Tempo insolvent trading
TEMPO Holidays had been trading while insolvent since 26 Jun 2019, according to preliminary investigations into the company, which collapsed three months later (TD 20 Sep).
A new report from Laurence Fitzgerald of accounting firm William Buck, notes a declining cash position because its parent company Cox & Kings India did not help fund a shortfall during a period of “comparatively low receipts from customers”.
Prior to that, in Apr and May 2019, a total of almost $5 million was advanced from Tempo to its overseas parent, but an agreement with Cox & Kings’ bankers implemented in Jun placed severe restrictions on how funds could be used - including repayment of this money despite it being required to fund operations in Australia.
Other key cash flow issues at Tempo included the withholding of about $789,000 in customer payments by American Express.
A prop-up payment of $3m was received from Tempo Holidays NZ, but again this was insufficient to keep the business going.
The administrator says that if a formal determination is made that the company was insolvent from 26 Jun “we estimate a potential claim of insolvent trading against the directors”.
The report also notes that three unnamed creditors may have received preferential payments totalling about $171,000 in the lead-up to the collapse.
Overall, unsecured creditors are owed about $38.5 million, while staff entitlements amount to $1.16 million plus several outstanding expense/travel claims and reimbursements.
The firm’s revenue was split roughly 66% to Bentours and 33% to Tempo Holidays, & sales were up about 14% over the last year.
MEANWHILE the administrator’s report also confirms that attempts to sell the business are ongoing, with a total of 21 parties expressing interest, 17 of whom were provided access to further information.
Three non-binding indicative offers were received and assessed, and a preferred bidder was identified a week ago, on 16 Oct, who is currently undertaking further due diligence on an exclusive basis.
Another meeting of creditors is scheduled for 3pm on 28 Oct at the InterContinental Melbourne.