The £35m spat between the administrator of the collapsed travel group, Globespan, and E-Clear, its payment processing provider, has its first hearing in the High Court tomorrow.
PricewaterhouseCoopers (PwC) is asking a judge to put E-Clear itself into administration to break the stalemate over payments to the Scottish airline that left 4,500 passengers stranded when it went bust just before Christmas.
It is normal for processing companies handling credit-card payments to hold onto a portion of the funds as security against the failure of the merchant. And, given Globespan's £20m losses last year, E-Clear's actions are even less surprising. But the wrangle with PwC is about the amount of money involved, and what should be done with it now that Globespan has collapsed.
PwC says its analysis suggests potential claims of around £15m, rather than £35m, and that the remaining £20m relates to flights that have already taken place. Of even greater concern, PwC says, is that its repeated requests for a breakdown of E-Clear's calculations have been ignored, and that the company will not even prove that the sum is available. E-Clear has also resisted PwC's requests that the money be put in joint bank account. By filing an administration petition in court, PwC hopes to force answers to its questions.
PwC's Bruce Cartwright, one of Globespan's administrators, said."This week we have provided records of thousands of transactions to E-Clear, and while we don't expect them to process that within a mere few days, we are concerned as to why E-Clear has not explained to us how they arrive at their estimate of the potential chargeback."
He added: "It makes no sense to us for E-Clear to suggest that the question of how much money they hold is of no relevance to us. We don't understand why we can't get a simple answer to a simple question."
E-Clear acknowledges it has the £35m, but denies that only £15m relates to future flights, and says it will hold onto the fund for six months to ensure that any refund claims can be met.
A spokesman for E-Clear said: "Our responsibility is to our credit-card customers, not to PwC or Globespan." He added: "We need to make sure our customers are provided with services and, if so, we will release the funds to Globespan or its administrators. But not until then." It paid out £500,000 to credit card users for cancelled Flyglobespan flights on Thursday alone.
The Serious Fraud Office (SFO) has received a complaint on the matter, and is conducting the requisite preliminary enquiries, but it has not launched a formal investigation. "We have not heard from the SFO because frankly there is nothing to investigate," the E-Clear spokesman said. "This is a contractual dispute and nothing more."
The relationship between Globespan and E-Clear is further complicated by the involvement of E-Clear's chief executive, Elias Elia, in a £9m rescue package mooted in November as a way to save Globespan. The deal never happened.
E-Clear specialises in providing clearing facilities to distressed companies and has been caught up in several bankruptcies in the last 18 months as the recession wreaked havoc in the travel industry. It was hit by the collapses of XL and Zoom in 2008, and has faced legal disputes related to the Slovakia's bust SkyEurope airline and Canada's Go Travel Direct.
Mr Elia is also the major shareholder of Allbury Travel Group, which folded in December leaving 100 holidaymakers stranded.Reuse content