Thomas Cook reportedly failed with a balance sheet deficit of more than £3 billion.
Court documents list liabilities including £1.9 billion of debt and guarantees to organisations such as the Civil Aviation Authority, bonding providers and payment service providers.
Former chief executive Peter Fankhauser concludes in a High Court witness statement seen by The Times that “accordingly the company has a balance sheet deficiency of in excess of £3.1 billion” and predicts that after the failure of talks over a restructuring “in simple terms the company will run out of cash by October 4”.
He confirms that “the absence of funding” was one of the main reasons the board opted for liquidation rather than administration.
The group’s debts left it vulnerable to external factors including Brexit uncertainty and competition from online rivals.
Fankhauser says that in the week commencing September 9, the group’s lenders requested a further £150 million to £200 million of funding, on top of the £900 million deal led by Chinese suitor Fosun.
He confirms that the company did not agree that the extra money was needed to keep the group afloat, revealing that banks originally had asked Fosun to produce the cash, which it refused to do.
Among the cash liabilities are £388 million of payments due to hotel partners and £272 million to other external suppliers.
The insolvency documents filed by the company seen by the Financial Times show it was left with just £956,670 in group cash reserves and £31.2 million in bank accounts when it went bust.
Thomas Cook received five non-binding offers for all or part of its airline, one non-binding offer for a sale of the tour operator from Fosun and one offer for its Nordic business.
But all the bids were rejected, with the board deciding that they were unlikely to realise sufficient value, and would leave the capital structure of the remaining group in a state that was “unlikely to be sustainable”.
The documents also reveal that the company was approached with a takeover offer at the start of August by Turkish tour operator Anex Tour Group, which had taken an 8% equity stake.
Talks between Anex and Fosun failed to lead to a deal, the papers said.
The disclosure of the level of liabilities came as the Financial Reporting Council said that it was considering “whether there is any case” for an investigation and enforcement action.
Executives and auditors face pressure to explain how bosses received payouts linked to profit figures flattered by one-off items. The past three chief executives were paid close to £30 million.
MPs on the business, energy and industrial strategy select committee yesterday said that there were “serious questions to answer, including about the company’s accounting practices, its remuneration policy and practice, and about the stewardship of the company”.
Committee chairwoman Rachel Reeves said that it was “keen to seek answers to these questions”.
CBI deputy director-general Josh Hardie told the newspaper: “Questions are now rightly being asked about directors’ remuneration and decision-making.”
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