Directors Report for presentation to a Meeting of Creditors of Ghana Travel Ltd convened pursuant to Section 98 of the Insolvency Act 1986 and to be held at Tankersley Manor, Church Lane, Tankersley on Thursday 7th April at 11.00am
1. Statutory Information
1.1 The company was incorporated on 11th April 2000 under registration number 03969661.
1.2 The registered offices until recently 1-3 Eastgate, Barnsley and is now situated at 12 Victoria Road, Barnsley, S70 2BB
1.3 The nominal share capital of the company is 49,002 ordinary shares at ?1 each.
1.4 The Directors of the company are Regina Ajegweh Trepczyk
1.5 The Company Secretary is Mr Michael Anthony Trepczyk
Due to the failure of the Ghanaian national carrier then flights became filled with ?flight only? customers with minimal ?package holiday? business. The result was much higher volumes but at much lower margins, increasing risks. Un-audited accounts for the year ended 30th November 2004 show that turnover increased to approx ?2.0m from sales in 2003 of just ?60k. Cause of Operational And Financial Problems
With surplus cash in the UK accounts and in Ghana at the year ended 30th November 2004 plans were put in place for the Christmas period to provide additional flights and capacity to meet anticipated demand. As a consequence of the operational problems operational problems resulting from the Flyjet failure to meet their contractual obligations financial difficulties resulted as a consequence of:
? The inability of Flyjet to meet their contractual obligations to carry 233 passengers plus luggage due to their inaccurate calculations to determine maximum passenger numbers.
? A reduction in maximum passenger numbers per flight from the originally contracted 233 to what was supposed to be an achievable number of 210 in November 2004, which was too short notice (90 day lead time required) to amend Christmas bookings
? A loss of income of 23 Pax per flight across 35 flights equating to approximately
? Continued problems with weight restrictions post the new November agreement, increased costs of compensation paid by Ghana Travel Ltd for lost and delayed luggage due to
? Increased costs for compensation paid by Ghana Travel Ltd due to unannounced Flight delays and cancellations by Flyjet
? With the onset of the winter season and drop in sales prices the consequential low margin/loss making flights drained the balance of funds in the UK.
? Although the majority of cash inflows from the UK were used to cover flight cost, this was insufficient to prevent a continued build-up of creditors the major one being Flyjet
On the Friday 11th March after talks with Flyjet and prior to leaving, the agent informed Ghana Travel that no further action would be taken until an investor?s decision had been made and that all flight operations would continue as normal for at least the following 4 days.
At that time the Flyjet plane that would have been used for that evenings flight had been on the ground in Canada and would have not been able to travel back to the UK to service that evenings flight despite the assurances from the agent acting on Flyjets behalf.
At 4:40pm that day hand delivered letters from solicitors demanded signature of debentures and powers of attorney over both company?s Ghana Travel Ltd and GH Travel Ltd Flyjet had been informed this was against strict advice from solicitors not to sign, this legal advice based upon issues surrounding Flyjet?s own financial position. When signature of the documents was refused Flyjet pulled all flights.
5. Use of Other Flight Providers to Clear Customers ? Monday 7th to Tuesday 15TH March
Under the heads of agreement there was a restriction imposed on using any new charter carriers, with the exception of the contract that had already been signed with Astraeus. They offered to bring forward the planned launch of their service and fill the gap left by Flyjet. Their first flight operated successfully and was praised by customers in respect of additional legroom and quality of service.
As the Astraeus flights carried fewer passengers all attempts where made to clear additional passengers through other charter carriers and scheduled airlines. However, due to the bad publicity put out by Flyjet even when offered payment up-front carriers refused to release capacity resulting in a backlog of customers and the very high costs of compensation and accommodation (over ?400,000) that had to be paid by Ghana travel Ltd.
6. Calling in the ATOL Bond ? Tuesday 15th March
Given the loss of funds through compensation the only route left to safeguard customers was to call in the ATOL bond to repatriate and repay passengers.
7. Liquidation of The Company - Wednesday 16th March
On the morning of the 16th March, liquidators acting under instruction from Flyjet insisted that Ghana Travel either enter voluntary liquidation or be forced into compulsory liquidation through a court application that day.
8. Contract Issues and Loss Claims
Flyjet knew of the contract issues and the disputes regards the operations and the quality of service. They had also been kept informed regards the new contract using the new carrier (Astraeus) and the plans for operating flights from both companies and that Ghana Travel had made contact with financial and legal advisors.
Instead of following standard business practice Flyjet used their dominant position to force Ghana Travel into liquidation without giving it the opportunity to seek redress for the losses suffered by Ghana Travel Ltd due to the breach of contract by Flyjet.