TravelBrands Update: Commissions & Suppliers Will Be Paid During Restructuring

Open Jaw
by Bruce Parkinson

Frank DeMarinis

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 value."

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.

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