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A Chicago area investor has acquired the assets of bankrupt travel marketing firm YTB International and plans to resurrect the company that collapsed after state regulators scrutinized its sales model.
On Friday, a bankruptcy judge approved the the sale of YTB’s assets to Jamraval Inc. for $3.5 million. It made the sole bid in the bankruptcy court’s auction.
The new business, owned by Sam Hathi, will operate as YTB Global Travel Inc. according to a statement. He will oversee day-to-day operations at YTB.
“We believe the YTB franchise can be turned around and that it can regain the leadership position that it once held in the travel services industry,” Hathi said in a statement.
Andy Cauthen, YTB’s International’s president and CEO, will remain at the company in an unspecified management position.
Wood River-based YTB International had filed for Chapter 11 bankruptcy in March in federal court in East St. Louis.
Founded in 2001, YTB’s independent agent ranks grew to more than 130,000 in the late 2000s. To grow the business, YTB used a multi-level marketing business model where agents received fees based on the sales of recruits they helped attract to join YTB.
But YTB came under fire in 2008 when the California’s attorney general’s office filed a lawsuit against the company, alleging it acted as an illegal pyramid scheme. The Illinois attorney general’s office filed a similar suit the following year.
Both suits were ultimately settled, but the fallout from the lawsuits led to declining revenue and the departure of agents.
When YTB filed for bankruptcy, the company listed $1.3 million in assets and $7.1 million in liabilities. Before the asset sale, YTB has about 40 employees, according to court documents.
Editor’s note: The story has been updated, recast at 6:30 pm. ___