Thomas Cook paid more than £20m to advisers in days before collapse
Thomas Cook paid more than £20m to over 30 advisers in its final days as it failed to secure a rescue deal.
The payout added to the cash deficit that led to the company’s collapse, with advisers working on behalf of the company, bondholders, shareholders, the pension fund and insurance schemes.
They were all involved in talks to restructure the business and bring it back from the brink, but were unable to find a resolution over additional £200m that lenders had demanded.
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The Big Four accounting groups, 20 law firm and leading restructuring advisers were brought in, along with turnaround specialist Alvarez and Marsal, on behalf of the Civil Aviation Authority (CAA), the Financial Times first reported.
Thomas Cook collapsed on 23 September after a £900m rescue deal fell through, with the company unable to find an additional £200m needed.
The travel group paid out more than £20m to advisers during the negotiations, a source told the FT, which would have been more if paid for the full month.
“The workers and customers of Thomas Cook will look on aghast at the feeding feast that has taken place at this company by accountants and advisers whilst they have lost their wages, jobs and holidays,” shadow chancellor John McDonnell told the FT.
“We need a complete overhaul of the system for dealing with companies in trouble.”
Thomas Cook’s chief executive said the company would have “run out of cash by 4 October 2019 and probably earlier”.
Thomas Cook’s growing adviser bills came as a result of the group trying to get all parties around the table to reach a deal.
Some of those involved worked on plans to save the company and its insolvency.
AlixPartners, advised Thomas Cook on its restructuring options in February and was retained as its special manager to the insolvency series. It will also oversee the return of £300m to customers that booked holidays with Thomas Cook.
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Thomas Cook, the CAA, AlixPartners, Alvarez & Marsal, the Big Four accountants and the law firms declined to comment.
Rachel Reeves, Labour MP who chairs the business select committee, told the FT: “The collapse of Thomas Cook has again raised serious questions about the role of auditors, consultants and advisers and highlighted concerns that too often their interests appear at odds with their client’s shareholders, customers or employees.”