Bankruptcy Court ruling on Prestige Travel may snarl travel plans

Prestige Travel Inc. lost a U.S. Bankruptcy Court bid on Thursday to have certain funds applied to customer hotel stays in the future, potentially leading to an unhappy start to hundreds of vacations.

The Las Vegas-based travel agency, one of the largest in Nevada, already has had clients who showed up at local resorts only to be told at the front desk that they would have to buy their rooms again.

Prestige requested temporary restraining orders that would force about four dozen hotels and resorts to use money from standby loans called letters of credit to cover future guests instead of paying down debts incurred by Prestige before bankruptcy. But U.S. Bankruptcy Court Judge Bruce Markell ruled that the hotels could not be forced honor their booking contracts with Prestige, especially when Prestige already had defaulted on them.

The bookings were made through tripres.com, Prestige's online division. It already has been closed, but the website still exists and routes bookings through a different company. The company will try to reorganize around physical locations, numbering 10 in Las Vegas.

Tripres would take traveler payments, then forward them to the hotel after check-in. But, in many instances, the amount Tripres owes exceeds the amount available from letters of credit though it holds cash in separate accounts.

MGM Resorts International attorney Nile Leatham said his client has adopted a policy of honoring the room slots booked through Tripres but requiring a second payment at a discounted price. At that point, tourists can then call their credit card companies to cancel the Tripres charge.

"We do not want to elevate the problem," Leatham said. "We want to do everything we can to accommodate our guests."

MGM says it is owed $5.6 million, making it the largest creditor in the case.