Originally Posted by
Jonty
That was pretty much my take on it.
This isn’t bring used to block bond holders, bond holders will get a vote on the recapitalisation at a meeting next week.
This is being used to see if some hedge funds, who have taken out CDS on Thomas cook get paid or not. If they do they have said they will vote for the recapitalisation next week. If they don't get paid and they hold more than 25% of Thomas Cooks debt then they can use the threat of derailing the deal as leverage. Or just vote against the deal and the company goes down.
That was my understanding of the situation anyway.
That's broadly right, in basic terms. There's quite a bit more complexity in it than that in respect of the bond holders, the hedge funds and the swaps that are in play. For the swaps to pay out, Thomas Cook would need to be insolvent or deemed to have insufficient means and in a position of default (not a great deal of difference between the two, but there is a technical difference).
If tomorrows meeting deems that Thomas Cook is in that position, again as I've mentioned before, that doesn't trigger the immediate shuttering of check-in desks, but it will significantly undermine confidence within Thomas Cook's supply chain, its ability to obtain continuing lines of credit, future bookings, and the biggest of the lot, liquidity will simply vanish overnight making even relatively simple business tasks difficult.
It is at that point where the doomsday scenario would be a matter of hours, not days away.