Creditors accuse MyTravel of 'gross mismanagement'

Former directors of the troubled tour operator MyTravel, who presided over big losses in 2002 and 2003, were accused of gross mismanagement at a High Court hearing yesterday, but the company will not bring any claims against them.

The accusation came from a group of the company's bond-holders who are in court objecting to the group's attempts to force through a restructuring without their consent, which would leave them with only a 2 per cent stake.

Michael Crystal QC, acting for MyTravel's bondholders, questioned whether the company had explored whether there might be claims against some of its former directors for "gross mismanagement''. Mr Crystal represents an ad hoc committee of bondholders, comprising Fidelity Investments, Société Générale Asset Management, Lehman Brothers, and New Star Asset Management, but said he speaks on behalf of 75 per cent of the convertible bondholders.

Mr Crystal cross-examined Peter McHugh, MyTravel's chief executive. Mr Crystal asked: "So there are to be no claims against the directors who were in office when hundreds of millions of pounds of losses were made?'' Mr McHugh replied: "It would not have been appropriate to bring any claims.''

Mr Crystal noted that a number of MyTravel's former directors were "extremely wealthy men'', such as its former chairman David Crossland.

The company made a loss of £911m in 2003. It racked up £1.3bn in debt during an expansion drive but was forced to sell many of those assets. To slash those borrowings, MyTravel proposed last month an £800m debt-for-equity swap and offered its 20-plus creditors, led by Royal Bank of Scotland and Barclays, 88 per cent of the company while shareholders would get 4 per cent. Under that proposal, which was rejected, the bondholders would have got 8 per cent.

The company, which serves almost 7 million passengers a year, has gone to court to obtain the go-ahead for an alternative scheme of arrangement that would not require bondholders' approval, but the bondholders challenge this.

Mr Crystal questioned why problems with the company's accounts took so long to fix. He referred to a statement made in December 2003 that said significant accounting issues continued into 2003. Mr McHugh said: "A series of actions were put in place ... to cure the accounting problem but they were a bigger problem than we understood them to be and to fix them took time.''

Mr McHugh said there had been frequent discussions between the company and its advisers regarding the risk that the company might have to go into administration. He is set to receive a £2m bonus on completion of the restructuring.

The hearing continues.

Travel
travel
News
Tim Vine has won the funniest joke award at the Edinburgh Festival 2014
peopleTim Vine, winner of the Funniest Joke of the Fringe award, has nigh-on 200 in his act. So how are they conceived?
News
Jamie and Emily Pharro discovering their friend's prank
video
Arts and Entertainment
Taylor Swift crawls through the legs of twerking dancers in her 'Shake It Off' music video
musicEarl Sweatshirt thinks so
PROMOTED VIDEO
News
Our resilience to stress is to a large extent determined by our genes
science
Travel
travel
Sport
sportBesiktas 0 Arsenal 0: Champions League qualifying first-leg match ends in stalemate in Istanbul
News
Pornography is more accessible - and harder to avoid - than ever
news... but they still admit watching it
Arts and Entertainment
The eyes have it: Kate Bush
musicKate Bush asks fans not to take photos at London gigs
News
i100
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Sport
Manchester United are believed to have made a £15m bid for Marcos Rojo
sportWinger Nani returns to Lisbon for a season-long loan as part of deal
News
news
News
i100
Arts and Entertainment
O'Toole as Cornelius Gallus in ‘Katherine of Alexandria’
filmSadly though, the Lawrence of Arabia star is not around to lend his own critique
Life and Style
fashion
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Quantitative Developer

£700 per day: Harrington Starr: Quantitative Developer C++, Python, STL, R, PD...

Web developer (C#, MVC4, HTML5, CSS3, Javascript, Jquery)

£30000 - £44000 per annum + Bonus+Benefits+Package: Harrington Starr: Web deve...

Senior Automation QA Engineer (Java, Selenium WebDriver, Agile)

£40000 - £65000 per annum + benefits+bonus+package: Harrington Starr: Senior A...

Web developer (C#.NET, ASP.NET, MVC3/4, HTML5, CSS3, JAVASCRIPT

£35000 - £45000 per annum + benefits+bonus+package: Harrington Starr: Web deve...

Day In a Page

Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

BBC faces corruption allegation over its Sir Cliff police raid coverage

Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home
Lauded therapist Harley Mille still in limbo as battle to stay in Britain drags on

Lauded therapist still in limbo as battle to stay in Britain drags on

Australian Harley Miller is as frustrated by court delays as she is with the idiosyncrasies of immigration law
Lewis Fry Richardson's weather forecasts changed the world. But could his predictions of war do the same?

Lewis Fry Richardson's weather forecasts changed the world...

But could his predictions of war do the same?
Kate Bush asks fans not to take photos at her London gigs: 'I want to have contact with the audience, not iPhones'

'I want to have contact with the audience, not iPhones'

Kate Bush asks fans not to take photos at her London gigs
Under-35s have rated gardening in their top five favourite leisure activities, but why?

Young at hort

Under-35s have rated gardening in their top five favourite leisure activities. But why are so many people are swapping sweaty clubs for leafy shrubs?
Tim Vine, winner of the Funniest Joke of the Fringe award: 'making a quip as funny as possible is an art'

Beyond a joke

Tim Vine, winner of the Funniest Joke of the Fringe award, has nigh-on 200 in his act. So how are they conceived?
The late Peter O'Toole shines in 'Katherine of Alexandria' despite illness

The late Peter O'Toole shines in 'Katherine of Alexandria' despite illness

Sadly though, the Lawrence of Arabia star is not around to lend his own critique
Wicken Fen in Cambridgeshire: The joy of camping in a wetland nature reserve and sleeping under the stars

A wild night out

Wicken Fen in Cambridgeshire offers a rare chance to camp in a wetland nature reserve
Comic Sans for Cancer exhibition: It’s the font that’s openly ridiculed for its jaunty style, but figures of fun have their fans

Comic Sans for Cancer exhibition

It’s the font that’s openly ridiculed for its jaunty style, but figures of fun have their fans
Besiktas vs Arsenal: Five things we learnt from the Champions League first-leg tie

Besiktas vs Arsenal

Five things we learnt from the Champions League first-leg tie
Rory McIlroy a smash hit on the US talk show circuit

Rory McIlroy a smash hit on the US talk show circuit

As the Northern Irishman prepares for the Barclays, he finds time to appear on TV in the States, where he’s now such a global superstar that he needs no introduction
Boy racer Max Verstappen stays relaxed over step up to Formula One

Boy racer Max Verstappen stays relaxed over step up to F1

The 16-year-old will become the sport’s youngest-ever driver when he makes his debut for Toro Rosso next season
Fear brings the enemies of Isis together at last

Fear brings the enemies of Isis together at last

But belated attempts to unite will be to no avail if the Sunni caliphate remains strong in Syria, says Patrick Cockburn
Charlie Gilmour: 'I wondered if I would end up killing myself in jail'

Charlie Gilmour: 'I wondered if I'd end up killing myself in jail'

Following last week's report on prison suicides, the former inmate asks how much progress we have made in the 50 years since the abolition of capital punishment