Agency chain threatens legal action against consortium
Southwest travel agency chain Vacation World is threatening legal action against Hays Travel Independence Group, which it claims scuppered its takeover by Midcounties Co-op.
Vacation World shut all 14 of its shops today, making 55 staff redundant, after its membership of the managed services Independence Group was terminated last night.
Hays Travel managing director John Hays confirmed the Independence Group had terminated Vacation Word’s membership and taken over its bookings from today. "We terminated the agreement on legitimate grounds, after taking proper legal advice."
He said Vacation World had been insolvent "for a very long time" and that the Group had "nursed the business along for years".
A clause in the agreement allowed Independence to terminate it in the event of an insolvency.
Vacation World’s parent Napco entered into a company voluntary arrangement with its creditors last July when it owed more than £787,000, mainly to HMRC in relation to unpaid tax and National Insurance contributions.
"I feel very sorry for the staff, but we don’t terminate agreements lightly," added Hays. "In 17 years we’ve had cause to do it only a small handful of times, but here we had no choice."
The agency’s owner, Stuart Arnott, claimed the Independence Group was holding onto about £350,000 commission owed to Vacation World without which a proposed takeover deal by Midcounties was unable to go ahead.
"We won’t see a penny of this money now, we can’t pay our rent, our rates or salaries and as a result 55 people are out of work today," said Arnott.
He said Vacation World had notified the Independence Group that it intended to terminate its membership six months ago and was working out its notice period, but it said the Group had "jumped the gun".
It wrote to Arnott yesterday to say it had terminated its managed services agreement "with immediate effect" and that it was taking over Vacation World’s 1,850 existing bookings. .
"Without access to these forward bookings, the deal with Midcounties couldn’t go ahead and they pulled out," said Arnott. "We were trying to sell for the continuation of the business; we only needed a 5% turnaround, but we couldn’t sell without the forward bookings."
Arnott said he was considering legal action against Independence Group to recover the £350,000 he says he is owed. "I will fight this tooth and nail," he added. "This is a point of principal and I’ll be talking to my lawyers tomorrow."
Midcounties said it had planned to take over the agency chain to secure the branches and the jobs, but said the deal fell through for reasons beyond its control.
By Linsey McNeill
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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