At Antony Batty & Company, we specialise in helping businesses overcome financial challenges with tailored insolvency solutions, with particular expertise in travel industry insolvencies. The case of Isle of Wight Tours Limited illustrates the importance of choosing the right insolvency procedure, with Administration serving as the crucial first step in managing this company’s insolvency, before a Creditors Voluntary Liquidation was used to wind the company up.
This case study highlights the particular challenges that travel company insolvencies present, looks at the financial difficulties faced by the company, the reasons why Administration was chosen, and how our expertise helped ensure a positive outcome for stakeholders during an exceptionally difficult period for the Company.
Background to Isle of Wight Tours Limited
Isle of Wight Tours Limited was a family-run coach operator based on the Isle of Wight. The company specialised in organising group tours across the UK, Ireland, and Europe, with a strong focus on special interest holidays such as dance, bowls, fishing, and reunion events for ex-servicemen and women. While small compared to mainland competitors, Isle of Wight Tours Limited was a significant local employer, supporting around 20 staff members.
Its commitment to providing memorable holidays made it a trusted name in the travel industry. However, the onset of the Covid-19 pandemic fundamentally altered the travel landscape, creating a set of challenges that proved insurmountable for this company.
Challenges Faced by the Company
The travel industry was among the hardest hit sectors during the pandemic, and Isle of Wight Tours Limited experienced a 90% reduction in future bookings almost overnight when the first lockdown was announced by the Government in March 2020. With approximately 2,000 future group bookings scheduled, the company found itself unable to honour these commitments due to insolvency.
The directors demonstrated resilience and determination. Initially applying for finance from the local business group Solent, which was refused, they were able to secure financial support in the form of loans:
- A £120,000 CBILS loan from NatWest.
- An additional loan of £121,000.
- A loan of £100,000 from the sole director, who personally invested in the business.
Despite these efforts, the company was unable to recover from the devastating impact of Covid-19.
Why Administration Was Chosen
When the company contacted Antony Batty & Company, it was clear that an insolvency procedure was necessary because the Company had completely run out of money. Administration was chosen as the initial course of action due to its ability to be implemented swiftly and provide immediate legal protection against creditor actions. This was crucial for safeguarding assets and allowing the company to develop a structured plan for managing its insolvency.
On 29th September 2020, a Notice of Intention to Appoint Administrators was issued, marking the beginning of the Administration process. By 7th October 2020, an Administration Order was made, with the following objectives:
- Achieving a better result for creditors as a whole than would be possible through liquidation.
- Realising property to make distributions to secured and preferential creditors.
The directors opted for Administration because it offered a pragmatic and efficient solution during a time-sensitive crisis. Unlike liquidation, Administration allowed for redundancy consultations and offered the prospect that creditors could receive higher returns.
Actions Taken During Administration
As Joint Administrators, Antony Batty and Hugh Jesseman of Antony Batty & Company undertook a series of actions to address the company’s insolvency and support stakeholders:
- Redundancy Consultation and Employee Support
The redundancy consultation commenced immediately after the Notice of Intention to Appoint Administrators was issued. While certain employees were retained to assist with processing future group bookings and enquiries, the remaining staff were guided through the redundancy process. Their claims were handled promptly via the Redundancy Payment Service, minimising financial hardship. - Refunds for Future Bookings
Ensuring that clients received refunds for future bookings was a complex but critical task. Most payments had been made via credit or debit cards, allowing clients to seek refunds through their card providers under the Consumer Credit Act. For those not covered by the Act, refunds were facilitated through the Bonded Coach Holiday Group (BCH), of which the company was a member. Despite challenges, all clients received their monies back, reflecting our commitment to transparency and fairness. - Realisation of Assets
The company’s assets, including customer lists, properties, and the website, were sold to maximise returns for creditors. While the sale of coaches fell short of expectations due to existing charges, the proceeds from property sales provided some surplus funds. - Discharge of Secured Creditor Obligations
The secured creditor, NatWest, was paid in full, enabling the transition of remaining assets into liquidation for further distributions.
Attempts to sell the business as a going concern were unsuccessful, as other holiday companies faced identical challenges.
Transition to Liquidation
Administration is generally limited to a 12-month period, and in this case, a Creditors Voluntary Liquidation followed to enable dividends to be paid to unsecured creditors. As Joint Liquidators, Antony Batty & Company continued to manage the company’s affairs, ensuring an orderly wind-down and the maximising of creditor returns.
The transition from Administration to liquidation underscores the importance of strategic insolvency planning. While Administration addressed the immediate challenges and protected assets, liquidation allowed for the final distribution of funds in accordance with insolvency regulations.
Testimonial from the Director
Shirley Winn, the director of Isle of Wight Tours Limited, shared her experience with Antony Batty & Company:
“Never in my 42-year career in travel and tourism did I ever think I would need the services of an Insolvency Practitioner, but Covid-19 came along and after a battle to continue to trade it became apparent that the situation with Covid-19 was not going to improve anytime soon. The whole journey was made so much smoother and less painful by the caring nature of everyone involved. Antony Batty & Co took away the angst and stress, ensuring staff received their redundancy payments and supporting me through one of the hardest times in my life.”
This testimonial highlights our dedication to supporting clients during difficult times with professionalism and compassion.
Key Insights
The case of Isle of Wight Tours Limited demonstrates the value of Administration in handling business insolvency. Key takeaways include:
- Legal Protection: Administration offers immediate protection from creditor actions, allowing companies to stabilise and develop a plan.
- Employee Support: The redundancy process was handled with efficiency and care, ensuring employees received their claims promptly.
- Maximised Returns: The structured approach of Administration allowed for higher returns to creditors compared to liquidation alone.
At Antony Batty & Company, our expertise in Administration and specifically in the travel industry in this case ensures that businesses facing financial difficulties can navigate insolvency effectively while prioritising the needs of all stakeholders.
Why Choose Administration?
If your business is experiencing financial distress, Administration offers a robust and practical solution. By safeguarding assets, enabling structured management, and maximising returns to creditors, Administration can help businesses achieve better outcomes. At Antony Batty & Company, we specialise in guiding directors through this process with professionalism, care, and expertise.
