Smith & Williamson’s creditors report confirmed in March that “sufficient cause” had been found for a detailed investigation into Lowcosttravelgroup’s eventual collapse on July 15 last year, after initial scrutiny of the conduct of various parties involved with the travel group.
The report read: “We made an initial assessment of whether there could be any matters that might lead to recoveries for the benefit to the creditors and what further investigations may be appropriate.”
Before its collapse, Lowcost was turning over £500 million per year.
Smith & Williamson’s initial estimate was that the failure of the company left a shortfall of £48.9 million owed to creditors, with just £1.34 million available to pay preferential creditors.
Now, a further report filed at Companies House shows that Smith & Williamson has been granted a High Court extension for its enquiries, until July 2018.
Lead administrator Finbarr O’Connell, of Smith & Williamson, told TTG: “There are a number of avenues we are looking at and we will hopefully bring some finances back to the creditors.
“The process does take a long time, with lots of records to analyse and people to interview.
“It is true to say that we are continuing to investigate whether to take legal action against various parties involved with the travel group.”
O’Connell went on to state that the case highlighted the fact that company directors had a duty to “preserve value”.
“It is a pity this business wasn’t available to market and sell sooner, as by the time we were contacted it was at the stage where it was effectively breaking up. It meant the value of the computer systems and database – which cost millions of pounds to design and develop – was effectively lost.
“Once companies hit financial trouble, the directors should be instructing people like us as early as they can. They have a responsibility to the company creditors and shareholders to retain as much value as possible.”
Lowcost founder Paul Evans moved the company’s base to Palma in 2013. Its Spanish bond cost it £1.09 million, leaving only around £7.50 in refunds available for each customer.
Evans, Lawrence Hunt and Salman Rasooi were the directors of Lowcosttravelgroup at the time of its collapse, according to the administrators’ creditors report.
