The main holiday business of Lowcost Travel Group is expected to be formally liquidated as early as this week, although it remains in talks to sell some of its assets.
Lowcost Travel collapsed on Friday putting at risk the plans of 110,000 holidaymakers. The company had 27,000 customers abroad and are expected to be able to fly home when their holiday are over, according one of the joint administrators of the business.
Travel agents were warned on the company website that customers in resort may be forced to pay their hotels before they leave as the accommodation providers “may or may not” have received payment from the Lowcostbeds arm of the business.
The company, which reported Total Transaction Value of £500 million last year, blamed the turbulence caused by Brexit and the plunging value of the pound.
The group ceased trading following “exhaustive attempts” by directors to rescue the business, which has been hampered by the recent and ongoing turbulent financial environment.
Directors had been in talks to sell its two main assets, the Swiss-based accommodation service Lowcost Beds and the online travel agent Lowcost Holidays.
The deal fell through on Thursday night and the administration was announced on Friday, The Sunday Times reported.
Talks are understood to be continuing over a sale of Lowcost’s million-strong customer database and some domain names.
The auction, which is being handled by administrator Smith & Williamson, is expected to fetch “a number of million pounds” but Lowcost Beds and Lowcost Holidays will enter formal insolvency within weeks, according to a source quoted by the paper.
Finbarr O’Connell, of Smith & Williamson, said: “The group experienced significant market headwinds in the run up to the EU referendum as holidaymakers delayed decisions.
“This was compounded by the Leave vote itself and the subsequent fall in value of the pound.
“Regrettably, in these extraordinary conditions, the directors had no option but to place Lowcost Travel Group into administration.
“Whilst we have not been appointed over the foreign subsidiaries which deal with the group’s customers we are aware that the directors of those companies are making all efforts to put useful and relevant information on the group website to assist customers to understand their individual positions.”
He added that meetings were planned with the appropriate Spanish regulators and authorities “to investigate what compensation may be available to customers who have lost money due to this collapse”.
A statement from the joint administrators added: “The group’s directors greatly regret this position, having tried all means available to them to rescue the situation.”