A preliminary investigation into the collapse of Tempo Holidays and Bentours has found that the company traded while insolvent.
According to the report by administrator Laurence Fitzgerald of accounting firm William Buck, seen by Travel Weekly, Tempo Holidays Pty Ltd (which traded as Tempo and Bentours) was likely insolvent from 26 June 2019, before collapsing in late September.
The administrator found that the primary reason for the collapse of Temp Holidays was “the drain on its cash resources through Cox & Kings Group and its inability to recover loans receivable from related entities within the group, which had increased by [approximately] $17.26 million in the 18 months prior to our appointment”.
Tempo Holidays suffered a number of cash flow issues in the lead-up to its collapse. Among them was Flight Centre withholding approximately $1.9 million in customer payments from the company and American Express withholding around $789,000 in customer payments.
The report noted that despite Tempo Holidays being handed an advanced payment of roughly $3 million from its New Zealand subsidiary, it wasn’t enough to keep the company afloat.
Furthermore, the administrator’s review discloses three creditors that may have received payments that were “preferential in nature” totalling approximately $171,000 in three separate transactions.
Tempo Holidays’ statement of financial performance shows that the company was in fact a profitable one, with revenue climbing approximately 14 per cent in the year ending 31 March 2019.
The company’s revenue was roughly split 65 per cent for the Bentours brand and 33 per cent for Tempo.
According to the administrator, approximately $38.5 million is owed to unsecured creditors, while the total amount owing for employee entitlements is an estimated $1.2 million.
In a quarterly trading update yesterday, Helloworld Travel said it expects to incur net costs of under $1 million in relation to the collapse of the two Cox & Kings-owned brands.
Another interesting revelation in the report is that the administrator is still trying to sell the business, with 21 parties expressing interest, and 17 of those signing an NDA to access further information.
From those 17, William Buck received three non-binding indicative offers, and agreed to enter a period of exclusivity with its preferred bidder.
“The preferred bidder has been provided with a limited period to complete further due diligence,” the administrator said.
A second creditors meeting is set to take place on Monday in Melbourne, where the future of the company will be decided by a vote.