Wednesday 16 September 2020 3:35 pm

Travelex creditors take £368m hit after pre-pack administration

Unsecured creditors in troubled foreign exchange provider Travelex are set to suffer heavy losses after suffering a shortfall of more than £368m. 

The majority of the shortfall, around £319m, is owed to bondholders who took control of Travelex but whose identities are unknown, according to the Times

Read more: Travelex debtholders take control with £84m funding

Last month PwC said a pre-pack administration sale of certain Travelex entities had been reached. The Big Four accounting firm said the rescue deal would see the new Travelex group with debts reduced from £385m to £160m, as well as £84m in new liquidity. 

But with the majority of its UK retail business shuttered permanently, the firm was forced to cut 1,300 jobs. 

Now a PwC progress report, seen by the Times, shows that hundreds of creditors include airports, local councils and HMRC. 

The accounting firm estimates that these creditors stand to receive 0.6 pence to less than 0.1 pence in the pound for the Travelex entities that can salvage a dividend. 

Earlier this year the forex company was left devastated by a cyber attack in which hackers held it ransom for over two weeks. 

The damage from the hack was compounded by the coronavirus outbreak, which saw Travelex shut all of its outlets for eight weeks as travel was severely restricted. 

PwC’s report seen by the Times also shows that loans paid to Travelex’s former owner Finablr were never repaid. 

In March, Finablr appointed advisers to prepare for a possible insolvency after the firm became mired in an accounting scandal. 

The following month it said it had a debt burden of $1.3bn, far higher than the figure the board had previously been aware of, which triggered the resignation of auditor EY. 

Read more: Travelex set for restructuring after auction process halted

A spokesperson for PwC said: “As a result of this highly complex restructuring more than 1800 UK roles and 5500 globally were safeguarded. The focus of the sale was on saving as much of the business as was possible at a time of unprecedented disruption.”

“Despite facing a material loss on their original debt, bondholders were prepared to invest new capital in order to preserve the brand and its business.”