The examiner of USIT Ireland is still confident he can broker a deal that will save the bankrupt travel company. Mr David Hughes, of accountants Ernst & Young, said yesterday that he believed Aer Lingus could still be persuaded to support the rescue bid being mounted by a group of investors led by Ms Gillian Bowler.
The national airline finds itself cast in the role of king maker because it is the companies' largest supplier. The core of USIT Ireland's business is the franchise to organise summer work visas for Irish student in the US, which requires the purchase of a return air fare.
Ms Bowler and her backers want to negotiate a new five-year deal with Aer Lingus, but the airline has balked at the prospect, saying the terms are not commercial. The new investors claim a long-term deal is needed to ensure the viability of the company.
Sources close to the negotiations say the airline will probably agree a shorter-term deal. Aer Lingus's support is also required for legal reasons because - as a large creditor - it has to approve formally the scheme put together by Mr Hughes before the High Court will sanction it.
USIT Ireland and its sister company USIT World.com are now all that is left of the group headed by Mr Gordon Colleary, which had a turnover of $600 million last year. The parent company of the group USIT World was put into liquidation yesterday. All the other subsidiaries have either been sold or put into liquidation.
Many of them - including the US subsidiary Counsel Travel - were bought by USIT's largest rival STA. The purchase of Counsel Travel late last year combined with the events of September 11th pushed USIT World into bankruptcy earlier this year.
STA took over USIT World in February and then put the company into examinership in order to effect a restructuring. The various subsidiary operations were put up for sale by PricewaterhouseCoopers. STA was interested in purchasing the Irish operation but a rival proposal, led by Ms Bowler, emerged in the meantime.
The money raised through the disposal of the various subsidiaries will now be distributed to creditors by the liquidator, Mr Ray Jackson of KPMG.
One of the largest creditors is actually the USIT treasury company, USIT Ltd, which was put into liquidation by NIB earlier this year. Mr Jackson is also the liquidator of USIT Ltd. NIB liquidated the company after it ran up an unapproved overdraft. The bank has alleged fraud. The liquidation of USIT Ltd triggered the collapse of the entire group.
Mr Hughes said yesterday he was "happy with the general reaction of the creditors to the schemes presented" and, while there were still some outstanding issues to be finalised, he was confident these would be resolved over the next week.
