The local arm of a global tour wholesaler that collapsed under the weight of COVID-19 was already struggling prior to the pandemic, according to a report by liquidators.
Nexus Holidays, which also traded as Vista Holidays, was placed into administration last month, with Jonathon Keenan and Peter Krejci of BRI Ferrier brought in to conduct a review of the company’s financial position to determine the next steps and potential outcomes for customers and creditors.
The local arm of Nexus Holidays was registered on 13 April 2007 in NSW and operated as a wholesaler of travel packages for destinations in China, Northeast Asia, Southeast Asia, India, Europe and North America.
The company was part of a group of entities, with associates operating in China, Canada, the US and the UK.
In a report to creditors, the liquidators said that, based on advice from the directors of Nexus Holidays, it is understood that the severe downturn in international travel caused by the COVID-19 pandemic decimated the business.
However, the report also noted that unsigned financial accounts prepared by the company’s external accountant showed Nexus Holidays incurred consecutive losses before tax of roughly $730,000 and $807,000 for FY2018 and FY2019 respectively.
The company employed 19 staff at the time of BRI Ferrier’s appointment, it is understood that the majority were subject to working-from-home arrangements with reduced hours to assist customers in postponing travel packages, arranging credits with suppliers and issuing refunds in some cases.
The report stated that Nexus Holidays had previously leased office premises in the Sydney CBD, but vacated in late 2020 as part of its overall effort to minimise operating expenses.
“In this regard, the company received financial support from the Australian government while it was available. However, once this ceased, it was unable to obtain the necessary further funding to continue business operations,” it said.
“Accordingly, we were appointed liquidators of the company on 20 April 2021, and upon conducting an urgent assessment of the company’s financial position, we determined that the company was unable to continue trading and we have terminated all staff.”
A summary of affairs (SOA) submitted by Nexus Holidays’ directors indicates that the company’s remaining assets total $269,000, represented by cash and cash equivalents of $50,000 and trade debtors of $218,000.
The liquidators said they have secured $76,000 in cash at bank funds to date.
“We are advised that a substantial portion of the trade debtors are aged and the recoverability is unknown at this stage,” the report said.
The management accounts of Nexus Holidays also show various other assets, including loans owed by other entities in the group totalling $640,000, prepaid expenses of $827,000, office equipment and rental bonds for $41,000.
The liquidators said they have also been advised of further related party loans which were not recorded in the company’s management accounts totalling approximately $340,000.
“Our preliminary enquiries regarding the related party loans indicate these are likely to be significantly impaired; however, our enquiries are ongoing,” the report said.
“We are continuing to review the prepaid expenses and determining whether there may be any recoveries available.
“We anticipate a nominal recovery from a sale of the company’s remaining plant and equipment, and we have arranged for these assets to be realised for the benefit of creditors.”
The liquidators noted there may be a nominal net rental bond due to Nexus Holidays relating to the Sydney CBD premises which it formerly leased, after offsetting outstanding overdue rental arrears.
Furthermore, BRI Ferrier said it has received an unsolicited offer to acquire the company’s complete customer list.
“We are actively seeking to secure a sale of same, along with various other business assets, largely incorporating intellectual property,” the report said.
The SOA also disclosed that Nexus Holidays’ liabilities for deposits/payments made by customers total $2.1 million.
The company’s management accounts also report other liabilities, including trade creditors of circa $269,000, the Australian Taxation Office for $203,000 and an employee loan of $95,000.
“Employee entitlements appear to have been recorded separately and we have been provided with an estimate of outstanding entitlements totalling $469,000,” the report said.
The liquidators said they have granted the directors of Nexus Holidays a short extension to gather the relevant information to provide a more accurate and detailed overview of the company’s financial position.
“Any return to creditors will be subject to there being surplus funds from the abovementioned potential asset recoveries, or otherwise any potential voidable recoveries that may be identified as our investigations progress,” the report stated.
“It is too early to determine if any voidable recoveries can be pursued in the liquidation and/or what recoveries may result from same.
“In any event, we are required to investigate the company’s affairs and the conduct of its officers and report our findings to ASIC in due course.”
With Nexus Holidays having ceased to trade, the liquidators noted the company will be unable to deliver on previously booked holiday packages and tours.
“We are urgently assessing the next steps and potential outcomes for customers, including whether any credit with third-party providers is available,” the report said.
“In the interim, customers are encouraged to contact their banks to explore if a refund is available via ‘chargeback’ for payments made on credit card.
“In addition, customers who have purchased travel insurance policy should also check with their insurer or seek their own independent advice on whether an insurance claim can be lodged, considering the company is now in liquidation.”
BRI Ferrier will provide a more detailed report to creditors by the end of July.
Featured image source: iStock/BrianAJackson