Just four weeks after collapsing with debts of at least $4.4 million, the Check-in.com.au business has been resurrected with former MD Simon Isaacs acting as a consultant to the new owners, Allied Consolidated, which bought the failed company’s assets for $35,000 last Friday.
Check-in began taking bookings again today and – by pulling inventory from online wholesalers – is even selling properties that don’t want involvement because they are owed money by the previous owner, Accommodation Clearing House.
Meanwhile, company liquidator Manfred Holzman attacked the merchant model payment system. “The whole way this works is wrong and the whole industry needs to be looked at,” he said.
One supplier said: “We terminated our relationship with them a few months ago because we weren’t getting paid. Now our product is on their site. We think they (the new owners) may have set up a relationship with another wholesaler.
“We’ve emailed and asked where they’re getting rates from and get clarity on how it’s working. If we don’t we’re going to have to work on a process of elimination. This is a real problem for the industry in that your product can turn up anywhere.”
Adir Shiffman from Allied Consolidated confirmed that it has employed Mr Isaacs, who founded the now defunct Accommodation Clearing House, on a retainer to assist with the transition.
He said Allied has retained four or five key employees and is now communicating with the industry to let them know of the site changes.
“The conversations we’ve had with hotels to date have generally been positive. If a hotel doesn’t want to be there they should contact us and we will take them off.”
Mr Shiffman, who declined to name the wholesalers now supplying Check-in with inventory, said Allied consolidated is a newly re-listed company looking for opportunities in the internet space.
It has strong balance sheet, he said, with “north of $1 million cash in the bank”.
For $35,000 it gets Check-in.com.au’s e-commerce platform, 350,000 customer database, supplier lists, domain names, logos, business names and other intellectual property.
Allied Consolidated has not taken on any liabilities or obligations of the previous operating entity, Accommodation Clearing House, which was placed in voluntary liquidation on May 21.
Meanwhile, company liquidator Manfred Holzman attacked the merchant model payment system – where online travel agents take the client’s money before reimbursing the hotel minus their booking fee post-stay – which allowed Check-in to spend client money without legal oversight or constraint.
“The whole way this works is wrong and the whole industry needs to be looked at,” Mr Holzman said. “The issue I see is that these people set up their booking engines and don’t have to maintain a trust account.
“They are receiving huge amounts of money from people and they can hold 100% of that for months.”
Mr Holzman said the Check-in collapsed with at least $4.4 million in debt and just $120,000 in the bank. There were around 5300 creditors – 4000 of them consumers who had pre-paid for accommodation, about 1300 accommodation providers and a number of other suppliers.
It’s likely none of them will get paid a cent from a company which in its final year of operation turned over $50 million.
“A lot of people unfortunately believe they will get their money but they won’t,” he said. “I’ve had people stranded overseas, families calling from hotels where they are being asked to pay again. It’s really, really sad.”
However the biggest creditors are hotels, with one large group owed $175,000. Mr Holzman these figures were provided by the former management of Check-in, which had in many instances proved to be under-estimating the financial damage.
“We still don’t know the precise number. Their accounts said one one guy was owed $400 but the real debt was $28,000.”
In terms of how the company operated, Mr Holzman said more than 50% of its revenue was spent on Google AdWords. “Check-in was spending huge amounts on Google,” he said. “You’re probably looking at $500,000 a month, sometimes more.”
However, Google is not a creditor. Its bill was paid every month by automated withdrawal.