‘There’s not enough money to go round’ says XL’s administrator

Fears that only a small proportion of collapsed airline’s bills will be paid as delayed proposal is issued

Thousands of creditors to XL Leisure, the airlines-to-holidays group that folded in September, will not be invited to a creditors meeting at Wembley Arena next week because administrators have deemed there is no money left in the underlying companies.

The administer, Zolfo Cooper, which was created by a management buyout from its parent company Kroll, last Friday published proposals that reveal creditors to just five of XL’s 13 underlying companies will be invited to attend the 16 December meeting.

The move will mean that many of the 300,000 creditors, including many uninsured individuals who lost their holidays and flights following the firm’s collapse, have lost any chance of getting their money back.

A spokesman for the administrator said: “The reason we have done this is because there are simply no funds left to distribute to unsecured creditors in these companies. The administrator had no preconceptions with regards the funds that could be available when it began. That was what the administration process sought to ascertain. Of course, creditors whose debt amounts to more than 10 per cent of any of the companies total debt can request a meeting with the joint administrators.”

A rival administrator familiar with the situation said: “What the administrator has done is perfectly legal and is intended to save costs. But I imagine there’ll be a few angry creditors who wanted to voice their anger at the meeting who’ll now be denied the chance. It’s a brave decision.”

Last week’s proposal to creditors came out a month later than initially expected after the administrator was granted extra time to sift through XL’s complex affairs.

Major creditors include the Icelandic investment bank, Landsbanki, which was recently taken over by the country’s government, and a number of bond insurers. Reports have claimed that XL owes the Civil Aviation Authority (CAA) £85m and the proposal to creditors seems likely to suggest that the CAA will be a creditor in some form, although it is unlikely to be owed a large amount. A CAA spokesman said none of its representatives plan to attend the meeting. “We ensured we had a £42m bond off XL.” said the spokesman. “That money was to guard against XL going into receivership.”

Last week it emerged that Phil Wyatt, the former boss of XL Leisure, is returning to the travel industry in January with his new venture, Black Pearl Investments, a name taken from the the Pirates of the Caribbean films.

Less than six months after XL’s collapse, Mr Wyatt said: “I would love to be involved in the UK travel business again, but I have no desire to be involved in another large corporation. You can come back too soon.”

Meanwhile, last week senior travel industry figures met with Transport Secretary Geoff Hoon, to call for an extension of consumer protection to the airline industry.