Intervention by a major creditor of credit card intermediary E-Clear could be its best hope as it battles attempts by Globespan’s administrators to put it out of business.
German banking giant Deutsche Bank has sought to distance itself from E-Clear following the collapse of the Scottish operator on December 16.
But Pago, a payments processing firm Deutsche half owns, wrote to the High Court this week supporting the adjournment and sources believe it could agree to provide the funds to stave off E-Clear’s administration.
Contracts between Pago and some E-Clear clients were terminated in late 2008, but Travel Weekly understands it continued to handle Globespan payments.
This means it will be a big creditor if Globespan administrator PricewaterhouseCoopers (PwC) succeeds in its winding up order on Tuesday.
PwC claimed £22 million of Globespan payments had been held back “without legal justification”, and the court ordered E-Clear to prove it has the money by today.
Court documents set out the lengths PwC administrators have gone to since the Globespan failure to force E-Clear to prove it has the cash.
The court submission states E-Clear chief executive Elias Elia told PwC the money was not in “a dedicated trust account” and suggested this was contrary to its Pago agreement.
PwC was told the money was in “‘sub accounts’ in various currencies” and that statements would be provided, but never were.
The position E-Clear holds as an intermediary in the credit card payment processing has raised questions about financial regulation of what is seen as a grey area.
E-Clear said it operated under Visa Mastercard rules, although PwC claimed its role as an “aggregator” is not “normally permitted” by the two credit card associations.
Industry sources expressed surprise that a firm handling such large amounts of cash and declared unfit in Germany to run its Nordfinanz Bank, isn’t obliged to keep customer payments separate.
Visa was unable to provide Travel Weekly with a comment before going to press.