Discovery Tours bankruptcy case slowly inches ahead

September 20, 2018

Discovery Tours bankruptcy case slowly inches ahead

CLEVELAND, Ohio – The Discovery Tours bankruptcy case made some progress toward resolution Thursday, but only dug a few more layers into a giant tangle of financial transactions that provide little clarity for families wanting their deposits  from canceled school tours.

That’s still months away.

Discovery Tours, based in Mayfield Village, had been running educational tours for schools for 36 years, but abruptly closed in May, then filed for Chapter 7 bankruptcy. That closure canceled trips to Washington, D.C., Chicago and Dearborn, Mich., for dozens of schools across Ohio, even after more than 5,000 families paid millions in trip fees.

The company owes families and businesses $3.9 million, but there are few assets, bankruptcy filings show.

Bankruptcy Trustee Waldemar Wojcik questioned former Discovery Tours Vice President Joseph Cipolletti for about an hour Thursday in a continuation of a hearing from June that laid out some details of how the longtime school tour organizer spiraled into bankruptcy this spring.

Cipolletti had told Wojcik in June that the company had been losing money for years and that bankruptcy came after repeated loans piled up, including some from family members.

On Thursday as the hearing resumed, Wojcik questioned Cipolletti about multiple transactions, regularly showing him bank and loan records and seeking clarification. Cipolletti could often answer, but other times had to refer Wojcik to other records the company says it provided the court.

“It’s in the boxes and boxes of stuff you have now,” Cipolletti said.

Other times, Cipolletti said Wojcik’s questions could be answered by clicking links on computerized company records. They agreed to resolve some questions that way later, rather than have Wojcik keep asking questions at the hearing.

A few scattered details emerged:

-       Discovery Tours’ founder and president Alfred Cipolletti was paid $120,000 a year, Joe $70,000 as vice president of product development, Chris Cipolletti $60-$65,000 as vice president of operations.

-       One family member who was not a company employee, Joe Cipolletti’s aunt, had loaned the company money and was paid back most regularly. Though she cashed a few company checks just before bankruptcy, she was still owed about $31,000.

-       Discovery still owes about $105,000 to Pay Pal for loans. Pay Pal handled most of the credit card payments made to Discovery Tours through the company website. Pay pal also regularly offered the company loans and deducted money paid to Discovery Tours to pay them back.

Once paid back, Pay Pal would offer another loan.

“We were always taking them because it was great to have that influx of cash coming in,” Cipolletti told Wojcik.

-       Family members would regularly loan the company money, though not through a formal process, Cipolletti said. Wojcik asked if those were just handshake agreements, Cipolletti they were often less formal than that.

“It was family,” he said.

-       Paychecks to family members were often delayed until catching up at the end of a year.

-       And Cipolletti is still unemployed since the company filed for bankruptcy.

“I have no income coming in,” he said. “I’m looking for a job, obviously.”
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