USTOA In Travel Market Report

Published Jan 14, 2020 12:00AM

Do Travel Advisors Have Legal Recourse When a Supplier Goes Bust?

First, business failures, like Excite Holidays, typically occur without warning. Everyone is caught by surprise, especially when the failure involves a company with a long-standing business, good reputation and apparent financial health. Since these companies are almost always privately held, no one outside the inner financial circle ever really knows what the cash flow and other telltale signs are until it is too late.

Second, tour operators usually have few hard assets that can be converted to cash, even in the rare case when such assets can be sequestered for later liquidation. By the time the operator begins to dishonor payments to suppliers and other commitments, the cash supply has been exhausted. This happens even in the case of the most honest and committed managements. Unfortunately, in some cases, managements that see the handwriting on the wall will exhaust the cash and any other liquid assets by paying themselves or otherwise disposing of the funds.

Third, and this is important to understand when a company fails, the state and federal laws governing insolvency and bankruptcy come immediately into play. One very important effect of that is the “automatic stay.” Even if an advisor in a contractual relationship with the failing tour operator has an apparently ironclad agreement with financial protections, all litigation against the failed business is normally suspended immediately upon any filing for protection in insolvency or bankruptcy. The reason for that rule is that the law provides for certain priorities of distribution of any remaining assets of a failed business to prevent favoritism on behalf of the management or on behalf of some creditors over others. The bankruptcy regime is very complex and is designed to assure that all creditors are treated fairly if there are distributable assets remaining after the cessation of business. However, as noted above, in the case of most tour operators, there are no meaningful assets remaining by the time the failure is discovered.

Read Full Article Here

SHARE THIS

Press/Media Contact

85 Broad Street
c/o WeWork
New York, NY 10004

Gina Dolecki
Phone: 212.229.0119
dolecki@redpointmarketingpr.com

Latest USTOA Blog Posts

Experience Aromatic Adventures in the Amazon Rainforest

Experience Aromatic Adventures in the Amazon Rainforest By: Visitbrasil.com The Amazon Rainforest is one of the most impressive and biodiverse natural wonders on the planet. Considered the largest tropical forest in the world, it harbors an incomparable wealth of wildlife, unique ecosystems, and ancient indigenous cultures. Spending six days immersed in the Uatumã Sustainable Development… Read More

Leave Your Mark, Not Your Footprint: A Guide to Sustainable Travel in Spain

Leave Your Mark, Not Your Footprint: A Guide to Sustainable Travel in Spain By: Turespaña It might not come as a surprise that Spain is one of the leading tourist destinations in the world for its vibrant culture, rich history and stunning landscapes. But did you know that Spain is a global leader in sustainable… Read More

Making Travel Meaningful: Connecting with Indigenous Communities

Making Travel Meaningful: Connecting with Indigenous Communities By: Gina Bang, Chief Sales & Marketing Officer, Avanti Destinations In a world increasingly dominated by mass tourism, travelers are seeking more meaningful experiences. Immersing yourself in the traditions of indigenous communities offers a window into a world that is both ancient and profoundly different from our own.… Read More

USTOA $1 Million

Travelers Assistance Program

A travel vacation should not only be an unforgettable experience, but offer solid peace of mind. That’s why USTOA created a consumer protection fund which protects consumers who book with our Active Members.

Learn More

USTOA News