Supporting travel companies in distress can present particular challenges. When a company fails it can leave people stranded overseas, disrupt once-in-a-lifetime events and trigger significant media, political and regulatory scrutiny.
Recovery news spoke to licensed insolvency practitioners, Michael Solomons, Partner at Moorfields, and from Interpath, Joshua Dwyer, Managing Director and Neil Speight, Director, about the key challenges facing practitioners in this sector.
What makes a travel insolvency different from a typical administration?
JD: “The key thing to keep front of mind is that they are consumer-centric businesses – and when facing financial distress, the scale of the potential wide-ranging disruption is significant – from people being stranded abroad and unable to get home, families having long anticipated holidays being curtailed or cancelled, or important life events like weddings or funerals at risk of being missed.
“This backdrop heightens regulatory scrutiny and potential media coverage and political interest around a travel industry restructuring. It also increases the pressure on those involved to develop holistic solutions and develop strategies to mitigate the fallout from a failure.”
MS: “The main difference is the position of the customer. In a typical retail or manufacturing administration, an insolvency practitioner will focus on creditors, employees, assets, contracts and the prospects of rescuing or selling the business. In such insolvencies the businesses customers are one of the stakeholders, in travel insolvencies they are often the key.
“Customers may have paid months in advance. Some will have bookings due to depart imminently; others may already be travelling. Their money may be protected through a statutory scheme, bond or trust arrangement, and decisions taken in the first hours and days can affect real holidays as well as the value of the underlying business.”
NS: “Another key challenge is that travel and tourism is a global sector – customers, suppliers, employee and assets may be located in multiple jurisdictions around the world. Developing and adapting restructuring strategies that address the overall objectives of preserving and protecting value, whilst mitigating for risks that may emerge in foreign jurisdictions can be a particular challenge.”
How important are ATOL, ABTA and other consumer protection arrangements?
MS: “The first point is not to assume that every travel business has the same protection structure. A travel agent may be acting as an intermediary, whereas the organiser of a package holiday may carry the key responsibility for performance and insolvency protection.
“For an insolvency practitioner, identifying the applicable framework should be an early workstream. The protection body should be treated as an active stakeholder in the case.”
JD: “Potential options and solutions may require regulator support to implement, and therefore timescales for engagement and obtaining necessary buy-in or approvals needs to be factored into any restructuring timetable.”
NS: “The nature of bookings made will also impact on the nature of consumer protections available and the overall strategy – for example someone booking a packaged holiday will benefit from ATOL protection, someone booking a flight and hotel separately will not.”
How do you balance the interests of customers, employees and creditors?
MS: “Customers who are already overseas or have imminent departures may need an immediate answer. Employees need clarity because the business may still need their knowledge and support to service bookings. The protection provider needs accurate information about customer funds and commitments.
“The business does not stop operating simply because a formal process has begun. In some cases, protecting the interests of these groups points in the same direction: preserving a viable operation can protect jobs, retain enterprise value and allow existing bookings to continue.”
NS: “In general, if a business can be sold or transferred and forward bookings fulfilled, then stakeholder interests will be broadly aligned and the impact on customers will be minimised.
“An insolvency practitioner needs to understand the legal framework specific to that business and ask themselves questions like: What are the contract terms? Are customer funds ring fenced and protected? and What funds might have enhanced protections?”
JD: “Like most businesses facing insolvency, employees are often on the front line, dealing with customers and suppliers, while also facing the stress and uncertainty the situation creates in respect of their own roles. Being empathetic to their situation is always key when seeking their continued support.”
What pressures are travel businesses facing today?
JD: “A key challenge is the availability and preservation of liquidity within the business. While liquidity is key in all restructuring situations, in travel businesses, it can quickly evaporate due to factors such as geopolitical shocks and reduced customer confidence affecting bookings and merchant acquirers increasing holdback provisions delaying the release of much needed cash.”
MS: “Some travel businesses have historically depended heavily on search engines, paid advertising, publishers and affiliate partners to generate customer leads. AI-led changes to search behaviour are altering that model, while the loss of a major media or affiliate relationship can remove a significant source of enquiries with very little warning.
“Advisers need to look beyond headline turnover and cashflow to issues like what happens if a major partner leaves and how much of future revenue depends on channels the business does not control.”
What advice would you give travel businesses experiencing financial distress?
JD: “Like most situations, the earlier management recognise potential issues on the horizon and take steps to develop mitigation strategies, the greater the likelihood of a turnaround being achieved and insolvency avoided altogether.
“Businesses in the sector need to maintain agility to respond to external factors that can impact their business models or profitability overnight.”
NS: “Having access to quality management information, in particular maintaining a robust cashflow forecasting model that has input from all key areas of business is important.
“Proactively taking steps to address issues when they emerge, rather than avoiding issues that can escalate, whilst taking critical stakeholders such as regulators, lenders and suppliers on the journey with you is also crucial.”
Case study: Tripsmiths and TS Travel
Following their appointment as joint administrators in May 2026, Michael Solomons and Andrew Pear, Partners at Moorfields, explain how they handled a successful administration of Tripsmiths and TS Travel via a prepack sale.
Tripsmiths had built its business around affiliate revenue, generating leads for escorted tour operators and cruise lines, with TS Travel fulfilling bookings. The businesses had customer protection arrangements through ATOL and the Travel Trust Association (TTA).
The companies encountered a range of challenges, including a slower-than-expected recovery from the pandemic, changes in online search behaviour, the loss of a key media partner and cashflow pressures linked to a deficit in the TTA trust account.
Speed mattered, but so did bringing the TTA into the process from the outset. We maintained regular dialogue as offers were received and worked with the TTA on prospective purchasers rather than presenting it with a completed transaction.
A sale of the business and assets was completed to The Travel Network Group. Existing customer bookings continued, future holidays went ahead and employees transferred to the purchaser.
The protection scheme is not an obstacle sitting outside the process. Indeed, when engaged proactively and constructively, it can play a pivotal role in preserving a viable business and securing a better outcome for customers, employees and creditors.
