Destination club industry pioneer Rob McGrath has resigned as CEO of Tanner & Haley, effective immediately.

Last week’s article in The Wall Street Journal alluded to the possibility of McGrath’s departure as a result of the Chapter 11 bankruptcy filing.

On Thursday, a bankruptcy-court creditors committee was formed. “We want to find out where the money went. We want to preserve vacations as much as we can. And we want to get the company on sound financial footing,” says Michael J. Reilly, the committee’s lawyer. Evaluating Mr. McGrath’s future with the company, he said, “is front and center” on the agenda.

In a letter today from Chief Restructuring Officer Holly Felder Etlin (text below), the company announced it has secured $12.2 million in DIP financing, 22% more than the $10 million originally anticipated.

The destination club appears to be fulfilling its promise of maintaining service to its 874 members, stating over 500 reservations have been completed since the bankruptcy announcement. Another 200 reservations are in the queue.

More details about the reorganization process are expected to be announced next week on August 21st.

Member Update – August 15, 2006

I want to share with you some news about the company and the reorganization process.

Today, we received and accepted Rob McGrath’s resignation as chief executive, effective immediately. Rob is widely credited with inventing the destination club business, which today numbers more than twenty major players and generates total revenues of more than a billion dollars. Rob concluded that he could best enable the company he founded to successfully complete its financial reorganization by stepping down. We thank him for making this personally difficult decision and wish him well in his future endeavors.

Also today, Judge Alan H. W. Shiff of the U.S. Bankruptcy Court for the District of Connecticut, Bridgeport Division, gave final approval for the company’s $12.2 million debtor-in-possession (DIP) credit facility. With this permanent financing now in place, the company will be well-positioned to continue to meet its post-petition vendor obligations under normal terms, as well as continue to serve Members and meet its post-petition obligations to its employees.

As you may recall, I indicated on the Member conference call we held on July 27th that we would be prepared on or about today to provide you with details on our operational plans during the reorganization process, including Member travel availability through the holiday period. We have, in fact, developed such plans. We have been asked by the Unsecured Creditors Committee, however, to first share those plans with the Committee and give its members an opportunity to review and comment on them before implementing them and sharing them with Club Members generally. Accordingly, we have postponed wider distribution of our plans for one week, until Monday, August 21st. We appreciate your patience as we provide the Committee with the time for review that it has requested.

Finally, I am pleased to report that our Destination Clubs continue to support their Members and that Members continue to travel with us. Specifically, since July 23rd, Members of our three Clubs—Private Retreats, Distinctive Retreats and Legendary Retreats—have completed approximately 500 retreats representing more than 1,700 Member nights; and that we have booked nearly 200 new retreats representing nearly a thousand Member nights. These numbers are very encouraging, since our Clubs’ ability to continue to serve Members, provide you with a broad range of destinations and services, and preserve the value of Member deposits to the greatest extent possible largely depends on Members continuing to book retreats and remain Members in good standing of your respective Clubs.

On behalf of the company, thank you for your continuing patience, interest and support.

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Holly Felder Etlin
Chief Restructuring Officer