Creditors owed up to 拢650million in total from the collapse of regional airline Flybe may only receive a tiny fraction of their cash 鈥 if they get anything at all.
Joint administrators for the defunct Exeter-based company have revealed about 900,000 claims have already been made and continue to arrive.
The value of cash demanded by unsecured creditors is now at between 拢600million and 拢650million and could become 鈥渕aterially higher once all claims have been received鈥.
Joint administrators at global business consultancy EY are dealing with the claims and said who gets what has yet to be determined.
Latest in the Flybe saga...
But EY has said it intends to make a legal application not to distribute the money which has been set aside for unsecured creditors because it would not be cost effective.
In other words, so little cash is in the pot the creditors would receive hardly anything so it is not even worth distributing it.
EY said there is only a maximum of 拢600,000 in this pot meaning unsecured creditors would get less than 拢1,000 each. Some are owed tens of millions.
An EY spokesperson would only say: 鈥淒istributions to unsecured creditors as part of the administration are yet to be determined and will be communicated to creditors in due course.鈥
Even though joint administrators at EY have completed the sale of the Flybe - renamed FBE Realisations 2021 Limited (in Administration) 鈥 business assets to a new company called Flybe Ltd, which hopes to start flights in 2021, they are still settling claims and collecting in cash from debtors of the original firm.
And they have confirmed the huge scale of debts owed by Flybe before it went into administration in March 2020, after failing to secure a 拢100million Government rescue package.
Large amounts are owed to secured creditors, who own charges over assets and are highly likely to get their money back, including 拢136million to various lenders, 拢127million in mortgages over aircraft and engines and more than 拢11million to Lloyds Bank鈥檚 Cardnet credit card arm.
Already 拢6.6million has been paid to secure charge holders including 拢3.1million to BRAL Trustees from the sale of the Flybe Training Academy to Devon County Council.
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In addition, 拢3.2million is owed to preferential creditors, mainly in wages, holiday and pension contribution claims from hundreds of former Flybe employees who lost their jobs when the firm hit the skids.
EY has said: 鈥淲e currently estimate that preferential dividends will be paid in full towards the end of this year.鈥
That leaves non-preferential creditors, 鈥渆ffectively the company鈥檚 unsecured creditors鈥 according to EY. The joint administrators said they continue to receive claims from creditors 鈥渕ost notably, substantial claims from financiers and lessors鈥.
The five largest claims are from BRAL Trustees, owed 拢96.5million; NAC Aviation, owed 拢90.5millon; Norddeutsche Landesbank Girozentrale, owed 拢82.9million; Environment Agency, owed 拢51.8million; and GE Engine Services, owed 拢17million.
Documents filed at companies house said EY intends to make an application under the Insolvency Act 1986 for an order not to distribute the prescribed part of the assets, set aside for unsecured creditors, on the grounds that 鈥渢he cost of making a distribution to unsecured creditors would be disproportionate to the benefit of doing so鈥.
