Administrators looking into the collapse of OTA and trade supplier Lowcost Holidays have concluded there is “sufficient cause” for a detailed investigation into the actions of the directors behind the failure.
A team of administrators – including representatives from Smith and Williamson and CMD Partners – were tasked with looking into whether they could recoup some the money owed to credit card firms that have reimbursed customers.
But the progress report says it is “unlikely” that a dividend will be paid to creditors.
“At present we do not expect that realisations will be sufficient to declare a dividend to preferential creditors. We have not therefore taken steps to agree preferential creditor claims.”
Lowcost Travel ceased trading in July owing an estimated £75 million and with less than £10 million in assets. It 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.
In a progress report, the full details of which remain confidential, administrators said: “Shortly after appointment, we made an initial assessment of whether there could be any matters that might lead to recoveries for the benefit to the creditors and what further investigations may be appropriate.
“This assessment took into account information provided by creditors either at the initial creditors’ meeting or as a response to our request to complete an investigation questionnaire.
“The administrators have determined that there is a sufficient cause for a detailed investigation into the circumstances leading to the companies’ insolvency and are currently reviewing a number of possible actions that may be taken under relevant insolvency legislation.”
The administrators also said they needed to extend the time they need to continue their investigation.
“Due to the complexity of the investigation and the exceptional volume of material that is subject to examination, it is anticipated to be some time before this reaches a conclusion,” it added.
The progress report posted on Companies House also revealed that three sales of property including part-completed IT projects and the company website brought in £165,000 but that plans to sell the customer database for “significant value” has now been abandoned.
Between July 21 2016 and January 20 2017, the administrators recovered a total of £3,195,272.
Back in July 2016, the administrators said Lowcost Holidays had a guarantee of just €1.3 million with the Balearics regulator and said: “Customers’ claims will be limited to that.” However, all customers are understood to have been reimbursed by their credit card companies.