A TRAVEL company claims it has lost $4 million to 1800Hotels and will lose $2 million more unless a Florida bankruptcy judge allows it to break its contract with the firm.
In a plea before the bankruptcy court in Tampa, London-based Gullivers Travel Agency (GTA), which was paid to manage 1800’s reservations, said that 1800’s mismanagement was to blame for its own bankruptcy.
It also accused 1800Hotels of dropping an injunction taken against GTA just as 1800Hotel’s Dublin-based chief executive Graham Peakin was about to give evidence, in an effort to hide its financial losses.
GTA complained that, in addition to the $4 million (€3.2 million) it has lost, it will start to lose an additional $30-50,000 a day from today. These additional losses would top $2 million, it said.
It was not responsible for 1800’s losses: “Any damage to the debtors’ ‘1800’ brands has already occurred as a result of the debtors’ own mismanagement of their business and failure to pay critical suppliers like GTA,” it said.
Under US bankruptcy law, an automatic stay is placed on certain contracts once a company seeks Chapter 11 bankruptcy protection. However, GTA said the law allowed contracts to be broken if a party can show adequate cause, and argued that it had more than ample cause because of 1800’s history of non-payment.
The court was due to hear 1800’s plea for an emergency restraining order yesterday, in which it sought to compel GTA and six other travel companies to honour their contracts and stop cancelling 1800’s reservations.
GTA complained that 1800 withdrew its injunction request.
“The debtors simply withdrew their contested TRO [temporary restraining order] just prior to the Peakin deposition, without agreement of the parties, refused to produce Mr Peakin and refused to return documents to GTA – all in an effort to delay GTA discovery of the debtor’s true financial condition – and to avoid judicial scrutiny,” GTA claimed in its filing, adding that 1800 and its Irish parent company, Happy Duck, were guilty of “misconduct” before the court.
The court agreed to hear direct evidence in the case yesterday afternoon and is expected to make a decision shortly.
