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16 Sep 2016

BY Jennifer Morris

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Lowcost failure: Administrators confirm shortfall runs into 'many tens of millions'

Lowcosttravelgroup’s administrators have confirmed that the total estimated shortfall in assets for the group runs into “many tens of millions of pounds”.

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Lowcost failure: Update from administrators

It comes as the administrators also revealed that the Swiss bed bank arm – Lowcostbeds.com AG had entered the Swiss bankruptcy process.

 

Finbarr O’Connell, Henry Shinners and Colin Hardman of accountancy, investment management and tax group, Smith & Williamson, and Lane Bednash of CMB Partners UK, released an update today (Friday).

 

Since the administrators’ appointment, more than 30,000 emails have been received in connection with the administration, and they continue to receive and deal with more.

 

The administrators confirmed they have a statutory duty to "investigate the behaviour of the directors prior to the failure of the business" and to make a report to the Department for Business, Innovation & Skills.

 

These investigations are ongoing and will take some months due to the complexity of the business, they said.

 

The administrators have drafted their proposals, which have been provided to creditors.

 

They said in a statement: “The total estimated shortfall in assets for the group and its subsidiaries at the time of the administrators’ appointment runs into many tens of millions of pounds.

 

“This includes the financial shortfalls relating to Lowcost and its UK subsidiaries, as well as to the Spanish subsidiary.

 

“The individual companies’ positions include a lot of inter-group balances and the administrators are currently working to ascertain the extent to which third party creditors are affected in each individual company.

 

“It should be emphasised that the final deficiency figures cannot be known for some time due to customers and other creditors continuing to formulate their claims.”

 

The administrators also confirmed that due to the size of the financial losses compared to the value of the remaining assets and the number of creditors, it was likely that any eventual dividend paid to creditors will be “negligible”.

 

They said many customers who paid by credit or debit card had been able to make (or are making) a successful claim through their card issuer.

 

The administrators said they remained in regular dialogue with the UK Cards Association which provided advice on its website for customers: "We understand that Paypal is well progressed with its adjudication process with many customers having secured reimbursements".

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