• Joe Breitfeller

Thomas Cook Seeks Eleventh Hour Bailout From British Government to Avert Collapse

Updated: Jan 11, 2020

The previously announced £900 million rescue package by Chinese conglomerate Fosun and company creditors has now been amended, requiring an additional £200 million of new capital.

Thomas Cook Airlines - Courtesy Thomas Cook, plc

The BBC is reporting that after an independent review of the rescue plan by creditors, who have pledged half of the original £900 million in bailout funds in exchange for equity, an additional £200 million will be required to save the company. Apparently, a group of investors who were prepared to raise the extra capital has backed out, forcing the Thomas Cook Group, plc to make a last-ditch plea to the UK Department for Transport to make up the shortfall. According to the BBC, the prospects of a government bailout look grim and without the additional capital infusion, the company may enter administration (the British equivalence of US bankruptcy) as early as this weekend.

The collapse of the company could leave as many as 600,000 tourists on holiday stranded, including over 150,000 Britons. The UK government is prepared to repatriate all customers at an estimated cost of £600M in a plan called “Operation Matterhorn.” UK customers will be afforded a certain amount of financial protection from the Air Travel Organizer’s License (ATOL) program, funded by tour operators. The program requires package holiday providers to pay £2.50 per booked passenger into the fund.

We previously reported that a creditor meeting scheduled for September 18th, had been postponed until Friday, September 27th. Additionally, there was some concern that Thomas Cook Group, plc bondholders who carry credit default swap (CDS) insurance might complicate the bailout deal after the company filed a Chapter 15 administrative bankruptcy in the U.S. last Monday. There is still some hope that a deal will be made, but time is running out for the storied 178-year-old firm. This is a developing story, and we will provide updates as more information becomes available.

Update 9/22/2019 (10:45 PM EST) - Regrettably, after failing to execute a recapitalization plan, Thomas Cook UK, plc and affiliated companies entered administration early this morning. The message on the company website states,

"Thomas Cook UK Plc and associated UK entities have entered Compulsory Liquidation and are now under the control of the Official Receiver. The UK business has ceased trading with immediate effect and all future flights and holidays are cancelled. A dedicated support service is being provided by The Civil Aviation Authority to assist customers currently overseas and those in the UK with future bookings. Please visit: thomascook.caa.co.uk for further information."

Source(s): BBC, Thomas Cook UK, Plc