The former directors of Thomas Cook, one of Britain’s biggest travel companies, are to be officially cleared by the government’s bankruptcy watchdog after an investigation lasting more than two years.
Sky News has learned that the Insolvency Service has concluded its investigation into the collapse of Thomas Cook, which was forced into compulsory liquidation in September 2019 after last-minute bailout talks failed.
Full details of the insolvency service’s findings were unclear on Wednesday, but a source familiar with the process said it had decided there was no basis for further action against the tour operator’s bosses.
The development comes just under nine months before a statutory three-year deadline for the watchdog to complete its investigation.
In a letter to the Insolvency Department on the day of Thomas Cook’s collapse, then Business Secretary Andrea Leadsom urged it to deal with the investigation as a matter of priority, “given the importance of this matter and its implications for thousands of customers and employees”
“I ask that the Official Receiver’s investigation not only address the conduct of the directors immediately before and during the insolvency, but also whether any action by the directors caused harm to creditors or pension plans. “, she wrote.
It was unclear on Wednesday whether the inquiry’s review of former Thomas Cook directors, which looked at issues such as whether the company traded while insolvent or released misleading financial statements, raised significant concerns.
The Collapse of Thomas Cook followed by months of frantic talks aimed at raising hundreds of millions of pounds in funding to keep it afloat.
Its liquidation caused thousands of job losses and a huge repatriation effort led by the Civil Aviation Authority, the largest of its kind in peacetime.
The early exoneration of the travel agency’s board members will come as a relief to Peter Fankhauser, chief executive of Thomas Cook at the time of its collapse.
Other former board members included Warren Tucker, a former British Airways executive, and Lesley Knox, director of Legal & General.
An investigation by the House of Commons Business Select Committee – chaired at the time by Labor MP Rachel Reeves – said its directors had shown “a lack of defiance in the boardroom as the company was accumulating debt and Thomas Cook management was missing opportunities to reduce debt levels and give the business a viable future.
The threshold for further action such as disqualification proceedings against the directors is high, however, and Thomas Cook’s slow demise has been attributed by many in the travel industry as having been largely the consequence of an inability to adapt to changing consumer behavior.
The Insolvency Service has brought disqualification proceedings against bosses involved in other significant business collapses in recent years – including at BHS, the department store chain previously owned by Sir Philip Green.
He is also seeking assembly bans against a number of former directors of Carillion, the construction giant that went bankrupt in 2018.
Thomas Cook had been in talks with creditors for several months over a complex financial restructuring but ran out of time in September as it approached the renewal of its ATOL license with the Civil Aviation Authority (CAA).
Fosun, the Chinese leisure and tourism group which was a big shareholder in the London-listed company, had agreed to help in a £900m bailout deal, but talks broke down when it emerged that the Lenders were demanding an additional cushion of £200million during eleventh-hour negotiations.
Industry watchers later pointed out that any bailout deal would have been undermined by the emergence of the COVID-19 pandemic less than six months later.
Fosun has since unveiled the revival of the Thomas Cook brand as an online travel agency.
A separate investigation into the audit of Thomas Cook’s financial statements in the two years to 30 September 2018 continues to be conducted by the Financial Reporting Council.
Sky News reported last month that Thomas Cook’s liquidators had launched a bid to offload its small stake in the company behind air traffic control operations in the UK.
Many of its high street shops were bought following its collapse by Hays Travel, the private company.
In response to the Sky News report, a spokesperson for the Insolvency Service said: “The winding up of the Thomas Cook Group is a complex and significant insolvency, with the Official Receiver carrying out his duties to ensure an orderly liquidation of the company. travel business failed in the interests of creditors.
“Based on the findings of the Official Receiver following an investigation into the conduct of the directors of Thomas Cook, the Insolvency Service does not currently intend to commence disqualification proceedings against the directors.”