What happens if a travel company goes bankrupt in Australia?
If a travel company goes bankrupt in Australia, your options depend on how you paid. You may be able to claim a chargeback through your bank or credit card provider. Unfortunately, unsecured creditors—like customers—are typically last in line for refunds from the liquidator.
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How it works in practice
Understanding Travel Insolvency
When an Australian travel company, such as an agency or tour operator, declares bankruptcy or goes into liquidation, all business operations cease immediately. The company's assets are handed over to an appointed liquidator or administrator whose job is to pay off existing debts.
As a customer who has paid for future travel, you automatically become an "unsecured creditor." Under Australian corporate law, unsecured creditors are placed at the bottom of the priority list, meaning you will only receive a refund if money is left over after secured creditors, employees, and liquidator fees are paid.
Credit Card Protections
The most effective way to recover your funds is by relying on your bank rather than the liquidator. If you paid using a credit card or a debit card by pressing "credit," you have strong consumer protections under your bank's chargeback scheme.
A chargeback allows your bank to reverse the transaction because the promised service was not provided. You must contact your bank immediately, as chargeback rights usually expire within 120 days of the transaction or the date the service was supposed to be delivered.
Important exceptions
There are a few important exceptions regarding how you can recover your money. If you purchased comprehensive travel insurance before the company went bankrupt, your policy might cover insolvency, though you must check the specific Product Disclosure Statement (PDS) as many basic policies exclude this.
Additionally, if you booked through a third-party booking agent rather than directly with the bankrupt company, the agent may hold your funds in a trust account. In this specific scenario, you might be entitled to a direct refund from the agent, as the money was never formally transferred to the insolvent business.
What you should do now
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Contact your bank or credit card provider immediately to request a chargeback for the unfulfilled travel services.
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Check your travel insurance policy to see if you are covered for travel agency or airline insolvency.
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Gather all your booking confirmations, receipts, and communication records with the bankrupt company.
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Register your details as an unsecured creditor with the appointed liquidator or administrator handling the company's collapse.
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Contact any third-party booking agents or partner airlines involved in your itinerary to see if parts of your trip are still valid.
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