Defunct travel group JG Worldwide is asking its creditors to stand down while JG pursues its $65 million lawsuit against Virtuoso, asserting that a potential verdict or settlement of the case represents its only remaining asset.

The company's attorney, James J. DeCristofaro, confirmed the strategy last week, noting that JG Worldwide and its principals, Jena Gardner and James Saleh, decided to focus their limited resources on the lawsuit, rather than on bankruptcy, as a way to reduce costs and to keep the matter private.

Federal bankruptcy cases, DeCristofaro said, operate "in a fishbowl."

"Everything is public," he said. "Not that that is a bad thing."

But he noted that the Department of Justice oversees bankruptcies, and "they really are the stewards of the creditors. It can be a slow process to resolve everything."

Private resolution, he said, is "a lot cheaper ... and a lot quicker and more efficient."

In July, facing mounting lawsuits and claims from former partners, travelers, travel advisors, lending companies, former employees and JG Worldwide's landlord, Saleh filed a petition for Chapter 7 bankruptcy in U.S. federal bankruptcy court in the Southern District of New York.

But after meeting with the trustee assigned to the case, DeCristofaro said, Saleh decided to change course and seek private settlements that would hinge on winning a verdict against, or settlement from, Virtuoso, which JG Worldwide blames in court documents for destroying its reputation and its business.

The claim against Virtuoso, DeCristofaro said, is JG Worldwide's only asset, and any monies that might be won as a result of the lawsuit would be used to pay creditors.

In the lawsuit filed last month, JG Worldwide claims Virtuoso's decision last February to suspend two of the company's luxury tour operators, Heritage Tours and Revealed America, from the Virtuoso network and publicly accuse the suppliers of "late commission payments, service issues and nonresponsiveness" negatively impacted business. 

The result, the suit claims, was "an immediate and widespread decrease in call volume," cancellations and financial losses.

Virtuoso has vowed to aggressively defend itself, calling the accusations "baseless." It also said that JG Worldwide was the party that terminated the relationship after it and Virtuoso had begun working on a “corrective plan” to address complaints from consortium members about Heritage and Revealed American.

DeCristofaro said the company might still end up in bankruptcy, but for now it is seeking to work with creditors privately to negotiate settlements that would be tied to the resolution of the Virtuoso suit. To begin that process, he said, Saleh was sending a letter to creditors.

He declined to release the letter, but Travel Weekly obtained a copy privately from one creditor.

The letter, signed by Gardner and Saleh, said the pair does not admit the existence of any claims and cannot guarantee any outcome of its case against Virtuoso. But they ask creditors to "refrain from commencing or continuing any action against us" while they pursue the case.

Jena Gardner
Jena Gardner

In the letter, Saleh and Gardner also wrote, "We personally and our companies have no resources to fight these cases, and, if we are forced to defend them, it is only a matter of time before we will most likely wind up in bankruptcy again; we are sure you would agree that given the enormous expenses and potential time drain associated with bankruptcy preparation, filing and administration, we are all better served consensually resolving claims and other disputes out of court."

Creditors and litigants reached by Travel Weekly declined to comment.

DeCristofaro declined to say how many creditors the letter was sent to or how much JG Worldwide owes, pointing only to the company's initial bankruptcy filing where it said it had up to $10 million in debts and no assets.

It listed about a half-dozen creditors whom it says it owes more than $2 million.

Absent from that list, however, were many travelers and local tour operators around the world who have claimed the company and its subsidiaries owe them money. 

The missing creditors include Morocco Private Travel, which filed a lawsuit in New York Supreme Court claiming that Heritage owes it more than $1.2 million for travel services and another $200,000 for lost revenue on hotel bookings, and African tour operator Steve Turner of Origins Safaris of Kenya, which in a separate lawsuit claims Heritage owes him more than $340,000.

Also missing are JG Worldwide's former landlord in New York, which has sued the company for $250,000 in unpaid rent, and a loan company in Queens, N.Y., that says it is owed more than $500,000.

In addition, many more travelers, travel advisors, former employees and suppliers around the world told Travel Weekly this summer they were in the process of preparing lawsuits or formal complaints with state attorneys general for unpaid travel, commissions, expenses, medical insurance, retirement plans and various other debts.

When asked how Virtuoso can be blamed for JG Worldwide's collapse when some of the allegations of missed payments  --  including a nearly $1 million gross-mismanagement claim against Saleh by Marc Henry Borremans, who sold his tour operator, Millennium Voyages, to JG Worldwide in 2017  --  far pre-date the company's falling out with Virtuoso, DeCristofaro said, "Lawsuits are just allegations, really. It just depends on the evidence."

He also pointed to a plaintiff's exhibit filed with the lawsuit that claims to represent a March 2017 offer from Certares Management to buy the company for $43 million. Certares is the owner of Travel Leaders Group and a shareholder of American Express Global Business Travel.

"These guys were cooking," he said of Gardner and Saleh. "They declined the offer because they were on a growth trend, and their revenues reflect that."

When asked to confirm the lawsuit's claim of a purchase offer, an official with Certares declined comment.

According the lawsuit, JG Worldwide’s revenue grew from $15 million in 2015 to $20 million in 2016 and $23.6 million in 2017. By 2018, the suit claims, company revenue was "approaching $30 million ... and growing."

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