Administrators sorting through £650m of debts run up by Exeter’s stricken airline Flybe are looking to claim cash from the new company which has taken its name - if it turns out to be a soaraway success.
Business consultants at EY Parthenon are keeping a close eye on Birmingham-based Flybe Ltd which has just announced it will be flying on 23 routes to 16 airports in the UK and Europe - with the first flight scheduled between Birmingham and Belfast on Wednesday, April 13.
An update on the long-running administration of the Devon airline revealed EY thinks money could still be claimed from the new firm, which bought the business and some assets of the original Flybe Ltd when it went bust.
It said that although its dealings with the new “Flybe 2” are confidential they are linked “to the future performance of the new ‘Flybe’ business being run by the purchaser”.
It could include raking in cash for valuable landing slots at various airports. No money was paid in respect of these landing slots when they transferred to the new company, but “there remains a contingent recovery by way of deferred consideration.”
Exeter’s Flybe Ltd fell into administration in early 2020 and in March 2021 was renamed FBE Realisations 2021 Ltd. Meanwhile, a company called Thyme Opco Ltd acquired the business and some assets from the administrators and renamed itself Flybe Ltd, in April 2021, commonly referred to as “Flybe 2” by some observers.
A nominal consideration of £1 was paid, with some surviving employees transferring to the new company. The new Flybe has now announced it will base itself at Birmingham Airport and will also have crew and aircraft at Belfast City.
It will fly to Glasgow, Leeds, Bradford, Heathrow, Edinburgh, East Midlands, Manchester, Southampton, Inverness and Newcastle, but is planning international flights to Amsterdam and several French airports.
The administration of the original Flybe is likely to continue until 2024 and EY has revealed that up to £650m is being claimed by more than 900,000 unsecured creditors, but there is no cash to pay them. It estimates these claims will be between £550m and £650m, but with claims still coming in it is “ possible that this figure will be materially higher once all claims have been received and an adjudication process is complete.”
But EY has said it has made an application to the High Court for an order not to make a distribution of cash to these creditors on grounds 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.
The five largest unsecured creditors are BRAL Trustees, owed £96,500,000; NAC Aviation, short of £90,578,757; Norddeutsche Landesbank Girozentrale, which is claiming £82,930,860; the Environment Agency, claiming £57,448,541; and GE Engine Service LLC, owed £17,126,790.
The joint administrators are, however, still raking in money from debtors and can pay some secured creditors. A fourth progress report revealed that in the past six months administrators sold five engines to three separate parties for £3.8m. Two other PW150 engines remain to be sold, a third is being claimed but is subject to other claims, including from insurers.
Meanwhile, £6.8m in cash has been recovered from bank accounts. A further £3.4m has been collected from credit card acquirer firms bringing the total to £14.7m. Since the report a further £433,511 has been received from card acquirers and no more is now likely to come from these types of businesses.
A further £1.8m has been recovered from trade debtors, bringing the total to £7.5m, and £300,000 had been recovered from other debtors. Of the trade debtors, £7.3m is owed from Virgin Atlantic Airways Ltd, of which £4.9m has been received now with more due this year. Another £94,000 is being paid by other debtors. A total of £1.1m has now been recovered from insurance claims and the administrators are seeking a VAT repayment of £1m.
