Thomas Cook Group has filed for Chapter 15 bankruptcy in the Southern District Court of New York, seeking protection from US creditors as it undergoes restructuring in the United Kingdom, Bloomberg has reported.
The petition was filed on September 16. Chapter 15 bankruptcy effectively means that EUR1.15 billion euro (USD1.3 billion) worth of bonds issued in the United States are shielded from local claims and can be a part of restructuring agreed under British law.
The move came after US-based hedge funds holding credit insurance were reportedly reluctant to agree to the proposed restructuring of Thomas Cook unless they first secured their payment.
Meanwhile, the United Kingdom Civil Aviation Authority (CAA) is reportedly drawing up contingency plans in case Thomas Cook fails to secure funding from investors and the tour operator unit fails to renew its licence, the Sunday Times has reported. According to the report, the CAA is readying for the potential need to repatriate "hundreds of thousands" of passengers who are staying abroad and would be stranded if the tour operator collapses.
The tour operator's licence (Air Travel Organiser's Licence) is due for annual renewal on October 1, 2019. Without the renewed ATOL, Thomas Cook would not be able to continue selling travel packages.
ch-aviation understands that the reported preparations have nothing to do with the group's airline units, whose financial standing is much more secure. Their Air Operator's Certificates (AOCs) are also not due for renewal any time soon.
Thomas Cook said in a stock market filing that it had scheduled meetings with creditors and stakeholders, the so-called Scheme Meetings and the Schemes Sanction Hearing, for September 27 and 30, respectively.
The tour operator is currently negotiating a GBP900 million pound (USD1.1 billion) rescue package, split in half between fresh capital injection and a equity-for-debt swap, from the company's largest shareholder, China-based Fosun Group, and bondholders. If finalised, the deal will lead to Fosun Group taking control of the operator itself, with the airline units hived off into a separate entity in which Fosun would take a 25% stake. The tour operator continues to target the implementation of a recapitalisation in early October.
