more of the ABC report, see the ABC website here.

Pilot Partners, the Bestjet liquidators, have stated previously they 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 of 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.”

MEANWHILE, Channel 9Finance has reported that a AUD 17 million deal could have saved Bestjet and potentially spared thousands of customers heavy losses.

A consortium claims it was in talks to buy the doomed Queensland company, five months before it collapsed.

9Finance has quoted a Memorandum of Understanding (MOU), it says was signed in July last year, stating the consortium would “purchase 100 per cent of the issued shares” in Bestjet Travel, Wynyard Travel, Brooklyn Travel and “associated entities” for USD 12.887 million. The deal reportedly fell through because the vendor made demands the consortium found excessive.

9Finance has also reported that corporate watchdog ASIC (the Australian Securities and Investment Commission) failed to take action over Bestjet despite being warned about alleged misconduct a year before the budget airfare company collapsed.

For 9Finance’s coverage of the Bestjet collapse, see the Channel 9 website here.

AS WE REPORTED PREVIOUSLY, the ability of Pilot Partners to fully investigate the collapse and the complex circumstances surrounding it may now depend on money. See: Will funds permit proper probe of liquidated Bestjet?

IntegraPay (Bestjet’s principal payment aggregator) has notified the liquidators that it claims all of the Bestjet funds so far recovered (about AUD 3.6 million).

The liquidators have noted: “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.

Another potential source of funds may be available, however.

In general advice on its website, ASIC states: “If a liquidator suspects that people involved with the company may have committed offences and the liquidator reports this to ASIC, the liquidator may also be able to apply to ASIC for funding to carry out a further investigation into the allegations.”

How far the investigation into Bestjet will go, who will fund it and how long it will take, all remain to be seen. Public outrage over the collapse shows no sign of easing and sympathy for customers left out of pocket is running high.

Written by Peter Needham

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