Liquidator reveals travel agency owed over $350K upon collapse

The first creditor’s report into a Kiwi travel agency that went bust has identified “irregular” handling of customer payments.

Guru Travel Limited went into liquidation in November last year after failing to pay back its debts which totalled NZ$370,157 ($354,544), according to liquidator Gareth Hoole of Ecovic KGA.

The Auckland agency, which began operating in 2005 and is owned by Shareen Ramasre, was understood to have experienced cash flow difficulties for some months prior to the appointment of liquidators.

These cash flow difficulties were initially caused by the buy-out of a shareholder and were compounded by the termination of working capital facilities by a bank and a travel wholesaler, forcing Guru Travel to operate under a cash basis, the creditor’s report said.

“Based on the foregoing, the company could not maintain its operations with such cash flow constraints and legacy debt issues in a highly competitive online environment, resulting in such low margins that the ongoing viability of the business was questionable,” it said.

“Hence, the company was unable to meet its debts as they fell due and, on professional advice, the shareholder elected to place it into liquidation.”

A preliminary review of the books and records of Guru Travel by the liquidators found a number of customers had paid for travel or paid deposits to the company, but they had not yet been issued with travel tickets or vouchers.

Furthermore, the liquidators discovered there were no funds held in trust for such customers.

“While investigations are at the preliminary stage, the liquidators have established that, as such, customers’ monies were received, they were paid over to a ticketing consolidator/wholesaler,” the report said.

“The liquidators have been in communication with that party and it appears that the monies paid to them were applied to legacy debt rather than to pay for travel for the paying customer.

“The liquidators consider this to be irregular and will continue to investigate that matter, with a view to consider seeking to void transactions paid to the ticketing consolidator/wholesaler.

“From the discussions held with the recipient of the monies, it appears that they are not holding funds or tickets in effective escrow for any of the customers.”

The report said affected customers have been contacted and it has been recommended to them that where they have travel insurance or they paid for the travel using a credit card, they may have some scope to seek recovery independently via that channel.

The liquidators investigated whether or not Guru Travel was a member of the Travel Agents Association of New Zealand (TAANZ) and, if so, whether there was a bond available to assist customers who have been affected by the closure of the business.

However, TAANZ advised the company’s membership had been terminated more than a year prior to the appointment of the liquidators and that there was no bond arrangement against which recourse could be sought.

Travel companies named as creditors in the report include Helloworld Travel, Allianz and Amadeus.

The liquidators believe that, based on records made available to them, Guru Travel was insolvent at the time of their appointment, but have not yet been able to determine how long the company traded as insolvent, if at all.

“The liquidators will pursue appropriate action against the directors to the extent considered economically beneficial if evidence exists to support such action,” the report stated.

“The liquidators will also review the actions of the director in the payment of customer funds to the ticketing consolidator/wholesaler and whether there are any grounds for action in that respect.”

The report said the liquidation of Guru Travel is expected to be completed within six months from 27 November 2019.

Image: iStock/alexskopje

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Ecovic KGA Gareth Hoole Guru Travel Guru Travel Limited liquidator Shareen Ramasre travel agency