Very true but very hard to prove 
Carrying out business while insolvent is criminal but probably just about all companies which went bust were insolvent for a while beforehand, otherwise they would not have gone bust. Incompetence has never been illegal
To get done under this law you need
However, even if all the hotels in Turkey and Greece, etc, got together, all they could do is make the TC board personally bankrupt, which will yield… exactly nothing. Well, a few houses, Ferraris, and last-minute personal pension fund contributions, perhaps, whose value will be consumed in one day’s work by the usual administrator own-pocket-liners like PWC.
Remedies under Chapter 11 are more straightforward – the DIP loan is used in part to fund the litigation on behalf of unsecured creditors, just a fairer system.
Peter_Mundy wrote:
I must admit it puzzled me why the CAA did not simply pay the bankruptcy administrators of TC to carry out the necessary flights instead of chartering from 3rd parties
AFAIU the AOC is revoked immediately when a company goes bankrupt.
Unless the operating subsidiary is a. insolvent itself, or b. providing upstream guarantees to the parent’s lenders, which have been called, it is not bankrupt, and the AOC would remain valid.
Peter wrote:
they could do is make the TC board personally bankrupt, which will yield… exactly nothing.
It would send a strong signal to those in charge of companies that they can not hide behind the “limited” in case they do bad.
I wonder if the introduction of those kind of companies with limited liability were not the beginning of this kind of thing. As long as patrons had to stand for their companies with their own money and all they owned, I bet they were more careful.
TC however has been a problem for a long time: Not the individual branches but the fact that they were way over their head in debt, the interest of which was no longer entertainable… or so several analysts said today. Which of course brings up the question why the profitable parts could not have been kept operating with a look towards sale.
In any event, this thing will have massive consequences for package tour operators and the whole travel industry. Today, most people will book their holidays via different platforms and no longer book via packages. I reckon more and more people will go that way, even though particularly in the UK, package holidays are much better insured than others. But trust in conventional travel agencies will definitly suffer.
I wonder if the introduction of those kind of companies with limited liability were not the beginning of this kind of thing
The Ltd Co goes back maybe 300 years (in the free world) and is essential for free enterprise.
Almost nobody will risk their house, etc. Well, only those who never managed to accumulate any assets, and few such people are any good at, ahem, starting a business and making a success of it.
I suppose very young people have that opportunity, but when you are young you cannot raise finance (ask me how I know, with the Midland Bank manager taking the p1ss out of me in 1979 when I wanted to borrow £700; I later got it from Barclays ).
The rules have gradually been tightened up over the decades. It is harder for a total crook to do a “runner”. Especially repeatedly. But still it is possible. And always will be.
Also, with apologies to Gordon Gekko, greed works very well. It works both ways. TC were greedily exploiting big hotels, raising hundreds of M of working capital by paying them 90 days in arrears (probably 90 days only when aggressively chased for the money) while the hotels were just as greedy in taking easy money from TC, ignoring the possibility of TC taking the business away one day and immediately and totally trashing the hotel.
Today, most people will book their holidays via different platforms and no longer book via packages.
You would think so, because you and I and most on EuroGA do that, but I think most people don’t. I think most still book a package. It has some real advantages; you get a bus picking you up at the airport, etc. Also many love full board holidays (where you never leave the hotel, and you wear the plastic wristband ).
Pity TC wasn’t a Bank. Government wouldn’t allow it to fail if it was.
Same sort of incompetent management. No care for the future of the customer.
Why on earth should a company which in this form wasn’t viable not go bust? Who should pay for it being kept alive, and why should they be forced to do so (there obviously were no volunteers)?
It is part and parcel of a competitive open economy that companies fail. In a well functioning bankruptcy process there shouldn’t even be a need for government funds. In the US the banks are technically able to provide well remunerated and adequately secured debtor in possession finance which allows for the orderly re organisation or sale of going concern assets, under court supervision. Unfortunately this commercial expertise is absent over here.
In the meantime it seems that Slovenian air carrier Adria Airways went into bankruptcy. They are trying to get some loan from the government but their aircrafts are grounded since day or two.
