• Kyodo

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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 agency’s lawyer.

The filing by Tellmeclub on Monday is the fourth-largest bankruptcy in Japan’s 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 yen’s 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.

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