TORONTO — TravelBrands’ court application for an extension of the stay of proceedings to Feb. 29, 2016 comes on the heels of an unanticipated claim by Gibralt Capital Corp. for $3,964,314.50, which TravelBrands disputes.
As recently reported by Travelweek, TravelBrands filed materials requesting an extension of the stay of proceedings from the Ontario Superior Court of Justice under the Companies’ Creditors Arrangement Act (CCAA).
This application is supported by a notice stating the grounds and reasons for the application, the affidavit of Joe DeMarinis sworn on Nov. 30, 2015, and the fourth report of the monitor, KPMG Inc.
All three documents point to the filing of a recent and unanticipated claim by Gibralt Capital Corp. in the amount of $3,964,314.50. Gibralt apparently paid $3,750,000 to the Trustee in the bankruptcy of Skyservice Airlines Inc. and is now claiming that TravelBrands must indemnify it for the amount it paid under an indemnity agreement between Gibralt and TavelBrands.
TravelBrands has formally disallowed the claim and Gibralt has formally disputed the disallowance of the claim.
The matter has been scheduled to be heard by the Ontario Superior of Justice judge dealing with this matter in January 2016 which is past the present date for ending the Stay (Dec. 11, 2015).
As TravelBrands wants to resolve this before it moved forward it is asking for the stay to be extended to Feb. 29, 2016. The net result is that the fate of TravelBrands remains uncertain and unresolved pending the judge’s decision, any applicable appeal periods and the reaction of the principals of TravelBrands to the judge’s decision.
The materials point out that TravelBrands’ success – having resolved its issues and disputes with IATA, various legacy contracts including a contract with Sears Travel, and its settlement with the landlord of the 75 Eglinton Ave. Toronto property – may all be for naught if TravelBrands is unhappy with the judge’s decision on Jan. 5, 2016.
The Monitor’s Report outlined the results of operations for the 10 weeks ending Nov. 27, 2015. Operating cash was $2,500,000 less than anticipated; customers deposits were lower than projected, and supplier payments out of trust moneys were higher than anticipated, resulting in a lower than forecast trust balance. The Monitor attributed these variances to the timing of customer travel.