My Travel Rescue Plans Blocked
A High Court judge has blocked holiday firm MyTravel's rescue plan, raising fears the company could collapse.
The company had put forward a deal to restructure £800m ($1.47bn) of its debt through an equity swap that will leave bondholders with an 8% stake.
MyTravel's bondholders had rejected the deal and MyTravel had hoped to get court backing for its rescue plan.
MyTravel, whose brands include Airtours and Going Places, is due to present a revised plan to the court at 2pm.
Failed ambitions
MyTravel has offered the bondholders an 8% stake in the restructured company, with shareholders getting 4% and the rest - 88% - for its lenders.
The company, which raked up huge debts after an unsuccessful expansion drive, had earlier warned the bondholders that it may halve their stake to 4% if forced to seek permission for the scheme from the courts.
Its bondholders, including Fidelity, Societe Generale, Lehman Brothers, and New Star Asset Management, have argued that MyTravel does not have the legal right to take such action.
In addition to its failed expansion efforts, MyTravel was also hit by accountancy errors, and suffered heavily from the post-September 11 downturn in travel.
The slump left the firm with high costs and many unsold holidays, and despite efforts to cut expenses by shedding thousands of jobs and selling businesses its debt mountain has grown.