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Flyglobespan into administration

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Flyglobespan into administration

Old 10th Jan 2010, 08:14
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Things might become clearer on Tuesday:

E-Clear: Court to rule on lost Globespan cash - Business News, Business - The Independent
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Old 10th Jan 2010, 14:28
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It would be of interest to learn why Globespan (and XL) used this obscure company for card payments? also does anyone on hear know of other airlines that use or have used E-clear

I think the French bit of XL is still flying? who do they use?
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Old 10th Jan 2010, 14:40
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Sky Europe used them as did Zoom not sure who's left if anyone

all airline that halyclon have wanted to invest in aswell
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Old 10th Jan 2010, 15:12
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It would certainly appear that Elia had quiet a good money making scheme set up here - using E-Clear to process the payments, eventually start witholding the airlines money and then using Halyclon to "invest" in the airline, bailing out at the last second, denying all responsibility (and he would have gotten away with it too - if it wasnt for those pesky kids...)
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Old 10th Jan 2010, 17:51
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My moneys on eclear going to the wall this week, can only fob off PWC and the courts for so long.
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Old 10th Jan 2010, 18:44
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mines to if i could find somewhere to put a bet on it. could make up my december wage wich i will never see thanks to them.

They currently have at least 3 winding up order in court against them

Last edited by habs_fan; 10th Jan 2010 at 19:09.
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Old 10th Jan 2010, 19:03
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I wonder if PaddyPower will take bets on them going bust
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Old 10th Jan 2010, 19:31
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This does not answer why they held the £35m.

Recession killed Flyglobespan, not me – tycoon

Published Date: 10 January 2010
By David Leask
THE tycoon accused of causing the collapse of Flyglobespan last night came out fighting in a bid to clear his name.
Embattled Elias Elia told Scotland on Sunday that the Scottish airline was the victim of the recession – and not his credit card clearance company E-Clear.

In his first interview since Flyglobespan went into administration before Christmas, leaving 4,500 holidaymakers stranded abroad, the Greek Cypriot businessman admitted his reputation had taken a hammering but insisted his hands were clean.

He has been accused of precipitating the airline's collapse by withholding some £35 million paid by credit card holders for flights and holidays. He said he had to keep the money to protect himself and his firm from future claims by unhappy customers.

Elia said: "Flyglobespan are a victim of the current recession. They were forced to discount the cost of tickets to compete in a market that has been badly hit by the financial meltdown.

"We have suffered because we have lost an important client in Flyglobespan and people are painting us as a reason for the airline's collapse. That creates bad publicity, when our view is we are just doing our job. We feel that is unfair, but it still damages our reputation."

The entrepreneur has kept a low profile since Flyglobespan – and its parent company, respected and long-standing Edinburgh travel group Globespan – went under on 16 December.

The airline and its parent company filed for administration on the day when its civil aviation licence was suspended after a financial rescue deal – in which Elia was involved – fell through.

Former Globespan insiders yesterday insisted that airline executives had been convinced by Elia and others that a rescue was on the cards until the very last minute.

Elia said yesterday: "Flyglobespan was a great airline, loved by the Scottish people, and that's why for more than two years we tried our best to help them in every way we could and recently attempted to bring investors to the table to try to secure its long-term future.

"Right up to its closure we were still trying, but once the Civil Aviation Authority withdrew its licence, it was impossible to continue."

Scotland on Sunday, meanwhile, has seen a due diligence report that appears to have been drawn up on Globespan by accountants advising investors lined up by Elia. It cautions against acquiring the airline and says that the business would need a cash injection of £70m, including the £35m the report confirms was held by E-Clear, to survive until June.

Elia's own holiday company, the Allbury Travel Group, including the famous brand Libra, also went bust at the end of last year. His credit card clearing firm also handled Allbury's payments, as well as those of now defunct airlines XL, Zoom and SkyEurope. Elia is facing at least two sets of litigation as a result of these collapses.

The entrepreneur last night stressed that his firm specialised in handling the payments of struggling companies and it should therefore be no surprise that some of them went out of business.

He said: "We are working in the distressed market. We hold on to the funds until all the charge-back claims are exhausted. The major credit card companies use us as a sort of insurance policy to make sure their customers do not lose money on poor services or those that are not provided.

"In Flyglobespan's case 100,000 people paid for flights they have not taken, according to the records we have."

Globespan itself, however, was far from convinced by that argument in its closing weeks. At the time, it questioned whether E-clear needed to keep all credit card takings for up to six months to cover potential losses.

While waiting for the rescue investment arranged by Elia, Globespan also looked at petitioning a court to wind up E-Clear. The accountants currently acting as administrators for the airline – PricewaterhouseCoopers – are understood to have threatened to continue that action.

E-Clear, meanwhile, is late filing its annual accounts. Elia said yesterday this was not unusual for companies and added: "E-Clear is financially healthy and our stakeholders are behind us."

Flyglobespan directors are unable to comment under the rules governing administration.

Bruce Cartwright, of PricewaterhouseCoopers, said: "If E-Clear are really serious about co-operating with us then they should confirm exactly how much money they are holding from Globespan customers."

A spokesman for Elia yesterday confirmed that the entrepreneur accepted his firm had held £35m of Globespan funds when the airline folded.
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Old 10th Jan 2010, 20:53
  #329 (permalink)  
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The more we hear about E-Clear, the worse they smell.
 
Old 10th Jan 2010, 22:35
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Alba

Just heard the news of the demise of Alba what a diasaster for both Gla and Edi having flown in to both stations and been handled by them i can honestly say they were streets ahead of any other Handling Agent not just in Scotland and having met their shall i say straight talking manager he was a character he was called by his nickname KM his real initials hope each and every one gets a job with menzies as they couldent lace Alba boots
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Old 11th Jan 2010, 08:37
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Capetonian

Looking at the news stories that came out late last week. Mr Elia seemed very keen to come up with rescue packages for more than just flyglobespan. I wonder where the dosh came from? Three Golden geese were shot from the sky, and suddenly no money!!
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Old 11th Jan 2010, 13:14
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E-Clear, meanwhile, is late filing its annual accounts. Elia said yesterday this was not unusual for companies
This dismissive attitude that shows total disregard for UK Law, as well as his & fellow directors obligations, says it all. Having considered this in context than it is fair to say that the full content of Elia's interview should be taken with some cynacism.
and added: "E-Clear is financially healthy and our stakeholders are behind us."
Well then prove it !
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Old 11th Jan 2010, 13:22
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Sound like a right bunch of chancers flouting UK law and openly admitting holding on to £35 milion of GSM cash.Wonder what the political views on this situation is in Downing Street ?
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Old 11th Jan 2010, 15:00
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CABOT

Mmmmm !!!!!I wonder indead what Downing Street would have to say.

Why doesn't everyone voice their opinion, instead of being forgotten or just another statistic and swept under the carpet.

Try this one [email protected]. Go on everyone be heard. Good luck to you all. You deserve it after all your hard work, Alba and Globespan workers.
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Old 11th Jan 2010, 17:09
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In defence of E Clear..

Just to spell out the position:

(1) Globespan passenger pays for his flight/holiday through E-clear. E-clear pays money to Globespan 90 (?) days later. Financial reconciliation on date of payment.
(2) Globespan goes bust, E Clear responsible for repayment to all customers who paid by c/c (not debit card) who haven't started or completed their return travel. Financial reconciliation on return date of travel.

so..
(1) Appears to be agreed at £35 Million however
(2) is far more difficult to calculate, but provided E clear is holding more than the total amount required to refund all passengers who haven't yet completed their journeys then all affected passengers get all their money back (and then PwC administrators eventually get the balance remaining).

Isn't that what the consumer credit act is written to make sure happens ???

are we seeing E clear as scapegoat when in reality it was company failure due lack of profitable business ??
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Old 11th Jan 2010, 17:13
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E-clear where and still are keeping the money for upto six months after pax had been on the flights and holiday not 90 day

also a lot of that money is for excess weight and seat sale and checked bag fees made at the airports
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Old 11th Jan 2010, 17:21
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By no means all the monies that go through the card processors are reclaimed in the event of failure. Some (as stated here) are for fees actually collected at the airport. Some are for travel next day (very low risk). Some are never reclaimed as travellers do not know, don't bother, reclaim procedure too convoluted, etc. I would say that between 25 and 50% of credit card turnover is never "chargebacked" in these situations.

I am not quite clear how these amounts refunded or not are reported back to the liquidators. If the card processor gets to keep all the money they have at the time, but only actually refunds a proportion, with the large sums under consideration that's a nice little earner which must make the card processor actually start to hope fror bankruptcy.

Which is I think where we came in .......
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Old 11th Jan 2010, 17:28
  #338 (permalink)  

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Whilst I smell a rat as to e-clear, there are other similar companies operating in this market of credit card clearing with the travel and other industries with high consumer put through.

They too have some dubious practices, which are dodgy to say the least and in some cases, require the connivance of the user IE: client, which if relevant in this case, would be Globespan.

The area is under regulated and a license to print money.
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Old 11th Jan 2010, 17:35
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Sorry HABs but my point is that its not 90 days or 180 days after the flight date, the retention period starts from the payment date, regardless of the flight date..

..and as for payment for non- refundable items, it is possible that E clear have a right of offset against monies that they will have already forwarded to Globespan for flights which now won't be performed and will have to refund.

There's two sides to this, its not as simple as is being suggested.
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Old 12th Jan 2010, 08:32
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VOM1T
Whilst I accept your observations as to timing of retention periods, however there would appear to be a more basic issue as to whether E-Clear now have the assets available to repay GSM's administrators.
Lack of clarity in this matter is certainly not helped by the reluctance of E-Clear to publish its accounts albeit that these would only disclose historic data some 9 months out of date, and are may not provide any clear indications that there are funds available & accessible.
Coming from another direction, then surely the settlement with GSM was on a regular cyclical basis whether daily/weekly/monthly and as such then taking 90, 180 days or whatever, then in any specific period there will always be a settlement due placing E-Clear in default if unpaid, albeit not necessarily of anything like the total sum discussed.
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