10,000s of holidaymakers hit by the collapse of the online travel agent Lowcostholidays have registered as creditors, according to the administrators - but they're unlikely to get money back unless they try a different route such as Section 75 or chargeback. The good news is administrators say the latter method has proved successful for "a significant number".
A copy of the creditors' report from joint administrators Smith & Williamson and CMB Partners, obtained by MoneySavingExpert.com, reveals parent company Lowcosttravelgroup Ltd had an estimated £49 million shortfall in its finances when it collapsed. Lowcostholidays Spain S.L - the subsidiary which most customers booked with - had an estimated deficit of £287m.
Up to 140,000 customers had their bookings thrown into doubt when the online travel agent collapsed on 15 July at the height of the holiday season, with many losing money as a result.
The administrators say they've now received more than 30,000 emails from customers in connection with the administration, with a huge number registering as creditors in the hope of getting some money back when the company's money and assets are divvied up.
But as 'unsecured' creditors customers are far down the pecking order, with redundant employees first in line for a payout. The creditors' report reveals that even as 'preferential' creditors, those staff will only receive £800 each - likely to be less than they're owed in many cases.
Across the five group companies now being administered by Smith & Williamson and CMB, nearly £25m is owed to unsecured third-party creditors, which includes customers.
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'A significant number of customers have obtained refunds'
While Lowcostholidays customers are unlikely to have much joy as creditors, the administrators' report does offer hope by highlighting the successes of those who've tried other avenues, as set out in our Lowcostholidays reclaim guide.
The report says: "A significant number of customers have already obtained refunds, largely facilitated by applications made to credit card companies under Section 75 and via debit card chargeback schemes etc."
Administrators even claim there are likely to be "relatively few consumers that booked with Spain S.L. or the Group, who will remain as creditors" once those who reclaim through other methods have been discounted.
Lowcostholidays customers who've got refunds from third parties such as PayPal or their card provider won't be considered creditors and so won't get an additional payout from the administrators. However you'll still be able to register as a creditor if your PayPal, chargeback or Section 75 claim is currently ongoing.
How can I register as a creditor if I haven't already?
There's still time to register as a creditor if you were affected by the Lowcostholidays collapse - though as above, you're unlikely to get much if anything by way of a refund. To do so email your details to email@example.com.
I'm a creditor - what should I do now?
If you've registered as a creditor by emailing the administrator, you should now have received an email or post invitation to the creditors' meeting, with links to the creditors' report, claim forms and proxy vote forms.
The meeting takes place at 10am on 29 September 2016 at City Temple, 31 Holborn Viaduct, London EC1A 2DE.
At the meeting creditors will be asked if they wish to form a committee which can vote on the administrators' proposals and whether to approve their fees and costs.
The administrators will then prepare a progress report. The process of dividing the company's assets is expected to take over a year.
What do the administrators say?
In a statement, the joint administrators said: "The administrators recognise the frustration felt by people caused by the failure of Lowcost. Since appointment, the administrators have been working to make the best of the very difficult and complex situation arising from the collapse of Lowcost and its subsidiaries, not least by providing information and assistance to the many travellers/customers.
"Since the administrators’ appointment, over 30,000 emails have been received in connection with the administration, and they continue to receive and deal with more.
"The administrators have drafted their proposals and these have been provided to creditors of Lowcost."