Prestige Travel Inc. of Las Vegas filed for bankruptcy reorganization today, listing $10 million or more in liabilities in a case that threatens tourists' reservations and a number of Strip shows.
A spokeswoman said it's business as usual at Prestige Travel, but the company declined to comment on the fate of TripRes.com, its subsidiary that books hotels, flights, show tickets, golf tee times and other activities online.
Two industry insiders told VEGAS INC that TripRes, which lists about 160 employees on its website, was shutting down.
Customers of TripRes.com are advised to call its customer service line for help. Show producers may have less recourse.
They say they are getting cheated out of revenue TripRes owes them from selling tickets to their shows.
David Saxe, founder of David Saxe Productions in Las Vegas, whose company produces and promotes a dozen shows at V Theater and Saxe Theater at Miracle Mile Shops at Planet Hollywood, said he has “hundreds of thousands of dollars, maybe a half million dollars” in ticket revenues he is owed by the company.
“What happens is they sell tickets directly to the customer, charge a service fee and keep their commission, which is pretty high,” Saxe said today. “They pay the producer later for the tickets they have sold. But after waiting 45, 60 days to be paid, I could tell there was a problem. They told me I would get a check on Monday. I didn’t get it and then got a call this morning that they are closing down and filing for bankruptcy.”
Saxe said that many small-scale shows in Las Vegas might be forced to close because they will not be able to recoup thousands of dollars in lost ticket revenue.
“If you have a small show and are four-walling (leasing) a room, you might not be able to withstand losing $30,000,” said Saxe, who said he’d already received calls today from entertainers who are renting space in hotels who are worried they might not survive.
Prestige Travel listed in today's initial bankruptcy filing assets of less than $50,000 and liabilities of $10 million to $50 million. The company will have to file more specific financial information later.
Leo Falkensammer, president of TripRes.com and the head of Prestige Travel, issued this statement: "Prestige Travel did file for protection under Chapter 11 of the Bankruptcy Code today. The nine Prestige Travel cruise and vacation offices are all open and will continue to provide the best vacation planning and booking services as we always have since 1980. The online division, that books hotels and shows, is working with both the hotels and its lenders to do what it can to make sure travelers' reservations are honored."
Creditors include scores of Strip hotels, including the Excalibur, which is owed $454,000, as well as shows, such as Mystere at Treasure Island, owed $288,000, and American Express, owed $1.3 million.
The company also filed suit in Bankruptcy Court against City National Bank to recover a $3.3 million certificate it issued to the bank to back up letters of credit it has with various hotels. The lawsuit does not allege wrongdoing on the part of City National Bank. It says Prestige Travel was insolvent when the certificate was issued Oct. 4.
Under bankruptcy law, Prestige Travel can try to recover payments it made while it was insolvent but before it filed for bankruptcy.
The certificate is "necessary to ensure post-bankruptcy payment of the debtor’s customers’ hotel and show reservations and other travel arrangements," according to the lawsuit.
"Because the customers have already paid for the rooms and/or shows, the public will be harmed if the defendant (City National Bank) liquidates the Market Strategy Security because the debtor (Prestige Travel) will be prevented from paying the hotels for future bookings and in turn, the hotels would refuse to honor the future bookings, thus leaving tourists stranded at the hotels without a place to sleep or a show to see," the lawsuit says.
The suit says Prestige Travel, a family-run business for 30 years, has 49 agreements with hotels and their parent companies in which Prestige books air, hotel and/or entertainment packages for customers.
Prestige separately sued MGM Resorts International in bankruptcy court, seeking restrictions on MGM's ability to draw against a $2.5 million letter of credit Prestige had provided to the casino company. The letter of credit enabled Prestige to book rooms at MGM properties, including Aria, Bellagio, Vdara, MGM Grand, the Signature at MGM Grand, Mandalay Bay, the Hotel at Mandalay Bay, the Mirage, Monte Carlo, New York New York, Luxor, Excalibur and Circus Circus.
"MGM Resorts’ draw down on the letter of credit will negatively impact the debtor’s (Prestige Travel's) estate and deplete the debtor’s post-bankruptcy assets," the lawsuit charges.