A number of buyers last week moved to pick up pieces of bankrupt
Far&Wide Corp., with more expected to emerge this week.
As competitors jumped in with offers to rescue stranded
Far&Wide travelers, attorneys continued to battle over the
Miami-based holding company, which owes secured creditors more than
Another $60 million is owed to unsecured creditors, who
according to court filings, are not expected to be repaid.
In California, Attorney General Bill Lockyer last week ruled
that the state’s $2.6 million consumer protection fund would not
cover Far&Wide companies because the holding company is based
As sellers of travel, agents in California may be held
responsible for their clients’ deposits on Far&Wide trips that
were canceled, unless they provide written documentation within 30
days that the money had been sent to the tour operator. (For more
An official with the fund said it appears that two of
Far&Wide’s companies are members and may be subject to claims
in the state. Claims could add up to more than $1 million.
With an estimated 15,000 current and future travelers affected
and about $30 million in bookings, the bankruptcy case is expected
to rekindle an ongoing debate about the effectiveness of consumer
protection plans. The topic is on the agenda for an Oct. 9 board
meeting of the U.S. Tour Operators Association.
Far&Wide attorney John Monaghan, of Holland & Knight
LLP, said last week that company officials were trying to keep the
company operating long enough to negotiate the sale of as many of
the tour operator units as possible.
Last week the court approved a bare-bones budget for continuing
operations through this week.
But in a Sept. 29 hearing, Far&Wide’s most senior secured
creditor, Ableco Finance LLC, asked the court to convert the
company’s Chapter 11 filing for protection from creditors into a
Chapter 7 liquidation.
The request was initially denied last week, but may be renewed,
Ableco Finance, a subsidiary of Cerberus Capital Management, is
owed more than $9 million by Far&Wide. Ableco, a lender that
Far&Wide approached for a loan last year, has a lien on company
assets and, as the most senior creditor, has priority over
In an initial statement, Far&Wide said that eight of the
company’s 21 brands would be reacquired by previous owners. As of
Wednesday, four buyers had filed court documents seeking to buy
some of the units. Monaghan said he expected one more to be filed
last week and several more this week. Company officials were
talking to 20 to 25 more potential purchasers, he said.
Some of potential buyers are former owners of the tour
operations, including Ian Swain, founder of Swain Australia, who is
negotiating to buy Downunder Direct; Pacific Bestours; Swain India
Tours; Swain Africa Tours; and Swain Tahiti Tours, as well as the
management of United Vacations Pacific.
Pacific Bestour’s former owner, Peter Yeung, has bid for a
division of that company, as well as United Vacations Asia. David
Herbert sought to buy African Travel, which he founded, as well as
Lion World in Canada. Herbert and Swain are running the companies
with their own money while waiting for the court to rule. Bids also
were expected for High Country Passage, Adventure Center and Grand
Far&Wide has a $1 million bond with the tour operator
association. Bob Whitley, the association’s president, said the
last major bankruptcy of a tour operator Kingdom Vacations in 2000
resulted in claimants being paid 45 cents on the dollar.
After that case, board members debated changing requirements but
decided not to. Whitley predicted the same conclusion this
“We have a $1 million bond and no one has anything better out
there in the industry,” said Whitley. “Without it, there would be