Thomas Cook Group Plc & Ors, Re

The court granted petitions for the compulsory winding up of 26 companies in the Thomas Cook Group and appointed the Official Receiver as liquidator pursuant to section 136 of the Insolvency Act 1986. The court concluded that liquidation was the only viable option after rejecting continuation of trading, further recapitalisation and administration as realistically available alternatives. The court exercised its discretion to dispense with the ordinary notice requirements because of the extreme urgency of the situation and the need to implement contingency plans, in particular a large repatriation exercise coordinated with the Civil Aviation Authority. The court also appointed special managers under section 177 of the Insolvency Act 1986 (supported by the Official Receiver’s report and rule 7.93(1) of the Insolvency (England and Wales) Rules 2016) to manage the businesses and assist with repatriation and other immediate tasks.

This is a first instance insolvency ruling on petitions presented by the directors for the immediate winding up of 26 companies forming part of the Thomas Cook Group. The petitions sought, among other orders, a dispensation of the usual notice requirements so that winding up and the appointment of the Official Receiver as liquidator could take effect immediately; the Official Receiver sought court appointment of special managers to assist with urgent post-liquidation tasks.

The background was a severe deterioration in the Group’s finances, unsecured indebtedness in the order of £1.9 billion, acute liquidity difficulties said to lead to insolvency by about 4 October 2019, unsuccessful attempts to secure recapitalisation and the failure of schemes under Part 26 of the Companies Act 2006 to secure the necessary support. The Group faced substantial liabilities and an immediate cashflow crisis exacerbated by loss of public confidence and supplier demands for pre‑payment. Approximately 145,000 UK customers were abroad and required repatriation.

The court framed the principal issues as (i) whether the jurisdiction to wind up exists and, if so, whether it should be exercised; (ii) whether the notice requirements should be dispensed with; and (iii) whether special managers should be appointed under section 177 of the Insolvency Act 1986, supported by a report pursuant to rule 7.93(1) of the Insolvency (England and Wales) Rules 2016. The judge analysed available alternatives: continuation without recapitalisation was unviable; negotiations for recapitalisation had failed; administration was not reasonably likely to achieve any of its statutory purposes; and compulsory liquidation was therefore the only practicable route. The judge accepted the Official Receiver’s evidence and report and held that immediate winding up and appointment of special managers were necessary to permit the CAA, the Official Receiver and the special managers to implement contingency plans, particularly the complex repatriation exercise. The court therefore made winding up orders, dispensed with the normal notice period for reasons of urgency, and appointed the special managers to perform the workstreams identified in the Official Receiver’s report.

The ruling records secondary findings that Her Majesty’s Government would not fund an administration but would support an insolvency process involving the Official Receiver, and that detailed contingency plans (including a services agreement between the CAA and the special managers) were in place. The court timed the orders to effect appointments in the early hours so that repatriation and communications could begin immediately.

The court made winding up orders in respect of all 26 companies and dispensed with the usual notice requirements because of the exceptional urgency and the need to implement contingency and repatriation plans immediately. By operation of section 136 Insolvency Act 1986 the Official Receiver became liquidator and, on the Official Receiver’s application and report, the court appointed special managers under section 177 of the Insolvency Act 1986 to manage the businesses and assist with repatriation and other immediate tasks. The rationale was that continued trading, further recapitalisation and administration were not viable and liquidation was the only practicable route to an orderly winding up and to protect the interests of customers and creditors.