January 20, 2010
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News: Globespan Falls With E-Clear
Globespan, the U.K. travel expert, has gone into administration losing its operating license, aircrafts and personnel. Going into administration in the U.K. courts is similar to seeking protection through Chapter 11 Bankruptcy in the U.S. courts. E-Clear, the credit card company chiefly blamed for sending Globespan into administration, has itself gone into administration. According to court documents, the credit card company had debts that were triple the figure owned Globespan. Administration papers indicated that E-Clear only had less than £10 million in the bank while the owner, Elias Elia, had nothing. The court appointed the accounting firm of BDO to administer to E-Clear in search of nearly £90 million to pay creditors. An investigation is also underway to determine if Globespan was the recipient of E-Clear's poor management or credit card fraud.
E-Clear was the company that processed travelers' credit card payments for several travel companies including Globespan and SkyEurope. After processing the payments, the company was to transfer payment to the travel companies. However, sometime last year, payments from E-Clear came into delinquency leaving several firms to collapse. The exact amount of credit card payments that E-Clear owes the travel companies has not yet been determined; however, a representative of PricewaterhouseCoopers, Globespan's accounting firm, estimated the total amount to be nearly £100 million. It is believed that the company owes firms across the globe including Scotland, Central Europe, and Canada.
Sunwing, a tour operator in Toronto, Canada who recently merged with Signature Vacations, was also one of E-Clear's victims. A spokesperson for Sunwing said that the company had been using E-Clear as their credit card processor, however, dropped them in May 2009. E-Clear stilled owed Sunwing money, however, the exact amount has not been disclosed. According to Simon Mortimer representing PricewaterhouseCoopers, E-Clear had been ordered to appear in court last week to show that the company had the funds to pay Globespan the £35 million owed them, however, E-Clear failed to appear. The courts had no alternative but to put them into administration.