Failed debt deal sinks 178-year-old Thomas Cook
Failed debt deal sinks 178-year-old Thomas Cook
23 SEPTEMBER 2019 9:13 AM

The long-troubled British travel company Thomas Cook has entered into liquidation after negotiations with its creditors and investors failed.

GLOBAL REPORT—After 178 years, Thomas Cook—the world’s oldest tourism company, which included four airlines and two hotel brands—has dissolved.

The British travel company and its associated United Kingdom entities have entered into compulsory liquidation and are now under the control of the official receiver, according to a message on the company’s website.

“The U.K. business has ceased trading with immediate effect and all future flights and holidays are cancelled,” the company said in a statement on its website.

“I would like to apologize to our millions of customers, and thousands of employees, suppliers and partners who have supported us for many years,” Thomas Cook CEO Peter Fankhauser said in a statement, The Wall Street Journal reports. “This marks a deeply sad day for the company which pioneered package holidays and made travel possible for millions of people around the world.”

The tour, hotel and airline company had just last week filed for Chapter 15 bankruptcy protection in the Southern District of New York as it worked with investors and creditors on a potential rescue plan.

Thomas Cook Group’s holdings include the Cook’s Club and Casa Cook hotel brands, with a combined portfolio of 200 hotels and roughly 40,000 rooms spread “across the Mediterranean, North Africa, the Middle East and Asia,” according to the company’s first-half 2019 earnings release.

The company’s four airlines are grounded and its 21,000 employees in 16 countries will lose their jobs, The Associated Press reports. More than 600,000 people were traveling with the company as of 22 September. Reuters reports the more than 150,000 U.K. travelers Thomas Cook had overseas as of Sunday represented “the largest peacetime repatriation effort in British history.”

Failed rescue
Thomas Cook was going through Chapter 15 bankruptcy proceedings to exchange nearly $2.1 billion of bank debt and bonds for 15% of the equity and at least $100 million of new subordinated notes, Bloomberg reports. The company’s creditors were supposed to vote 27 September on a plan that would allow Chinese investor Fosun Tourism Group to lead the rescue of the company.

The company’s debts neared £2 billion ($2.5 billion), and it was forced into negotiations with its shareholders and creditors, The New York Times reports. However, the company came up at least £200 million short. The British government refused to intervene to save the company out of concern other companies at risk would seek government bailouts.

The Wall Street Journal reports that Fosun Tourism said in a statement it was “disappointed that Thomas Cook has not been able to find a viable solution” with its lenders and investors. Fosun bought 5% of the company in 2015 but had since grown its share to 18%.

Stranded travelers
The collapse of one of Britain’s oldest companies has stranded approximately 600,000 people, the AP reports, “though it was unclear how many of them would be left stranded, as some travel subsidiaries were in talks with local authorities to continue operating.”

Of those 600,000 travelers, roughly 155,000 of them are U.K. travelers, BBC News reports. Approximately 16,000 travelers were scheduled to return to the U.K. today. The U.K. government chartered 45 jets, flying 64 routes from locations around the world, to return at least 14,000 of those.

The U.K.’s Civil Aviation Authority is working to help passengers who were due to fly back to the U.K. between 23 September and 6 October, the authority’s website states. Those who had booked flights through Thomas Cook for future trips have had their trips canceled.

Hotel guests
Reuters reported Sunday that British tourists in Tunisia said their Thomas Cook-affiliated hotel stopped them from leaving over concerns about payment. A guest posted to Facebook that security at the Orangers Hotel in Hammamet, Tunisia, “barricaded us in,” but later allowed him to leave the hotel.

On its Twitter account, Thomas Cook posted later that day it was aware of customers being asked to pay for their hotel stays in Tunisia.

“We’re aware a small number of customers were asked to pay for their hotel before leaving Tunisia; we have refunded all who paid on their credit cards,” the post said. “Thomas Cook will not be sending any new arrivals to Les Orangers, Tunsia. We continue to support customers in all our resorts.”

The Civil Aviation Authority is telling travelers who are currently on an Air Travel Organization Licensing-protected travel package through Thomas Cook that the authority will seek to guarantee their stay directly with their hotels. It advised these travelers not to make payments directly to their hotels unless told to do so by someone with the CAA. If the hotel does not accept the guarantee, the CAA could relocate guests to another hotel for the remainder of the stay.

Those who are not ATOL protected are not able to make a claim for out-of-pocket expenses and additional nights, but they might be able to make a claim through their travel insurance companies, banks or credit card issuers, the CAA states.

Guests who are staying at Thomas Cook-owned and -operated hotels through an ATOL-protected package might need to be relocated, the CAA states.

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