Lowcost administrators' report published

Lowcost administrators' report published

Many customers left out of pocket following the collapse of Lowcost Travel Group have been able to claim refunds from credit or debit card issuers, an administrators’ report has confirmed.

However, a statement from joint administrators Smith & Williamson and CMB Partners said that any dividend paid to creditors would be 'negligible'.

The statement from the administrators' said the total estimated shortfall from the group ran into 'tens of millions of pounds'.

It said: “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.

“Many customers who paid by credit or debit card have been able to make (or are making) a successful claim through their card issuer. The administrators remain 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.

“However, while this helps many individual travellers/customers - which is clearly very important to them - it does not reduce the size of the overall losses but simply moves them elsewhere. In this case, the losses are potentially being assumed by the banks and financial institutions who underwrote customers’ transactions.

“We are therefore currently in discussion with a number of financial institutions to ascertain the position regarding their losses as ultimate creditors of the Lowcost Group.”

Travel Weekly reported last week that updated advice on the UK Cards Association website had led to a surge in refund claims by issuers.

More than 3,000 customers in Ireland have also filed claims with the Commission for Aviation Regulation, which insisted Lowcost retain a bond with it.

Lowcost Travel ceased trading in July owing an estimated £75 million and with less than £10 million in assets. Online agent Lowcost Holidays had 112,000 bookings, with an average 2.5 customers per booking, while its bed bank, Lowcost Beds, had sold an unspecified number of beds.

Joint administrators Finbarr O’Connell of Smith & Williamson and Lane Bednash of CMB Partners warned in July that Lowcost Holidays had a guarantee of just €1.3 million with the Balearics regulator and said: “Customers’ claims will be limited to that.”

However, the change in the Cards Association advice meant fewer customers than feared have been left out of pocket, despite the association saying that refunds of accommodation-only bookings were unlikely, as were full refunds of Visa Debit payments for flight‑plus-hotel bookings.

Comments

This is a community-moderated forum.
All post are the individual views of the respective commenter and are not the expressed views of Travel Weekly.
By posting your comments you agree to accept our Terms & Conditions.

More in Travel technology