KPMG to manage Thomas Cook liquidation

KPMG has been appointed to manage the liquidation of travel agency Thomas Cook, following the news over the weekend that last-minute negotiations to save the 178-year old firm had failed.

The company has closed with immediate effect, putting over 20,000 jobs at risk, including 9,000 in the UK, and triggering the biggest ever peacetime repatriation that will aim to bring 150,000 British holidaymakers home.

The Big Four accountancy firm will manage the liquidation of the more than 550 Thomas Cook high-street branches across the UK, while AlixPartners has been appointed to liquidate the airline and tour operator companies.

In addition to its 550 shops, Thomas Cook operated 100 aircraft and 180 own-brand hotels, which would have made the firm an attractive investment for would-be buyers.

However, due to its size and enormous running costs, the firm has gone into compulsory liquidation, as opposed to administration.

For a company to go into administration, a professional services company must bear the costs of the business while it looks for a buyer – a job even a company the size of KPMG, or its Big Four counterparts, would not be willing to undertake.

Thomas Cook has reached a size and complexity, while being sustained by £1.7bn worth of debt, that makes managing the administration of the holiday firm something that no professional services company has the capacity or motivation to do.

KPMG will have their work cut out for them as it is, and the firm has said that their immediate priority is to provide support to the employees who have been made redundant.

The government’s Insolvency Service announced the news on 23 September that it had appointed KPMG to liquidate the firm, saying in the statement that Blair Nimmo, Jim Tucker, David Pike, Mike Pink and Ben Leith have been appointed as Special Managers to assist in the liquidation of seven of Thomas Cook’s companies: Thomas Cook Aircraft Engineering Limited, Thomas Cook Retail Limited, TCCT Retail Limited, The Freedom Travel Group Limited, Future Travel Limited, Travel and Financial Services Limited and Retail Travel Limited.

In addition, David Pike and Mike Pink along with Ben Leith, a restructuring director at KPMG, will manage the liquidation process of Thomas Cook Aircraft Engineering.

Andrea Leadsom, the government’s business secretary, announced that she would set up a cross-government taskforce to assist employees and stakeholders of Thomas Cook, and that she would write to the Insolvency Service asking them to fast-track its investigations into the reasons behind the collapse of the firm, including the conduct of its directors.

She said: “This will be a hugely worrying time for employees of Thomas Cook, as well as their customers. Government will do all it can to support them.”

Ordinary shares in the travel agency have been suspended from trading on the London Stock Exchange with immediate effect.