YTB International’s long run of troubles finally landed it in bankruptcy court Friday.
The Wood River-based online marketing firm, which a few years ago ranked among the fastest-growing companies in the travel industry, filed for Chapter 11 bankruptcy protection in federal court in East St. Louis.
The company plans to stay in business, YTB President and Chief Executive Andrew Cauthen said in a press release.
“YTB intends to utilize ... Chapter 11 to regroup, reorganize, and relaunch,” he said.
YTB has lined up a lender’s commitment for financing during bankruptcy, and it expects to emerge from bankruptcy “after a relatively short period of time,” Cauthen said.
In its heyday, in 2008, YTB brought nearly 20,000 online travel agents to its annual convention in St. Louis and reported $45 million in revenue in a quarter — mostly from selling travel-sales websites to those agents. It employed hundreds and envisioned a big campus in Wood River. And it sold an aspirational lifestyle of travel and leisure, fronted by a charismatic, father-son duo — J. Lloyd Tomer and his son Scott — who were YTB’s chairman and CEO, respectively, and the largest shareholders in the publicly traded company.
Then-California Attorney General Jerry Brown sued, calling YTB a “gigantic pyramid scheme,” and while the case was eventually settled, it has been downhill ever since. The settlement forced changes to YTB’s business model and the bad publicity drove agents away. Revenue fell sharply and the company had to sell off land and buildings to stay afloat.
In the last four years, YTB has spiraled through board members and executives, tried out new business models and launched a merger only to later pull out.
In May it announced a restructuring program to focus on “operational execution,” and a month later hired a former executive, Andrew Cauthen, as president and CEO. Then, in September, Scott Tomer left the company.
YTB’s over-the-counter stock now trades for a penny and it hasn’t filed a quarterly earnings report since the third quarter of 2011, when it reported $6.8 million in revenue. In December, it told securities regulators even that filing contained errors. The Chapter 11 filing lists assets of $1.3 million, and debts of $7.2 million.
It’s unclear how much business YTB still does. No one picked up the phone Friday afternoon and an e-mail to Cauthen went unanswered. But even its longest-serving board member, Cardinals Hall of Famer Lou Brock, recently stepped down, resigning from the board in January, according to an SEC filing.