Prime Travel Protection trustee: We’ll pay claims “to the greatest possible extent”

A trustee for bankrupt Prime Travel Protection, which sold what Florida investigators say was illegal insurance through a network of travel agencies, has promised to pay claims “to the greatest possible” over a three-year period.

In a letter sent last week to holders of approved claims issued by both Traveler Protection Services and Prime Travel Protection, travelers whose contracts haven’t been approved, and contract holders who have not traveled yet, a trustee for the liquidated company says although there isn’t enough money to cover all claims, a company principal has committed to “a series of capital contributions” to cover them.

Here’s the letter in its entirety, which was sent to me by a travel agency that sold Prime Travel Protection policies:

Ladies and Gentlemen,

Please be advised that Prime Travel Protection, Inc., a Colorado corporation, and Universal Assurance Group, Ltd., a Colorado corporation, have terminated active business operations as of January 26, 2009. Both companies are continuing business only to process, and to the extent possible, to pay claims which meet the criteria set out in the applicable contracts issued by Prime Travel Protection, Inc. and Traveler Protection Services, Inc. As of the date set forth in this paragraph, no new contracts have been issued by Prime Travel Protection, Inc.

By way of background, in 2007, Traveler Protection Services, Inc., an Illinois corporation, ceased active business operations and Prime Travel Protection, Inc, purchased the assets and assumed all, or substantially all, of the liability for contracts theretofore issued by Traveler Protection Services, Inc. At present, we are facing the situation that there are insufficient corporate funds in Prime Travel Protection, Inc. to pay all approved claims at this juncture and to establish sufficient reserves to pay all pending claims which have not yet been approved to-date.

In order to augment the financial resources available to Prime Travel Protection, Inc. to compensate its customers in accordance with its contractual obligations, Mr. Jerry Watson, a principal of both Traveler Protection Services, Inc. and Prime Travel Protection, Inc., has committed to make a series of capital contributions to Prime Travel Protection, Inc. over a sixty month period. Traveler Protection Services, Inc. is evaluating various possible claims against third parties to realize additional funds available for distribution to claimants. Mr. Watson will receive no compensation during the period in which the exclusive focus of Prime Travel Protection, Inc. is the repayment of its customers.

With respect to those persons who hold approved claims as of the date of this letter, it is the objective of Prime Traveler Protection, Inc. to repay such claims to the greatest possible extent over the initial three years of the five year capital contribution commitment which has been made by Mr. Jerry Watson. If you are the holder of an approved claim, there is no need to submit any further documentation to Prime Traveler Protection Services, Inc. The claims will be paid in the order in which they were received by Prime Travel Protection, Inc. or Traveler Protection Services, Inc., that is, the oldest claims will be paid first.

With respect to those persons who have submitted claims which have not yet been approved as of the date of this letter, the intent of Prime Travel Protection, Inc. is to repay such claims to the greatest extent possible during the final two years of the five year capital contribution commitment which has been made by Mr. Jerry Watson. Again, the oldest claims submitted will be paid first. Since additional documentation may be required to pay pending claims, you may be contacted by Prime Travel Protection, Inc. to submit additional materials to substantiate or clarify the claims you have tendered.

Lastly, with respect to those persons who have purchased contracts from Prime Travel Protection, Inc. or Travel Protection Services, Inc. and who have not yet traveled or have completed their trips but not yet submitted claims, it is the objective of the company to (1) cooperate with the travel agencies who issued the subject contracts to obtain substitute travel protection coverage for customers who have not commenced their trips, and the extent that obtaining substitute coverage is not possible (2) to evaluate any future claims in the ordinary course of business and pay such claims during the final two years of the recapitalization plan.

Please direct any correspondence to: Prime Travel Protection, Inc.,

ATTN: Counsel, 7450 W. 52nd Avenue, Suite 336-M Arvada, CO 80002.

We appreciate your patience as the company seeks to make good on its business obligations. Thank you.

Sincerely,

Trustee for Prime Travel Protection, Inc./Universal Assurance Group, Ltd./Traveler Protection Services, Inc.

Is this genuine effort to repay hundreds, if not thousands, of claims? Or an attempt to thwart a class-action lawsuit against Prime Travel Protection’s principals and the agents who sold its policies?

What do you think?

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