Almost £600m worth of holidays were cancelled because of the failure of Thomas Cook, according to a report that reveals the company owed £9bn when it collapsed.
The official receiver, a government employee managing the 178-year-old tour operator’s liquidation, took the unusual decision to publish a creditors’ report because more than 1 million people were owed money by the company.
The report reveals that Thomas Cook owed £5.7bn to companies within its own corporate structure and £1.7bn to its banks and other lenders.
Its total liabilities of £9bn exceed the £7bn that the outsourcing company Carillion owed when it collapsed in 2018. The report shows that only £176m to £244m has been recovered through selling off Thomas Cook assets, indicating that most debts will not be repaid.
Asset sales arranged so far include its high street shop network, sold to Hays Travel, and airport landing slots, as well as currency and cash from retail stores.
The creditors’ report reveals that £585m worth of holidays were cancelled when the business plunged into liquidation. Some of those will have been covered by the government-run Atol protection scheme that insures package holidays. However, the report says it is not yet clear how much of the total was covered by Atol.
Thomas Cook owes its name to a humble and deeply religious 32-year-old cabinet-maker who, one June morning in 1841, hiked the 15 miles from his home in Market Harborough to Leicester, to attend a temperance meeting.
The former Baptist preacher believed that the ills of Victorian society stemmed largely from alcohol and, presumably fatigued from his walk, realised he could deploy the power of Britain’s flourishing rail network to help spread the word.
Addressing the temperance meeting, he suggested that a train be hired to carry the movement’s supporters to the next meeting in Loughborough.
Thus, on 5 July 1841, some 500 passengers travelled by a special train for the 24-mile round trip, paying a shilling apiece.
Over the next few years, Cook laid on ever more trains, introducing thousands of Britons to train travel for the first time. The first such outing to be run for commercial purposes was a trip to Liverpool in 1845.
Over the next decade or so, the business expanded to offer overseas trips, to France, Switzerland, Italy and beyond, to the US, Egypt and India.
His more business-minded son John expanded the tour operator and its reach was such that the government enlisted its expertise in an effort, ultimately in vain, to relieve General Gordon at the siege of Khartoum in 1885.
John’s three sons inherited the business, which incorporated as Thos Cook & Son Ltd in 1924 and benefited from the increasing ease of international travel.
Its first flirtation with collapse came during the second world war, when the government requisitioned some of its assets and it was sold to Britain’s railway companies, effectively a nationalisation.
But it boomed in the postwar years as growing prosperity fuelled the appetite for holidays and it returned to private ownership in 1972.
Since then, it has changed hands and changed shape via a series of mergers and takeovers. It nearly collapsed in 2011 but averted its demise with a bailout deal funded by banks.
Now, after 178 years of operation, it has ceased trading.
“This is a stark reminder of the huge financial impact that the collapse of Thomas Cook has had on hundreds of thousands of customers, who saw plans for holidays, weddings and other long-awaited trips vanish into thin air,” said Rory Boland, the travel editor of the consumer group Which?
“While it is understandably frustrating for customers who are still waiting to get their money back, we would urge people to make sure they stick with official channels as scammers have tried to take advantage in the past.
“In the longer term, the government must look at what measures can be introduced to ensure that holidaymakers aren’t left picking up the pieces when holiday firms or airlines collapse.”
Staff were owed £45m, a sum covered by the government’s redundancy payment service, although the document shows that further claims could yet materialise.
Trade creditors – including suppliers such as hotels and airline service businesses – were owed £885m.
The document does not include costs incurred by the Civil Aviation Authority, the regulator that managed the largest peacetime repatriation effort to fly Thomas Cook 150,000 customers home.
It covers only the 26 Thomas Cook Group companies that were wound up on 23 September. The official receiver will provide information about another 27 UK companies that were wound up on 8 November “in due course”.
The official receiver, David Chapman, said: “The position regarding intercompany trading, assets and liabilities is still to be fully determined. Any payment made to creditors is dependent on the value of the assets realised and the costs of the proceedings.”
