TravelBrands Update: Commissions & Suppliers Will Be Paid During Restructuring
Open Jaw by Bruce Parkinson
TravelBrands is vowing to continue to pay agents and suppliers “in the
normal course" while the company goes through a restructuring process.
Typically, such payments are halted by the courts when a company seeks
creditor protection. But in this case, Frank Demarinis, one of 3 brothers who
run TravelBrands, has filed a sworn affidavit with the courts stating that the
company “intends to make payments for goods and services supplied post-filing
in the ordinary course."
To back up that claim, the affidavit states, “the company has $4 million
of committed funding from Red Label to fulfill this commitment."
TravelBrands says the reasons for the filing
for creditor protection relate to “isolated" parts of the business –
namely, a “revenue-sharing deal" with Sears Travel leftover from the Thomas
Cook acquisition and the leases on 2 commercial real estate properties. The
company says other parts of its business – the vast majority – are unaffected.
Clearly, the cooperation of both suppliers and agents is essential for
the future of TravelBrands. The affidavit states that the company “is heavily
reliant on leisure travel products and on services that it purchases from
various 3rd party suppliers, including hotel, cruise line, airline
and car rental suppliers."
Regarding travel agents, TravelBrands states that its wholesale
brands/divisions are the core of the business and that travel agents sell all
of that product. “In other words," the affidavit states, “without the travel
agents there is no wholesale business."
To keep suppliers providing the product and agents making bookings, TravelBrands
says it is “seeking the right, but not the obligation to pay pre-filing amounts
owing in arrears." It continues: “This will serve to safeguard the company's
core wholesale brands/divisions and therefore preserve the company's enterprise
As Nick Anstett, a communications spokesperson engaged by TravelBrands
puts it: “Suppliers and vendors are so vital to the business of
TravelBrands that they want to make sure they keep these people happy and
supportive throughout the process."
Anstett stresses that the CCAA process is considerably
different than the Bankruptcy & Insolvency Act (BIA) in that it relates to
operating a going concern that needs some restructuring with the intention of
coming out a stronger entity.