Travel Agents

No dice for STA Travel creditors, but hope remains for customers

Huntley Mitchell

Huntley Mitchell

Liquidators for STA Travel Group have confirmed that creditors of the now-defunct agency network will not receive a cent by way of a return.

The group – made up of STA Travel Pty Ltd, STA Travel Academic Pty Ltd and IEP Pty Ltd – collapsed in August last year after its parent company filed for insolvency, before being placed into liquidation.

In their statutory report to creditors late last year, STA Travel’s administrators and liquidators revealed there were “insufficient realisable assets to enable payment of a dividend to unsecured priority creditors, unsecured creditors and customers of the company”.

According to the team at Deloitte, 180 employees had claims against STA Travel totalling $3.02 million, while the claims by more than 37,000 unsecured creditors totalled $66.9 million.

However, the company’s administrators and liquidators have managed to recover $1.219 million worth of customer refunds from travel providers that were being facilitated by STA Travel up until its collapse; $1.2 million of which relates to IATA tickets, and the remaining $19,000 relating to other providers.

“We are currently reconciling these funds which have been received from multiple travel providers,” the report said.

“Impacted customers will be notified in the first quarter of 2021 regarding customer refunds received by the liquidators and any subsequent distribution process, which will be subject to the court application.

“Please note that this has been a complex and difficult reconciliation process, involving a large number of third parties and involved a substantial amount of work and time.”

Furthermore, STA Travel customers have been advised that they might be eligible for a chargeback via their financial institution, subject to the relevant scheme rules.

Eligible employees of STA Travel are able to make a claim for assistance via the Fair Entitlements Guarantee (FEG) scheme administered by the federal government’s Attorney General’s Department (AGD).

“The liquidators have worked in conjunction with employees and the AGD to assist eligible employees with their respective claims with the FEG scheme,” the report said.

“The AGD is entitled to be a subrogated creditor in the winding up as an unsecured priority creditor pursuant to the provisions of the Act for employee entitlements funded via the FEG scheme.

As of 29 December 2020, 154 eligible employee claims had been processed by the AGD.

Investigations to date have not revealed any possible offences committed by the directors of STA Travel or potential recoverable voidable transactions, according to the report.

“However, our investigations are ongoing, and we will continue to examine closely any obligations relating to requirements to hold customer monies on trust and the extent to which categories of customer monies and other cash from operations may have been comingled,” it said.

“These investigations are complex and ongoing.”

An assessment of the company by Deloitte indicates that STA Travel was likely not insolvent until on or around 20 August 2020 (being one day prior to the appointment of administrators) when parent company STA Travel Holding filed for insolvency.

“When taking this matter into account coupled with the temporary relief measures for directors of financially distressed businesses, it is unlikely there would be a material cause of action available (if any) to creditors and customers in relation to an insolvent trading claim,” the report stated.

“Notwithstanding, any suggestion of insolvency is expected to be vigorously disputed and defended by the directors.”


Featured image source: iStock.com/jax10289

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