Thomas Cook’s Insolvency – what does it mean for shareholders, employees and customers?

September 30, 2019


The collapse of the beloved UK airline Thomas Cook will have a huge impact, not only on holidaymakers but employees and shareholders. After speculation that the airline would be “saved” by the administration process, there were many who were shocked to wake up last Monday to find the company in liquidation.

So, what does this mean?


Liquidation is a process which involves the life of a company being brought to an end through the winding up of its affairs by a liquidator. The process involves the realisation of the company’s assets for the benefit of its creditors, with any extra split amongst its shareholders.

The bad news for many of the 9,000 employees is that their entitlement for compensation in a liquidation will probably be limited to no more than the statutory minimum redundancy payment, whereas if the business had been sold in an administration process the jobs and the contractual rights of the transferring employees would have been preserved and passed on to the successor business under the Transfer of Undertakings Protection of Employment Regulations (TUPE).

However, some staff have also commenced Employment Tribunal proceedings for the failure of the business to “collectively consult” with them before they were made redundant. Those who worked in branches or offices with 20 or more staff may be entitled to up to 90 days’ compensation if successful in these claims.

For customers, the ATOL scheme will protect those who have booked a holiday with most travel companies in the UK.


As an alternative to liquidation an insolvent company may be placed into an administration. The administration process is usually more appropriate where it is likely that part or all of the business of the company can be “saved” by the administrator selling the operation to a successor operation as a going concern. Often the management of the company in administration is involved with the ongoing business. An administrator can be appointed by the company or its board of directors. However, it is usually the case that an associated bank will have the opportunity to appoint its own administrator and can effectively override the wishes of the company and its directors. That said the bank will often support the directors’ nominee if it feels the candidate is likely to do a satisfactory job in preserving the company assets.

Thomas Cook – what happened?

The Thomas Cook insolvency is striking in that what many would have thought to have been a prime candidate for saving by the administration process with some sort of reconstruction plan, was not deemed to be sufficiently viable to be rescued. The poor performance of the company in recent years, the structural changes to the market, including the gradual demise of the High Street trade and the political uncertainty of international trading together with the fluctuation of exchange rates/air fuel prices are a toxic cocktail that has made this 150+ year-old brand name something that may pass into history.



Contact Our Team
Catherine Burke
View Profile
Damian Phillips
View Profile
Fflur Jones
Managing Partner
View Profile
Gareth Wedge
View Profile
Mark Rostron
View Profile
Nick O’Sullivan
View Profile
Owen John
View Profile
Rhodri Lewis
View Profile
Stephen Thompson
View Profile

I have worked with Darwin Gray for a number of years and the level of service, professionalism and timely response is second to none. I would highly recommend Darwin Gray to any business.”

Becs Beslee
Dice FM Ltd

Darwin Gray have provided us with a first-class service for many years now. They really take the time to understand our business and develop relationships which results in advice and support that is contextualised and effective.”

Rebecca Cooper
ACT Training

We have worked with Darwin Gray for several years and have always found their services and advice to be first class.”

Karen Gale
Stepping Stones Group

An extremely professional and sincere company who make time for your queries and understand the need to break down certain facts and information to ensure everything is understood perfectly. I would highly recommend the company to anyone looking for any type of legal advice”

Gwawr Booth
Portal Training Ltd

PSS has worked with Darwin Gray for many years. We have always received an excellent service. Prompt and professional advice and support.”

Ledia Shabani
Property Support Services UK Ltd

We have used several departments within DG recently and we have been very pleased with an effective, efficient and down to earth service. Very happy thus far and I expect that we will continue to use DG.”

Guto Bebb
Farmers’ Union of Wales

Darwin Gray offer us truly superb services. Very professional, quick and services available bilingually which is very important to us, highly recommend.”

Iwan Hywel
Mentrau Iaith Cymru

My “go to” in urgent and time sensitive cases for direction, support and advice. The team are quick to respond to calls or emails for advice and support on all matters. Always explain complex matters in a way a lay person can easily understand.”

Margot Adams
Guarding UK Ltd