The impact of bankruptcy on restructuring in the UK tourism sector: XL Leisure EMCC case studies Click for contents Wyattville Road, Loughlinstown, Dublin 18, Ireland - Tel: (+353 1) 204 31 00 - Fax: (+353 1) 282 42 09 / 282 64 56 email:
[email protected] - website: www.eurofound.europa.eu Contents Introduction 1 Company profile 2 Timeline of the company’s collapse 3 Legal context for company bankruptcy and collective redudunacies 7 Administration and redundancy process at XL Leisure 14 Measures to assist redundant XL Leisure employees 21 Lessons learnt 23 Bibliography 25 Annex 1 27 Introduction The collapse of package-holiday giant XL Leisure Group made front-page news in September 2008, with tens of thousands of British holidaymakers stranded in airports across Europe and hundreds of employees made redundant. As the company’s assets were frozen, flights grounded and holidays cancelled, the scale and nature of the meltdown quickly became apparent. Indeed, the operator’s demise was one of the earliest examples of the credit crunch affecting businesses. The size of debt amassed by XL Leisure, its previous failed restructuring, uncontrolled growth and mounting overheads meant that the company had been on the brink of insolvency for some time. The precarious financial situation into which the Group had sunk prior to collapse was only exacerbated by the economic downturn. The resulting hardships for employees and customers have raised questions over the way in which tour operators in the UK are run and how restructuring and insolvency in this industry are managed under less favourable market conditions. © European Foundation for the Improvement of Living and Working Conditions, 2009 1 Company profile 1 XL Leisure Group plc was a large travel and leisure company with offices in the UK, Ireland, France and Germany.