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Hamilton Locke acted for Quentin Olde and Liam Healey of Ankura Consulting in their capacity as voluntary administrators of the ‘Tourism Adventure Group’ on the successful restructure of its youth and adventure hostel business which have been severely affected by the COVID-19 border closures.
The administration of the Tourism Adventure Group is a quintessential Covid story in which an otherwise successful business was impacted almost overnight as a result of the international border closures and ongoing uncertainty with respect to domestic travel in Australia. Directors took the reluctant decision to appoint administrators following the reduction in government support with the hope of stabilising the business and to preserve value. Following appointment, the administrators continued to trade the business, however, in light of the ongoing restrictions, further lockdowns and resulting reductions in trade there were significant cash constraints.
Key to the success of this restructure was early engagement by the administrators with supportive landlords who critically agreed to a "rent free" arrangement for the duration of the administration. This meant the majority of leases were kept on foot and in turn allowed for cash preservation and a stable platform to negotiate with landlords, the secured lender and other stakeholders.
The restructure will see the Tourism Adventure Group business continue as a going concern and was effectuated via a pooled DOCA across 16 entities. The DOCA was approved with the almost unanimous support of creditors, including the senior secured lender in Australia and New Zealand, and will see employees retain jobs, the compromise of significant debt accumulated after months of lockdowns and a heavily subdued trading environment and provide the best opportunity for the business to take advantage of conditions when travel restrictions ease.
Commenting on the transaction, Nicholas Edwards said: “The demise of the Tourism Adventure Group reflects the very stark reality of the ongoing restrictions on travel and tourism related businesses. Management took the proactive step to appoint administrators to preserve value. Key to the success of the restructure was the way the team at Ankura lead by Quentin and Liam, worked with the landlords to agree on a platform to preserve cash and allow negotiations to take place throughout the administration period.”
Commenting on working with Nick and the team, Quentin Olde said “It was a great team effort working alongside the Hamilton Locke team led by Nick. The teams worked together aligning commercial outcomes with the necessary legal issues which enabled the business to be restructured cost effectively and within the statutory timetable of the administration process, without the need for additional costs and delays of extensions or court applications. The TAG administration is a great example of how the VA process can be used to restructure and save good business facing one off impacts and structural change.”
The Hamilton Locke team was led by restructuring and insolvency partner Nicholas Edwards who was closely supported by lawyer Katrina Zivkovic. Key members of the firm’s litigation team including Brit Ibanez and Emily Pendlebury, finance team including Monty Loughlin and Mai Dang, workplace team including James Simpson and corporate team including Cristin McCoy and Hannah Jones were also involved.