Skiing Europe/Chris Reynard - Children's ski holiday left in ruins.

A snowHead

leedsunited, I'll do the Times now

A snowHead

Reynard has a track record of misappropriating clients funds (from that past judgement). If SE is having cash flow problems now, obviously the same questions get asked. Given that a large proportion of a TO's takings from clients is for third parties (Hotels, air tickets, coach hire, possibly ski passes etc.), why is there not some kind of escrow arrangement in the industry? When a client is paying up for these services - in advance of their delivery - surely the money to cover those services should either go directly to the third party supplier or into some account that is independent of the TO's main working account. IIRC there's something like that in the financial services industry. Surely, the TO should not be able to take anything that contributes to their own funds until the product (i.e. the holiday) is actually delivered. TO-Pay-Pal?

Sure, in a manufacturing company the deposits paid on a long lead order may help with the cashflow in covering payments for current production, but the bulk of the payment is not normally taken from a client until delivery, or client acceptance (which can be weeks or months after delivery for some large/complex items). So in that case the worst a client can expect in the case of a company disappearing (either through misfortune or illegality) is to lose their deposit (say 20%).

Well, the person's real but it's just a made up name, see?

Being discussed on three counties radio, apparently SE have issued a statement

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@GrahamN

"why is there not some kind of escrow arrangement in the industry?"

There is many companies actaully pay into a bonded account - others such as SE however pay for an insurance policy. The problem would appear to be that the payments under the bond/insurance payment are only triggered when the business fails rather then when it is clearly failing - so the poor sodding customers are left in limbo. Legislation was brought in, against the wishes of many in the industry, to require bonding. Perhaps the industry needs to address this weakness in the bonding system if it does not want further legislation to stop it ripping off the poor customer?

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Sarah W - sadly can't find any confirmation of either Salisbury Cathedral School or Girvan Academy's cancelled ski trip with skiing europe, although Girvan did travel to Interlaken last year - so it sounds credible.
I'm surprised schools, or parents would keep quiet about this, unless they're embarassed.
The heads of Mount Grace and Beechwood Park both spoke candidly on 'You and Yours' and repect to them for that. Mr Baker at Mount Grace said that inevitably there would have to be cuts made at the school - so the knock on effect at that school alone is considerable.

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GrahamN, this is the school tour operator that uses trust accounts (sadly they don't offer skiing but no reason why school ski operators can't follow the example)... http://www.thetraveladventure.co.uk/single.htm?ipg=7648

They say:
We protect all clients’ travel monies in a trust account (overseen by an independent legal trustee) until the tour is complete and everyone has returned home safely. Given certain restrictions with other nationally known schemes, we offer a level of security that is total and immediate. Our programmes are overseen by a Registered Auditor and Certificate Holder approved by Argent Health & Safety (Part of the Parabis Group).
In addition we hold our own ATOL (Air Transport Organisers Licence) number 9173 which is issued by the CAA only after their own independent checks to verify our financial worthiness.

If I were organising a school trip I'd be very comfortable with that.

After all it is free

noskitrip, Thanks for the link to the radio broadcast. It was well presented I thought, giving a clear picture of what is going on - well, as clear as a muddied picture can be. And we know who is muddying it. Commercial sabotage and schools in arrears my erse! Let's hope a serious and quite extensive report like this will be the start of media coverage gaining momentum.

I can't imagine how a school budget can cope with a loss like that. With 80% or so of a budget going on people there is not much room for manoeuvre without staffing being affected. The sooner Reynard goes bust the better so that the insurance payouts can be triggered.

It seems as if Interlaken is at the centre of this business and my guess is that Adolf, the owner of the Grand Hotel where many groups have been billeted in the past has finally been pushed around by Skiing Europe too far and has said no money, no beds. And all of a sudden, with that problem to contend with, the snow conditions in the Wengen area suddenly deteriorate. Just my guess, though.

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To be honest I'm surprised any school would go to Interlaken for a late Easter, the lift opening and closing dates are published well in advance and most of them are shut after this Sunday, this is not a new thing for as long as I can remember the area has pretty much shut down for skiing by the end of the second week in April, even when there have been superb late spring conditions only a few lifts have remained open and those mainly at the weekends

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GrahamN,

I wouldn't say it's nominal, check out below:

ABTA

As an agent, it is a condition of ABTA membership that a bond is provided. Bonding rates are set by ABTA. Currently, a new member conducting agent business will be required to provide an ABTA bond in respect of that business at the following rates on the annual rate of Applicable Risk Turnover (ART*)

Applicable Risk Turnover ABTA Bond Required
£1,000,000 or less £37,500 minimum amount
£1,000,001 - £2,000,000 £37,500 + 3% of ART excess over £1m
£2,000,001 - £5,000,000 £67,500 + 4.5% of ART excess over £2m
Over £5,000,000 £202,500 + 2.25% of ART excess over £5m

Principal (Non-Licensable bond)
As a principal, who organises non-licensable packages (two components of travel arrangements not including flights), you are required by law to have financial protection in place for your customers.

As an ABTA member, ABTA can provide an ABTA bond for your non-licensable activity in order to satisfy legal requirements. This is usually 15% of gross turnover for new members, with a minimum of £5,000 although higher bonding levels will apply under certain conditions specified by ABTA.

NB. If you’re acting as a principal, with single element sales (e.g. accommodation only), the law does not require you to have financial protection in place for your customers, but you can choose to do so.

AITO

An AITO trust bond will be based on 15% of your non-licensable turnover.

ATOL

The CAA’s minimum ATOL bond requirement for new licence holders is £40,000 or an amount equal to 15% of ATOL turnover, whichever is the higher amount. The amount of bonding required may be reduced annually at renewal.

Small Business ATOLs (SBA) are for licence holders who intend to sell less than 500 flights or holidays a year and intend to keep the numbers at the same level in future years. An ATOL bond of £40,000 is required in the first year; with the bonding amount subsequently reducing over the course of the next three years.

Hope that gives a better idea of whats involved. snowHead

You know it makes sense.

Otherwise you'll just go on seeing the one name:

Yes, The Grand is rather too grand ......

A snowHead

ABTA bonds are for travel agents, ie someone selling someone else trips.
We, as a TO, pay a stupid amount for our bonds so that if we go bust the clients get the cash back. Dead simple.

The amount we pay keeps going up every year, why? I'll leave you to think about it (and of course comment wink

), but why should we, as a TO, that really does pay for everything up front keeping having the shell out more and more each year just to do the same as we have always done. OK, we can afford it but others can't. Not all TO's can pay for everything up front like we do.

I really don't know what's going on in this case and I would think that only one person will every really know the whole truth

But.... come on folks can we not get into a TO biting frenzy here please - we're not all bad. Some of us actaully do try and do a good job

A snowHead

Wayne,

I don't think anybody is having a pop at TOs in general. If you've got 3 weeks read the whole thread...really bad karma.

I know you guys do a great job out there.

Well, the person's real but it's just a made up name, see?

Please keep in mind, he is not only done this in Europe, but also Canada. We have very little recourse, and all of the Canadian Vendors are out a substaintial amounts of money. It is a true discrase to those involved in the Skiing industry. Not only are the employees left unpaid wages, but also flights, lift tickets, gas, meals. The hotel accomodations that the group stayed in is also unpaid. It is true disspointment, and I truly hope they are not allowed to infilitrate our Canadian Ski Industry again. We have a extremly sour taste in our mouth after this experience, and can hardly believe he choose to go international with his scheme. I wish you all the best in recovering your funds, but I am not holding my breath.

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QuaigSki - do you know where the party stayed, and when, and roughly how much was left unpaid? School children and their families did pay skiing europe and as you say, it is a disgrace that the company has stiffed so many people out of so much money. The media coverage is spreading here - some Canadian feedback may add to the momentum.

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Wayne

If the industry doesn't want to be penalised with tougher conditions in order to deal with the likes of Reynard (remember AITO say they offer "complete financial protection and peace of mind" if you book through one of their members) then they as the people who proabbly have a better idea of what is and what isn't good practice need to put their house in order. Where were the AiTO checks/audit of Reynard - this didn't happen overnight - does the industry operate any "fit and proper" tests. The choice is self regulate or be regulated by someone else.

We saw a similar tightening of reguations when a Xmas club company also used its customers money for puposes other than which it was intended.

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On Friday 8th April 2011 the Head of Mount Grace School appeared on BBC Radio 4 You and Yours show and BBC Three Counties Drivetime Show at about 5.20 pm. Both of these can be listened to on BBC iPlayer and make for very interesting listening.
At 6pm on BBC Three Counties they read a response from SE saying that their cashflow problems were caused by numerous schools not paying them the money due. BBC TV also did a report from the school today and this was due to be shown after the 6pm news on Friday but it wasnt shown. Thankfully the BBC are now onto Reynard and his company so I am sure we havent heard the end of it.

After all it is free

I suspect SE's cashflow difficulties may be because those who booked holidays for 2012 and beyond have stopped making their payments in advance given what they have heard - and as a result SE does not have the moiney to pay for the 2011 holidays, that money already have gone elsewhere. If so Mr Reynard needs to be advised that what he is running is not a buisness but a Ponzi scheme.

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Wayne, unfortunately bonding, regulations and so on will be relatively ineffective whilst there are still people out there willing to be dishonest.

I don't believe the bonding needs to be changed but perhaps those people doing the bonding need to keep a closer eye on those they bond, as for regulations and so on they are no damn good when they don't get enforced or they only get acted on when its too late, we saw that with what happened to the banks.

Now as for Mr Reynard I have no doubt that if he has committed a criminal offence he will be prosecuted, weather or not people will get their money back is another matter entirely Sad

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Wayne, In fairness the track record of TOs folding is not a good one and it is high profile when it happens becuse to many people their holiday is their major luxury of the year with a significant amount of household disposable income tied up in up. You say you pay your suppliers in advance but AIUI for many TOs their margin is highly dependent on maximising return on the cash they hold between deposit/prepayment and settlement with suppliers. You chose to work in an industry where people are taking a chance with trust every day and while I don't doubt your personal integrity there is scope for lots of separate parties to default on contracts which could impact the end customer e.g. builders don't complete work on hotel in time, hotel can't give you your contracted rooms, punters have to be moved to hotel further from lifts etc.

Now the red flags appear to be there with Reynard from his earlier disqualification, which is why I'm amazed that so many schools and LAs have been so credulous for so long but clearly AITO were willing to have him/SE as a member so there is a question of them over what due dilligence they do on their members. Perhaps you can clarify why he/SE resigned as a member - to get their bond back or to avoid scrutiny? Would the bond have been repaid without a test of their current financial capacity given the AITO spokeswoman seems to acknowledge AITO remain on the hook here provided the necessary steps are taken to ensure SE is buried?

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Wayne, I freely admit that I don't know how the bonding schemes work exactly other than that they only seem to pay out on formal insolvency of a member company and that schools which have cancelled their trips while Reynard was claiming to still have alternatives to offer them may have exposed themselves a bit. I'm sure the headteachers concerned had as a priority a decision around sending kids abroad on a coach operator that may have not been paid and may therefore abandon them to a hotel that may or may not have been booked or even be suitable for their party. We are all grasping in the dark a bit which is why you might be able to help clarify what benefit is there to pulling out of membership of AITO as Reynard/SE seems to have done? It also seems far from clear at least in publicly available information whether schools were contracting with a limited company which may have been bonded or a sole trader using a very similar name.

My interpretation of AITO's position is based on what their spokeswoman said on the radio item (I guess subject to the schools actually having contracted with the correct bonded entity). Of course you might pass that off as PR, and AITO lawyers could well be looking to identify schools that have not followed proper cancellation process.

None of this is a criticism of you or your operation. I totally understand that as an honest and perhaps "best practice" operator you feel rightly aggrieved by anything which criticises TOs or bonding schemes which you already pay handsomely into.

Do AITO screen you before accepting you as a member or is a matter of , if you pay the bond you're in?

Oh and per ATOL website 24 failures among their members alone in the past year. I'm not sure I can think of a comparable industry where customers pay significant cash upfront in advance of delivery of goods and services, maybe there are lots of Xmas hamper clubs that tank every year too.

You know it makes sense.

I would imagine there will be a big legal mess at the end of all this over multiple countries with Reynard claiming that schools cancelled at last minute and are therefore due no refund whilst schools will claim that transport and hotels were telling them they hadn't been paid and thus couldn't take them, also some hotels (and instructors/coach companies) may well be owed considerable sums for schools that have been out there (and who have paid Reynard) whilst Reynard claims he has no funds, if it can be proved that Reynard has acted illegally then his limited liability won't save him, but that may be difficult to prove without forensic accounting, all of which is likely to mean months if not years before this finally gets sorted out

Otherwise you'll just go on seeing the one name:

fatbob,
All I will say is that I hope for the kids/parents sake the Local Authorities don't use their own in house law teams or it will go pear shaped big style. I really hope that the lawyers called in initially by the school will show enough grace to pass this matter on to a firm that really understand this "stuff".

Mind you, if I was a lawyer (which I'm not BTW) I would not be looking at the T&C's of anyone - you'll get nowhere that way. But, I may be tempted to look at both the implied terms (which can't be negated) and also whether, in fact, consideration passed (in both directions). But what do I know.

Mrs W (who is a lawyer) is always saying that the person/people to go for are not necessarily the most obvious, but rather the ones with the actually ability to pay-up (insurance Co ?) unless you just want to prove a point, then go for the real culprit, but you’ll normally end with just feeling good and not get your cash back.

A snowHead

DG Orf

Since Reynard contracted with the schools as Reynard trading as SE, rather than SE Ltd which was dormant, he shouldn't be able to hide behind limited liability. What I supect he has done is transferred his assets elsewhere. It shouldn't be that hard to demonstrate that Reynard acted illegally if he changes the holiday then he has to offer a full refund - if he didn't he has broken the law - and the schools are well within the rights to cancel and demand their money back.

Wayne

You say the industry is audited - so why wasn't SE brought to account much earlier - why hasn't he been brought to account even now. The schools paid over the money a long time ago - but is wasn't there when it mattered. The industry needs to deal with its own rogues unless it wants even tighter regulation. My claim isn't with the bonding system - it is with what triggers repayments and who is allowed to join the scheme. Plenty of industries have fit and proper requirements - why not travel operators?

A snowHead

I guess I really don't understanding bonding. Let's talk hypotheticals. I book and dirct with a major TO on the basis it has ATOL and AITO bonding. 6 months later ithas certain operational difficulties and cannot offer me what I originally booked. I decline in writing the alternative offer and request a refund which thay are, AIUI obliged to pay me. Before the refund is paid they go bust and bonding kicks in. I would have thought my bonding still applies and I'm covered but maybe not as I've entered into a cancellation. I can't afford a specialist lawyer so I'm shafted (subject to being able to claim on my travel insurance). If this is the case then there's clearly a gaping hole in the bonding schemes.

Well, the person's real but it's just a made up name, see?

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Wayne

Trigger the bond if anyone fails to present audited accounts and if those accounts show overdue creditors of more than a certain amount in relation to turnover or signifcant deficits in net assets.

Re fit and proper might I suugest that anyone with Reynard's part history would not qualify in the first place to join any bond/insurance scheme - he joined AiTO while he was still disqualified as a director.

The industry could do this itself or it could wait for the State to strengthen the law.

AiTO says its customers should have full financial protection and peace of mind - they do not at present.

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Achilles

You are right - but look at what the Court of Appeal judgement said in 2002 (see below) - and this comes from pretty senior judges. I would have thought that being dissualified as a director on such a basis would constitute pretty clear cut grounds. Could you wish for clearer grounds?

re The original allegations for which Reynard was disqualified for 10 years.

"Mr Reynard faced allegations of misconduct in the proceedings instituted against him by the Secretary of State under the 1986 Act on 14 January 1998: trading from April 1995 whilst insolvent at the risk of creditors; failing to provide holidays paid for in advance; misusing the company’s money in payment of personal expenses and personal tax liabilities; misappropriating a company car (a Citroen); acting in breach of fiduciary duty to Howglen in paying salary to his estranged wife, in arranging for the company to make an interest free unsecured loan to a charitable company (Adventures for Life Limited) of which he was sole director and to another associated company (Multi-Activity Training Unit Limited) and in agreeing for the company to pay 15 % interest on a secured loan of £300,000 by him to the company; drawing excessive remuneration before the administrative receivership; failing to make deductions for PAYE and NIC; failing to keep adequate accounting records; breaching the trading standards legislation regarding the contents of the holiday brochure; breaching health and safety requirements regarding fire precautions; failing to co-operate with the administrative receivers with respect to the statement of affairs and the recovery of the Citroen car; and late filing of accounts and returns of two other companies."

What the judges found on appeal by Reynard

"On the appeal from the decision of the Registrar Blackburne J held that the Registrar was correct to find that unfitness was established, saying that there were ample grounds for that conclusion. He held, however, that the Registrar’s exercise of discretion in fixing the period of disqualification at ten years was open to review, as he had taken into account as misconduct matters which should either have not been considered at all or which did not amount to misconduct. He was therefore entitled to exercise the discretion afresh and, in doing so, he stated that he had no doubt that the period of ten years was altogether excessive. He substituted the period of 5 ½ years as the appropriate period. In fixing that period he did not take into account the Registrar’s finding that Mr Reynard was “a most unsatisfactory witness "

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After all it is free

Article in the Sunday Times today.

david@mediacopy, brilliant!

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Does anyone have access to the Times Online? Can you cut and paste onto the forum??

Help!!

Skiing Europe/Chris Reynard - Children's ski holiday left in ruins.

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