Travel agent Villa Parade was being investigated by the industry watchdog before its collapse, the Examiner can reveal.

Villa Parade, plunged thousands of holidaymakers into panic last night when it ceased trading.

But we have learnt that the firm, based at Highfields, was already under investigation by ABTA.

Villa Parade, which rented villas in Majorca, was being investigated for alleged breaches of the watchdog's code of conduct, following allegations the firm was offering rentals on properties it could not honour.

ABTA's investigation into Villa Parade was dropped when the company folded yesterday.

A spokesperson from ABTA said: “In early April this year an allegation was made by another company regarding some contracts Villa Parade had with a number of villas in Majorca.

"As a result of this allegation, ABTA launched an investigation through its code of conduct procedures. ABTA Code investigations are always conducted very thoroughly and they were ongoing at the time of the company’s failure.

"If Villa Parade had been found to be in breach of the code it would have been liable to serious penalties.

"We also instructed Villa Parade that if any of their customer’s bookings were affected by any contractual issues, they should be offered a suitable alternative booking or a full refund, without delay.

"Villa Parade had been an ABTA Member since 1998, without any previous record of breaches of ABTA’s Code of Conduct.

"Now that the company has ceased trading ABTA will support customers through the process of arranging refunds. "

Earlier rival firm Travelopo, who were hit by a court order earlier this month by Villa Parade after contacting customers saying the Huddersfield firm could not honour some bookings, had posted a statement on its website saying: "The landlords allege that Villa Parade has not paid them for more than a year and this is causing huge financial hardship. They were forced to stop dealing with Villa Parade...

"In desperation, the landlords asked Travelopo (via their local representative Business Resorts), to assist them to warn the holidaymakers that their bookings might not be valid and to try to stop Villa Parade from advertising their properties."

At the time of the injunction last week Villa Parade Managing Director Ian Sheekey said in a statement: "There are a small number of villas (about 10% of our portfolio) that are affected – isolated to Northern Mallorca. No other villas are affected. Unfortunately those who booked an affected property will be offered a full refund or alternative accommodation. We will be contacting all those affected over the next 7-10 working days. All other bookings are unaffected."

In an email seen by the Examiner Villa Parade sales and marketing director, Andrew Warden, yesterday said Somerset-based Travelopo's actions had 'fatally wounded' the Huddersfield-based company, adding: "I am really sorry that this has happened and left you in this very difficult position. Please accept my sincere apologies."

Jennifer Wright, of Matlock, Derbyshire, spend weeks chasing a refund for her son Andrew after his booking for a villa in the historic town of Pollença.

Ms Wright said: "It's a relief in a way because at least we know where we stand.

"If it's not of their making we feel sorry for them but it doesn't help people who are out of pocket.

"I'm sure we'll get our money back it's just how slow the process is going to be."

Valerie McCann, of Caernarfon, booked a holiday for herself and eight relatives in Pollenca.

She said: "Three days ago Villa Parade were offering me other accommodation, saying the flights were ok and we could have a refund. "Like everyone else I'm pretty disgusted."

What ABTA say

ABTA is setting up a special "travel clinic" to advise many of the holidaymakers who have paid out for flights or holidays.

The company has spent years renting out villas, mainly in Spain and Portugal.

ABTA say there around 1,300  bookings for future holidays with villa accommodation only.

Any customers who have booked this type of arrangement directly with Air Parade Ltd can get all the information to make a claim by going to ABTA's Travel Clinic and a refund for the villa accommodation will be arranged.

The watchdog says there are around 400 forward bookings for flight-packages that will be protected by its ATOL cover.

Any customers who have booked this type of arrangement should contact the CAA on  020 7453 6350  or visit  www.atol.org.uk . 

In addition there are around 300 forward bookings where Air Parade provided the accommodation via another company.

Customers should contact the company they used to book the accommodation and they will be looked after by that company, who will either advise that their holiday can go ahead, arrange an alternative booking, or arrange a refund.

In a small number of bookings Air Parade was acting as an agent for other travel providers.

Any customer who made a booking through Air Parade but whose accommodation or travel is being supplied by another company (the travel provider) should contact the travel provider in the first instance.

Click here to be taken to the ABTA website.

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