p10-11 News Apr24 22/4/09 18:40 Page 10
news freedom direct collapse
ttglive.com
Freedom Direct Holidays became the latest high-profile travel
FREEDOM ADMINISTRATORS.
industry collapse last week after hitting problems renewing
its Atol – but a corporate rescue company says the Newcastle
Potential buyers
retailer might have been saved. Lee Hayhurst reports
in takeover talks
Rescue call came
THE ADMINISTRATOR of Freedom Direct Holidays
has entered into talks with parties interested in
buying what remains of the company.
Mike Pott, recovery and insolvency partner at
RMT Accountants and Business Advisors, blamed
the collapse on the firm’s failure to finalise
‘10 days too late’
company accounts for the CAA by a March 31
deadline.
This meant the firm could not renew its Atol
bond and was unable to accept client money for
existing bookings or take any new Atol business.
“This demonstrates how quickly a business
CORPORATE recovery round of renewals in can fail if its accounts are not available for
specialists that tried March after it was specific deadlines and we would advise any
to rescue Freedom asked to provide more business which may be in this situation to seek
Direct Holidays last week said they could have security. It had been trading without being able professional advice as early as possible,” he said.
saved it had they been brought in 10 days earlier. to take new Atol bookings or collect monies on Pott said there was an attempt to save
The Newcastle-based online retailer failed bookings made since the March 31 deadline. the company by renewing its Atol bond or
leaving 10,000 forward bookings, 200 customers Photi said firms such as Freedom Direct transferring its business under another firm’s
abroad and an estimated £2 million bill for the operated on very small margins and that not Atol after RMT was brought in on April 14.
CAA on top of its £750,000 bond. being able to take bookings for 16 days would But he said time constraints meant this was
Chris Photi, senior partner at White Hart have had a serious impact on cashflow. not possible and the directors were forced to
Associates, and who runs International Rescue Freedom Direct was looking to join another accept the business had to stop trading.
with All Leisure Group chairman Roger Allard, group, thought to be the Travel Trust Association, “While it has been necessary for Freedom
said the rescue attempt came too late. to work under an umbrella-Atol before it failed. Direct Holidays to cease trading, there is still
Speaking at an Abta seminar this week, Photi Its 100 staff were told the news on Friday the possibility that another travel operator
said: “The top two reasons why companies fail is afternoon after ttglive.com exclusively revealed could take over the business,” said Pott.
not understanding their own financial position that directors had called in administrators. “We are currently in discussions with a
and not taking professional advice early enough.” Shortly afterwards a statement appeared on number of interested parties.”
Freedom Direct had been unable to renew its its website from director Martin Jones, who was A meeting of creditors to appoint a liquidator
Atol bond with Royal & Sun Alliance in the latest unavailable to speak to TTG this week. will take place on May 5.
NEWCASTLE RETAILER.
Collapse partly due to bonding
issues, says boss of Monster
The collapse of Freedom Direct Holidays last Atol bonding following exposure to the XL Leisure
week was a sign of the times, according to a Group collapse. He also blamed a lack of clarity
fellow Newcastle agent. Lee Hayhurst reports from the CAA over liability when a firm collapses. Monster Holidays’ David Hawke: pleased to work under a Co-op Atol
“There are guys like Freedom who have been
THE INCREASED risk of doing Atol business in whiter than white with the CAA and as a result That led us to go down this route, rather than
worsening market conditions caused Freedom were sitting on a big liability, while others have getting our own bonding,” he added. “If we
Direct Holidays’ collapse, according to a fellow not,” he said. had not done that we would be in a very difficult
Newcastle travel agent. Hawke opted to join the Co-op’s Freedom situation, looking to get a bond on the back of
Monster Holidays was set up last year by former Travel Agents’ Consortium and work under its our first year with a not good trading outlook.”
Thomson head of call centres David Hawke, who Atol, a decision he said was vital for the firm’s Hawke said the firm was looking to grow after
described the Freedom’s demise as “very sad”. survival in its first year. a first year in which it had pursued a volume-
A friend of Freedom boss Martin Jones, Hawke “A friend had set up a company a year previously growth strategy, and had taken gross turnover to
believed the firm’s problems were associated with and had severe problems on the bonding front. £18 million, at least £2 million short of target.
10 24.04.2009
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