Harmony International, a company local families paid more than $140,000 for a cancelled high school band trip, filed for bankruptcy this week, decreasing the likelihood of parents and students getting their money back, according to an attorney for the company.
This week, in a Rancho Bernardo library conference room, parents and band directors from four local high schools met with the attorney representing the tour company behind the trip.
“On behalf of the Mathesons, I first want to offer my deepest and most sincere apologies,” Erika Orcutt, Harmony International’s attorney, told a crowd of about 40 people. “Ultimately there is simply not enough money available to provide the refunds that were promised.”
The Georgia-based company is owned by Brad and Margie Matheson but on the advice of their counsel, they did not attend the informational meeting.
The band trip was supposed to take students and parents to Japan this summer but was cancelled last month. A total of 70 people (students and parents) from San Marcos, Del Norte, Mission Hills and Eastlake high schools signed up for the trip.
“We’re angry and we want our money back,” Rebecca Nee said.
Rebecca is a parent of a Del Norte High School sophomore cello player.
NBC 7 Responds first reported on the trip cancellation last week. To read the initial report click here.
At the meeting Tuesday evening, Orcutt began by addressing why the trip the families had been planning on and paying towards for over a year was abruptly cancelled.
“This spring became an extremely challenging time financially for Harmony International,” Orcutt said. “Due to ongoing concerns about global terrorism, other planned trips for the summer were either abandoned or cancelled for lack of participation.”
In an email to NBC 7 Responds sent after the meeting, Orcutt expanded on the explanation and said, news of “global terrorism...had a significant negative impact on the business revenues for the company overall and its ability to continue operations.”
At Tuesday’s meeting, Orcutt told parents the company knew back in January that not enough participants had signed up for the trip, putting it in jeopardy. According to band directors and parents, Harmony International didn’t inform them the trip was facing some challenges until April and the company continued to accept their payments through March.
Doug Kosty, a parent of a San Marcos High School sophomore student, told NBC 7 Responds his daughter made their monthly payments on time.
“That was a big thing for a sixteen-year-old, so yeah this was not good for her,” Doug said.
During the meeting, Orcutt listed other reasons Harmony International struggled with making the trip a reality including a lawsuit and a direct debit for $100,000 taken by a commercial creditor from Harmony International’s bank accounts for an “unpaid loan”.
“The company was hit with a large lawsuit by a commercial creditor and its bank accounts were drained,” Orcutt said.
The lawsuit, according to documents reviewed by NBC 7 Responds, was filed by Gibraltar Capital Advance in February in the Circuit Court of Cook County, Illinois for more than $180,000. According to federal court records, MFPI Group Inc., the company doing business as Harmony International, took the first steps toward filing for bankruptcy protection this week.
To see the company’s bankruptcy filing, click here.
In the bankruptcy records, Harmony International lists over 200 individuals and companies owed money. The company also lists a $1 million liability insurance policy the company holds, but it’s unclear what that money would go toward.
Since the company filed for bankruptcy protection, Orcutt said parents should expect a notice from the courts in the mail soon, explaining the process for filing claims.
According to the California Attorney General’s office, speaking in general terms not pertaining to Harmony International, ‘sellers of travel tours’ are required to register with their office and deposit all payments received by customers into a trust account or bond. At Tuesday night’s meeting, Orcutt told parents Harmony International had done neither of those things.
To read the California Attorney General’s requirements for ‘sellers of travel tours’, click here.
“We're so disappointed and we're angry,” Nee said, “We are justifiably angry.”
Parents told NBC 7 Responds they left the meeting with more questions than answers. One parent shared a cell phone video with NBC 7 Responds they had recorded during the first meeting with Harmony International on February 18, 2016. In the video, you can see Brad Matheson addressing parents via Skype.
“If you register before March 1 for this group, you’ll receive free trip cancellation insurance,” Brad Matheson told parents. “We wanted to include that as an incentive to get you to register as early as possible.”
At the meeting Tuesday night, Orcutt told parents Harmony International had not purchased the trip cancellation insurance policies they were promised.
“So that really put us in a situation where from the first interaction with the company, the first check we wrote in good faith, they didn't meet their commitments,” parent Kosty said.
In the video from the first meeting, Matheson is seen explaining the entire week-long itinerary for the advertised trip.
“We'll have the opportunity for them to visit Tokyo Disney,” Matheson said.
NBC 7 Responds spoke with Tokyo Disneyland representatives. They said their music program is not offered in the month of July, nor does the company have any business relationship with Harmony International.