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Collapsed tourism agent Traveldream may have taken customers' money while insolvent
Collapsed tourism agent Traveldream may have taken customers' money while insolvent

ABC News

time2 days ago

  • Business
  • ABC News

Collapsed tourism agent Traveldream may have taken customers' money while insolvent

Australians who say they have been left stranded overseas and broke after their travel agency collapsed have now been told the company was likely trading while insolvent. Melbourne-based agency Traveldream — which was registered as Australian Travel Deals Pty Ltd and sold discounted flights, cruises and international tour packages — collapsed in April and went into voluntary administration. Now, an administrator's report has found the company was "likely" trading while insolvent from 30 June 2024, more than nine months prior to entering voluntary administration. Directors found guilty of allowing a company to trade while insolvent can face civil or criminal penalties and be banned from managing companies. Do you have a story to share? Email ABC News has spoken to dozens of travellers who booked once-in-a-lifetime overseas trips through the agency, many spending between $10,000 and $30,000, only to discover their bookings had been cancelled — in some cases mid-trip. If the company went into liquidation, there would be some possibility their costs could be recovered, but it would be a lengthy process. Debts to customers, who are considered "unsecured creditors," would be some of the last — and least likely — to be repaid. Cairns healthcare worker Glenys Carpenter and her husband Glen booked a $32,000 tour of Canada and the US in February — during the period the travel agency was likely trading insolvent, according to the administrator's report. They were due to fly out on Monday, but this week discovered several tours and the hotel rooms they paid for had been cancelled. "I've lost sleep, lost weight and the stress has been unbelievable. People need to be held accountable." Some customers remain overseas, re-booking hotels and tours at their own expense. Others have cancelled plans they cannot afford to pay for again. Brisbane couple Michelle and Peter Brown landed in Toronto after 20 hours in transit — only to be told their hotel room did not exist. Days later, their Las Vegas accommodation was also cancelled. "We had confirmation emails for everything. We borrowed money and planned for this for years," Ms Brown said. Administrator Mcleod's investigation into the full financial picture remains ongoing. Since March, Traveldream's sole director has been Christopher Banson, who co-owns Saltwater Properties — a company operating high-end holiday rentals across Australia and which holds stakes in more than 30 other businesses. Documents filed with ASIC show Traveldream owed Saltwater Properties more than $758,000. The administrator's report also showed nearly $1 million in payments flowed from Traveldream to Saltwater Properties over four years. "I note that the company and Saltwater Properties regularly transferred funds between one another," the administrator wrote. Mr Banson told ABC News Traveldream was "funded by Saltwater Properties" and blamed the company's downfall on a separate wholesaler, My Travel Experience. He said Traveldream paid My Travel Experience in full for customer bookings and that it was the wholesaler who failed to pass on funds to hotels and airlines. But the wholesaler's director, Russ Masterson, rejected this, and said his company never took money directly from Traveldream customers and that cancellations were likely due to non-payment. Traveldream was stripped of accreditation by the Australian Travel Industry Association in 2020 over concerns about its directorship and finances. Despite that, the company's website continued to display badges claiming affiliation with the International Air Transport Association (IATA) and Cruise Lines International Association (CLIA). ABC News has confirmed Traveldream was never a CLIA member and can also reveal it was operating without a trust account to hold customers' money — a key consumer protection mechanism used protect client funds in the event of collapse. Jodi Bird, an insurance expert at consumer group CHOICE, said the collapse exposed major weaknesses in consumer protection for those booking travel online. He said Australians left out of pocket by failed travel booking companies had limited options to recover their money. Australia once had a national consumer protection scheme for travel bookings known as the Travel Compensation Fund (TCF), that would compensate customers if a travel agent became insolvent. Membership in the TCF was mandatory for licensed agents, but the scheme was abolished in 2014. Swinburne University corporate governance expert Helen Bird said the travel industry should consider an emergency indemnity fund to protect consumers. "If I were the big players in the industry, I would be doing that, because it's their reputation as much as the little players'," she said. Kim Arnold — director of policy and education at the Australian Restructuring, Insolvency and Turnaround Association — said if the company was placed into liquidation, the liquidator may be able to pursue the director personally for debts incurred while the company was insolvent. "Either they reach a settlement, or the court makes an order and then the director has to pay that money into the liquidation," she said. Ms Arnold said customers would likely remain unsecured creditors and sit low on the list for repayment. A second creditors' meeting will be held on June 3 to determine the future of the company — including whether it will move into liquidation. In the meantime, impacted customers, uncertain whether their holidays will go ahead, have begun tying yellow ribbons to their suitcases — a quiet show of solidarity for those left in limbo. Ms Carpenter said she was clinging to hope that someone will be held responsible. "This isn't just bad luck," she said.

Subpoenas issued after Builder.ai declares insolvency
Subpoenas issued after Builder.ai declares insolvency

The National

time3 days ago

  • Business
  • The National

Subpoenas issued after Builder.ai declares insolvency

Some current and former staffers at a once-promising AI start-up, have been issued subpoenas from the US Attorney's office in Manhattan days after the company declared insolvency. A former high-level employee at the Microsoft-backed company confirmed that, on the advice of counsel, some employees have been asked to preserve documents and other evidence related to a potential criminal investigation. 'They're looking into inflated sales numbers and round tripping,' a former staffer said, referring to a method for evading taxes. Regardless of whether or not the investigations lead to any litigation or prosecutions, the London-based days as a high-flying start-up are done. 'They're entering insolvency and every jurisdiction is different, so all of our end dates are all different, but the company is essentially done,' the former employee said. The US Attorney's office in Manhattan declined The National's requests for comment. It's a precipitous fall for a company that once achieved unicorn status, receiving a valuation of more than $1 billion. Another former employee spoke to The National last week to raise concerns about 'Founder Sachin Dev Duggal, who has since moved to Dubai, has also been a prominent speaker at many conferences across the region, contributing thought leadership to the tech and business community,' the former employee said in an email. Mr Duggal was removed as chief executive in March, though he retained an association with the company, along with the title of 'chief wizard'. In 2024, when was flush with investor cash and in the tech world's good graces, Mr Duggal briefly spoke to The National as he appeared at an event hosted by the Dubai Multi Commodities Centre, which had just announced a new AI centre. 'With this centre, we're helping to unveil a portal to global commerce,' he said at the time, reflecting on why chose DMCC as an ecosystem partner. 'We didn't want to be a software company just surrounded by other software companies, we wanted to be surrounded by potential customers and peers,' Mr Duggal added, referring to DMCC's reach and partnerships with gold, diamond, tea, coffee, crypto and gaming entities, to name a few. According to employees and media reports, failed to meet revenue expectations. It had promised to make mobile app development as 'easy as buying a pizza' but struggled to create reliable products, disappointing investors and creating a chasm between expectations and financial reality. Mr Duggal requested additional investment funds, as well as an emergency loan months before he was stripped of the chief executive title. Audits later revealed a high likelihood that sales projections had been fudged, causing concern about other potential financial irregularities. LinkedIn page, which has 288,000 followers, turned off the comment section for a post announcing the company's insolvency proceedings. 'Despite the tireless efforts of our current team and exploring every possible option, the business has been unable to recover from historic challenges and past decisions that placed significant strain on its financial position,' the post reads. 'We will work closely with the appointed administrators to ensure an orderly process and to explore all available options for parts of the business, where possible.' The company has become a cautionary tale of high-flying AI expectations meeting the realities of a competitive and crowded tech market. It's unclear if there will be any surviving pieces of intellectual property that might help survive in a different guise. Mr Duggal, whose confidence and bold projections helped to put on the map, did not immediately respond to The National's requests for comment. He did, however, post some thoughts on a alumni LinkedIn group. 'I don't think the story is done yet, but irrespective if I can be of any help to any of you as you make this transition in life please know I'm only a message away,' he posted in part. 'And more importantly – if I didn't listen, if I was short, if I was unreasonable – I'm sorry.' In the UAE, the DMCC, with which had an 'ecosystem partnership', said it was evaluating developments. The company has its headquarters in London and has offices in locations including New York and Dubai.

Time for Hong Kong to step up as a restructuring and insolvency hub
Time for Hong Kong to step up as a restructuring and insolvency hub

South China Morning Post

time4 days ago

  • Business
  • South China Morning Post

Time for Hong Kong to step up as a restructuring and insolvency hub

When people talk about Hong Kong as an international financial centre, what immediately comes to mind are its vibrant capital market, its efficient banking system, the ease and economy of incorporating and operating companies here, and the robust and transparent legal system that supports them. But what is less commonly known is that Hong Kong is also a well-known international restructuring and insolvency hub. Restructuring and insolvency (R&I) refer to the situation in which a company and its business run into financial difficulty, with the company and its creditors (for example, banks, private credit providers and bondholders) first trying to restructure the company's debts to give it an opportunity to turn its business around. If that fails, the company is put into insolvent liquidation under court supervision for creditor protection. R&I mechanisms thus seek to help the company find a way out of its financial troubles and give it an opportunity to turn around and, hopefully, prosper again. A company may run into difficulties for reasons unrelated to how it organises or runs its business. More often than not – especially in recent years – those difficulties may be due to external factors beyond the control of a company's operators. R&I activities therefore serve an important function in facilitating the continuation of viable businesses for the benefit of stakeholders. When avenues have been exhausted and nothing works, the responsible thing would be to put an end to the company. It would then be subject to a statutory scheme managed by court-appointed officers under court supervision to secure the assets left, and to ensure the orderly distribution of those assets to protect creditors. The uniqueness of Hong Kong is not that it provides R&I services, but that it specialises in offering them across borders.

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