FAIRFAX, Va. -- Travel agent arbiter William McGee ruled that
the owners of record of Uniglobe Fareway Travel Inc. of Raleigh,
N.C., are responsible for settling the agency's obligations to the
Airlines Reporting Corp. after losing accreditation. The case
illustrated the significance of an ARC rule stating that agency
sellers retain liability for the firm unless and until ARC approves
a change to new ownership.
According to McGee's decision, ARC's records showed that
Uniglobe Fareway Travel had two co-owners when it lost
accreditation in October 1997 for failing to pay fully for a
default.
The co-owners told McGee that they sold the agency in February
1997 to a man who immediately assumed control of the day-to-day
operations and the ticket stock. Subsequently, the sellers filed
suit against the buyer in a dispute over the terms of the deal. The
buyer closed the agency in September and filed for Chapter 7
bankruptcy liquidation.
Meanwhile, ARC said the buyer filed for approval of an ownership
change of the agency's branch, but withdrew it before ARC could
act. No ownership change was filed for the home office, ARC
said.
The two sellers argued that McGee should name the buyer as the
third party in interest in the case, direct him or his bankruptcy
trustee to surrender the ticket stock and plates and order him to
settle the amounts due ARC.
McGee, however, noted that the sale and the attendant transfer
of ticket stock were unauthorized by ARC. He ruled that the
co-owners of record "are the only parties in interest" and "remain
obligated for all contractual liabilities owed ARC."
In separate cases, McGee ordered the following agencies to
return any remaining stock and plates to ARC:
* Howard F. Berg General Partner (doing business as Air N Cruise
Travel Service) of Parma, Ohio, which he said lost accreditation in
November for failing to replace its canceled bond.
* HSG Travel Express Ltd. (doing business as Firstworld Travel
Express) of Los Angeles, which he said turned in most of its stock
after losing accreditation in September for failing to replace its
canceled bond.
* Maduro Travel (doing business as Bedminster Travel) of
Bedminster, N.J., which he said turned in most of its stock after
voluntarily relinquishing accreditation in August.
* Ogles Enterprises Inc. (doing business as Travel Professionals
International) of Franklin, Tenn., which he said failed to pay for
dishonored sales drafts worth $7,123 and submit sales reports.