A U.S. bankruptcy judge approved a liquidation plan for Renaissance Cruises July 30, calling for the return of almost $10 million in travel agent commissions.
The plan also entitles customers who paid by cash or check to receive full refunds of up to $2,100 per person for trips that were canceled when the Fort Lauderdale-based company filed for bankruptcy protection last September. Any amount over $2,100 will be treated as an unsecured claim.
Approximately 3% of the customers who lost bookings used cash or checks, according to Paul Singerman, the attorney representing Renaissance. The rest paid by credit card and simply disputed the charge with their credit card issuers, he said.
Renaissance’s largest single creditor is Miami-based Ocean Bank, which processed most of the credit card purchases. The bank is owed about $75 million, according to court filings.
According to the disclosures, about $200 million in outstanding claims remain against the defunct cruise company. The line has $14 million in cash remaining.
The company eliminated about $1.1 billion in debt when it abandoned claims to its fleet of 10 cruise ships.
Under terms of the plan approved last week, unsecured creditors will receive, at most, about 13 cents on the dollar. But that is just a “good faith projection,” Singerman said. The actual amount will depend on the ability of the bankruptcy trustees to recover funds, including the attempt to force travel agents to return commissions on unused trips.
Organizations such as ASTA and ARTA have been urging their constituents to resist the commission recall.
But the issue clearly falls into a legal gray area. Under bankruptcy law, it may not be enough for agents to claim that they were paid for services performed, attorneys said.
“There is no clear-cut answer,” said Jeff Miller, a travel industry attorney based in Maryland. “As a practical matter, it will come down to whether the creditors’ committee can go after the travel agency and whether the travel agency is willing to defend itself.”
In July, the creditors’ trustee committee sent a “final demand” letter to agents who indicated they wouldn’t pay. Several travel agencies are joining forces in an attempt to negotiate a settlement with the Renaissance trustees, according to industry sources.
As the industry sifts through the remains of Renaissance, the trustees continue to look for other ways to leverage the remaining assets. Four companies Grand Circle LLC, The Vacation Store, On-Line Vacation Center and Luxury Cruise Center Inc. have paid from $50,000 to $80,000 for nonexclusive rights to license the company’s database.
The trustees are also pursuing various insurance claims and a number of lawsuits to retrieve funds, Singerman said.
Of the more than 2,000 creditors, fewer than 40 voted against the liquidation plan, he said.