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Founding. Hospitality Franchise Systems Inc. (HFS) was created as an affiliate of the Blackstone Group, a private equity firm, as a vehicle to acquire hotel franchises. [1] It was led by Henry Silverman, a Blackstone partner and former CEO of Days Inn. [2]
- Background
- Central Events
- Aftermath
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1989: The stock price of CUC International, one of the merger partners that later form Cendant Corporation, plummets amid questions about the company’s accounting methods, which appear to inflate e...1990s: HFS (Hospitality Franchise Services) acquires a great deal of debt by engaging in multiple hotel franchise purchases. The financing strategy is criticized for benefiting executives but hurti...1993 – 1998: CUC managers engage in various aggressive financial accounting techniques, including adjusting financial statements to inflate earnings and better match analyst predictions. These prac...1996: CUC and HFS begin merger talks “to support the rapid growth of both companies.”March 1998: When CUC stalls on completing requested financial reports, the HFS accounting team is sent to help. Unexplained and suspect merger reserve and merger savings funds listed in the CUC boo...April 1998: Accounting “discrepancies” at CUC are revealed. Cendant launches an internal investigation of the company’s accounting.16 April 1998: Cendant releases a report admitting that 1997 earnings were overstated by $100 million. The stock price falls from $36 to $19 that day, eventually falling to $11 by August 1998.June 1998: The US SEC officially launches an investigation of Cendant’s accounting.June 1998: The shareholders sue Cendant for accounting fraud related to accounting discrepancies at CUC.28 July 1998: Silverman and the Cendant board of directors force Walter Forbes to resign. Silverman becomes Chairman of the Board.27 August 1998: Arthur Andersen delivers the results of its forensic audit to the Cendant board of directors. The audit reveals that CUC has overstated revenues and pretax income by more than $500...25 January 1999: Cendant sues the CUC accounting firm Ernst & Young, which blames CUC executives.Learn how Cendant Corporation, a consumer services conglomerate, was created by merging an ethical company with an unethical one that practiced deceptive accounting for years. Discover how the fraud was exposed, the consequences for the company and its executives, and the lessons for investors and auditors.
Oct 23, 2005 · NEW YORK, Cendant Corporation (NYSE:CD) today announced that its Board of Directors has approved a plan to separate Cendant into four independent, publicly traded, pure-play companies -- one...
Jan 17, 2007 · Former Cendant Corp. Chairman Walter Forbes was sentenced Wednesday to 12 years and seven months in prison and ordered to pay $3.275 billion in restitution for leading the largest accounting...
- NBC Universal
Jan 17, 2007 · Walter Forbes, the former chairman of Cendant Corp., was convicted of leading a scheme to inflate the stock of CUC International by $500 million in 1998. He was sentenced to 12 years and seven months in prison and ordered to pay $3.275 billion in restitution to the company and its investors.
Cendant Corporation is a global provider of travel, vehicle, real estate, and diversified services. It was formed in 1997 by the merger of Hospitality Franchise Systems and CUC International, and faced a major accounting scandal in 1999.
Oct 24, 2005 · Cendant Corp., owner of the Orbitz travel Web site and several hotel and real-estate brands, will split itself into four separate public companies, the conglomerate said Monday.
