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Navigating insolvency in the leisure and holidays sector

The leisure sector has grown at a remarkable pace over the last few years. However, in the last 12 months, this sector has been widely impacted by a number of high profile insolvencies. Following a weakening of the pound sterling against other currencies, businesses across the leisure sector have seen a steady increase in the cost of leisure and travel, whilst the rate of uptake has fallen dramatically due to geopolitical risks such as war, terrorism and disease.

During the course of 2016 and throughout 2017, we advised on one of the most significant leisure sector casualties in recent times, All Leisure Group plc, a travel and tour operating company.

The challenge

A travel company’s cash flow is largely funded by customer deposits. In an uncertain trading environment, management teams within the travel industry have been forced to consider carefully the ability to continue to trade in such difficult and sector specific circumstances.

In addition, travel companies are also faced with greater burdens than most other sectors concerning consumer protection. Such legislation is borne largely out of the collapse of travel companies in previous decades which have left hundreds of thousands of travelers stranded abroad. A travel company is therefore subject to stringent requirements should it seek advice, or be advised to seek, advice from an insolvency practitioner or any other person relating to its financial position or ability to continue to trade.

What made the All Leisure case particularly challenging therefore, was the need to engage with key regulators and seek a collaborative arrangement at an early stage whilst continuing to trade the business in order to ensure that a pre-pack sale of the tours business could be facilitated.

In respect of All Leisure's cruise business, the matter was also challenging due to the confluence of insolvency and complex maritime law.

Eddie Williams

Partner, Grant Thornton

It was a high level of service provided by the right people with the right expertise; but above all, it was due to the project management, leadership and commitment of the lead partner and the restructuring team within Pinsent Masons. The project involved multiple disciplinary requirements and the way in which the people worked together to deliver answers to some quite technical questions was a very important part of the success.

The solution

We acted for the board of directors in a complex restructuring involving taking a collaborative approach with key sector regulators, which enabled the successful pre-pack sale of the tours business. We also advised in relation to the subsequent administration of the cruise business, spanning across several legal jurisdictions and requiring an unravelling of the intricate interaction between international, local maritime and insolvency law. This enabled us to deliver a pragmatic solution whilst preserving value for creditors.

It was vital for the tours business to continue trading to preserve value while a sale of its business and assets was pursued. The power of the regulatory body in the travel sector should not be underestimated. The time limits for a distressed company to report to the CAA, the statutory corporation which oversees and regulates all aspects of civil aviation in the UK, are specific and short. Failure to comply may result in the CAA revoking, suspending or varying an ATOL licence. Such an event would result in the business immediately ceasing to trade given its inability to trade without a license.

Some regulatory bodies have, however, demonstrated that they will refrain intervention whilst a financial solution is pursued - provided that a more positive result can be achieved.

In complex cases, such as All Leisure, a collaborative arrangement with key sector regulators is often the best option available to a distressed company. Throughout the sale of the tours business, the CAA were kept materially informed, and involved in the sale process, vetting and approving any proposed purchaser and negotiating the terms of the sale agreement.

Pinsent Masons' intricate understanding of leisure sector regulation and the collaborative approach adopted enabled the key regulators to satisfy themselves that a more positive outcome would be achieved if the company continued to trade and if no trading restrictions were imposed, which in turn facilitated a pre-pack sale of the tours business.

In addition to satisfying the regulators, the firm also had to navigate the complex interplay between insolvency law – which is, on the whole, a prescriptive and well established area of law – and areas of aviation and maritime law which can become more complex when mixed.  For example, maritime law subverts the usual order of creditor priority.

Pinsent Masons had to overcome complex and time critical issues to release a vessel owned by the cruise business from arrest and secure a sale of the asset, whilst preserving value for creditors. Our team obtained a partial moratorium in the Singapore High Court, the location in which the vessel was docked, which prevented any further creditors from detaining the asset and further frustrating a controlled sale process.


Approximately 160 direct jobs were rescued as a result of our legal strategy and advice to the board of directors. All Leisure group was one of the largest employers in Market Harborough, the pre-pack sale therefore had significant impact locally.

The holiday bookings of 13,000 people were saved. This enabled future holidays to take place and prevented a significant claim being made against the CAA and credit card companies.

The deal also saw the creation of new data protection case law, providing reassurance for insolvency practitioners seeking to protect a valuable asset such as data. We successfully argued that customers' personal details should not to be disclosed in the statement of affairs of the administration. We were granted limited disclosure in order to protect commercially sensitive information.

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