The Untied States Trustee has challenged the ongoing chapter 11 bankruptcy case for Vantage Travel, asking the court to either appoint a chapter 11 trustee for the case, or convert the case to a chapter 7 bankruptcy case. This will ensure the liquidation is best handled by a bonded, independent fiduciary, a chapter 7 trustee, who will be subject to supervision by this Court and audit by
the United States Trustee.
This follows immense pressure by thousands of Vantage customers that have been left without refunds after having paid thousands of dollars for trips. The pressure even led the court to issue a notice that it would not respond to the outpouring of questions from Vantage customers.
Just last week, a routine status conference scheduled with the court was extended. The court also required anyone interested in attending the status conference virtually to file a motion, limiting access to the public and media, despite having the initial hearing early in July available to anyone via Zoom.
The Trustee said in its filing that Vantage owes customers just under $109 million and has debts of some $128 million, and calls into question CEO Henry Lewis’ role in the company, bankruptcy and financing of the company through his trusts.
“Questions about what happened to the $108,714,003.19 in consumer deposits, where the Debtor got the cash to continue operating in light of its miserable financial performance before and after Covid and the timing and circumstances of Henry Lewis’ (CEO) pre-petition loan facility will go unanswered,” the Trustee wrote.
The only official bidder for Vantage, United Travel, has offered some $1 million and discounts on booked trips. The Trustee said the sale process has been “rushed and arranged by the Debtor in a way that exclusively benefits Mr. Lewis.”
“The sale will benefit only Mr. Lewis, because he alone will be entitled to receive the net proceeds under his pre-petition all asset lien. Prepetition creditors will receive nothing,” the Trustee wrote in an aggressive 33-page filing. “The consideration to be paid by United appears to be worth far less than the assets it is purchasing from the Debtor.”
The Trustee also calls into question the bidding process, whereby new bidders must submit a certified check for $150,000 in addition to what it said were “very high, additional threshold breakup and topping fees – intended to preserve United’s inside track – totaling $500,000, or 50% of United’s bid, and then close quickly in all cash, with no credit allowed.”
The Trustee also said in its filing that even if a sale were to happen at $7 million, the only parties that would benefit are Henry Lewis and his trust.
“The facts and circumstances of this case demonstrate that cause exists to appoint a chapter 11 trustee or to convert the Debtor’s chapter 11 case to chapter 7, including for fraud, dishonesty, incompetence or gross mismanagement of the affairs of the Debtor by current management, either before or after the petition date, for gross mismanagement of the estate, for violation of the Debtor and management’s fiduciary duties or similar cause,” the Trustee wrote in the filing.