Sep 25, 2019

Thomas Cook faced ‘running out of cash by October 4’

Thomas Cook would have run out of cash within days, according to a court witness statement by its chief executive that paints a desperate picture of the fragile state of the company's finances in the run-up to its collapse. The travel group was facing demands of almost £500m from a long list of hotel partners and creditors at the end of September, according to insolvency documents filed by the company seen by the FT. But it was left with just £956,670 in group cash reserves and £31.2m in bank accounts when it went bust, which led chief executive Peter Fankhauser to conclude that the "Company will run out of cash by 4 October 2019 and probably earlier". The documents shed new light on how Thomas Cook management battled to save the group, including numerous conversations to sell part or all of the business in the months before its demise. The company's fortunes deteriorated sharply during the summer months, leading to a frantic race to raise cash. According to the documents, third-party payment service providers that collected significant amounts of cash from customers, including Concardis and Nets, Barclaycard, UniCredit and American Express, "Took steps to mitigate their financial exposure to the group, such as by withholding cash collections and cancelling the payment services which they provide to the group".

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