Bankrupt travel agency Tellmeclub

admits to faking profits to stay afloat

A failed budget travel agency that offered overseas tours repeatedly misrepresented its
finances since 2014, according to a petition to commence bankruptcy proceedings
obtained by Kyodo News on Thursday.

The Tokyo-based travel agency Tellmeclub incurred an operating loss of more than 1.5
billion ($13.5 million) in its last financial year through September 2016 but reported an
operating profit of 110 million.

Tellmeclub came under fire following a spate of complaints from customers who never
got their flight tickets. The company owes a total of 15.1 billion, including 9.9 billion
to 36,000 customers, according to the agencys lawyer.

The filing by Tellmeclub on Monday is the fourth-largest bankruptcy in Japans tourism

industry, according to credit research agency Tokyo Shoko Research.
In the financial term, Tellmeclub reported a net worth of 450 million but is believed to
have actually suffered a negative net worth of 7.4 billion.

According to the petition, Tellmeclub fell into an operating loss since the year through
September 2014, but gave the appearance it had secured profits by underreporting
initial sales costs and administrative expenses.

The company was also found to have presented different financial documents to banks
and the tax authority. It faked profits to continue obtaining financing from lenders,
sources said.

Tellmeclub, established in 1998, found it difficult to provide low-cost tours to

destinations such as Hawaii and Guam due to rising advertising and labor costs, as well
as the yens weakness, which pushed up its foreign-currency-denominated liabilities,
according to research firm Teikoku Databank.

Tellmeclub failed to pay roughly 400 million to secure air tickets to the International
Air Transport Association, a global airlines association by the March 23 deadline.

Until the date, Tellmeclub received roughly 1,000 to 2,000 new reservations per day
and collected about 10 billion as advance payment for tours.

Instead of using the payment for offering travel services, the company used the money
for other purposes such as advertising fees, and continued running on a shoestring until
it had only around 200 million left when it filed for bankruptcy on Monday.

Tellmeclub was soliciting customers until last week through newspaper ads. The
company, with about 80 staff, was also found to have made dozens of new job offers.