The OneTravel/SunTrips bankruptcy took yet
another complicated turn last month with the creation of a new
company that claims to have acquired the assets of the bankrupt
firms, but not the liabilities.
In effect, OneTravel.com and
its sister brands have migrated from OneTravel Holdings to the
newly incorporated OneTravel Group, which says it is now open for
business.
OneTravel Group is
owned by a group of investors led by Palisades Master Fund,
according to Ed Wegel, former president and CEO of OneTravel
Holdings and now president and CEO of OneTravel Group.
"Effectively, the
liabilities, including those of SunTrips, which was an operating
subsidiary of OneTravel Holdings, were left with the old company,"
Wegel said.
Those liabilities
include travel agent claims for at least $1.8 million in unpaid
commissions owed by OneTravel Holdings subsidiary SunTrips. The
claims will be administered by the U.S. Bankruptcy Court for the
Northern District of California.
The claims are also
the subject of a class action filed on behalf of about 600 agents
by California-based travel attorney Al Anolik.
Wegel asserted that
the new company was immune from those claims.
"If there are any
lawsuits that will be brought by unsecured creditors, they would go
to the old company," Wegel said. "They would have no effect on
[OneTravel Group]. We're a new company."
The asset transfer
to OneTravel Group was achieved through a so-called 363 asset sale,
named for section 363 of the bankruptcy code, which enables a
company to liquidate its assets and turn over the cash to the
creditors of the bankrupt company.
The assets
purchased by the new firm include the brands OneTravel.com, 11thHour.com, CheapSeats.com
and DiscountHotels.com; the Web sites, including domain names; the
technologies; and some hard assets such as computers and servers,
Wegel said.
The sale amount was
$6.8 million plus the assumption of certain liabilities. The court
approved the sale on Sept. 19.
The bankruptcy
petition filed by OneTravel Holdings on July 7 claimed assets
valued at between $1 million and $10 million and listed its debts
at the same amount. But Exhibit A of the petition lists the assets
at $99.7 million and the debts at $73.3 million.
Despite the fact
that court filings are typically public records, OneTravel Group
said the numbers were confidential.
After the sale is
closed, OneTravel Holdings said it will decide whether to continue
in Chapter 11 reorganization or move to liquidation under Chapter
7.
Anolik, who is
pursuing a lawsuit against OneTravel Holdings subsidiary FS
Suntours, the business name for the SunTrips brand, estimated that
the old company had "$16 million in assets and $30 million in
secured claims" so that the chances of recovering money owed to
agents "are getting to be less and less."
He also suggested
that the disposition of assets might have been illegal and
encouraged agents who are owed money to file complaints with the
California attorney general.
If California's
Travel Consumer Restitution Corp.'s fund must be tapped to pay
debts owed to consumers by OneTravel, Anolik said, travel agents
would have to pay to replenish the fund.
"That's why I'm
advising that consumers and agents complain to the attorney
general's office," he said.
"There may be a
legal shell when you change 'Holdings' to 'Group' but if its merely
the same people buying up the assets, the attorney general can say,
'I've seen your track record. ... I'm enjoining you from doing
business in our state.' "
To
contact reporter David Cogswell, send e-mail to [email protected].