- The FTI Travel Group will ultimately be dissolved.
Struggling travel company FTI, buried under a billion euros in debt, is now being dissolved. The Munich District Court has initiated insolvency proceedings against the two main entities, FTI Touristik and BigXtra Touristik. Insolvency administrator Axel Bierbach has announced the layoff of 700 employees. Majority of the estimated 350,000 creditors, primarily package tourists, will receive their pre-paid amounts from the German Travel Security Fund (DRSF).
However, the scenario varies for approximately 2,500 hotels, travel agencies, airlines, banks, and the federal government's stabilization fund (WSF), as per Bierbach. WSF, which lent around 600 million euros to the third-largest European travel conglomerate, FTI, during the pandemic, is yet to determine the final payout to its creditors.
Hotels continue operations
FTI declared bankruptcy in June due to decreased bookings, partner demand for upfront payments, and financial exhaustion. At the time of bankruptcy, FTI Touristik had around 30 million euros, as Bierbach mentions. Lack of funds for compulsory security certificates at DRSF led to the cessation of trip sales, Bierbach adds.
Approximately 60,000 vacationers departed safely, and all new trips were halted. Out of the 11,000 employees worldwide, around 7,500 still work in hotels on site, whose operations continue uninterrupted. More than 320 German employees have already found new jobs, thanks to job fairs with FTI clients and competitors like Tui, DER, DB, and Jochen Schweizer at the FTI headquarters in Munich. Around 600 employees will receive their termination notices from September 1st. An additional 130 will remain employed briefly for liquidation assistance. The liquidation is expected to be completed by the end of the year.
Subsidiaries sold
FTI's primary assets consist of 54 hotels with 12,000 rooms, including rented long-term properties. Except for one, all these hotels will continue operation and are expected to be sold. Several potential buyers are interested, and negotiations are already progressing in several cases, Bierbach mentions.
Several companies with several hundred employees, such as the luxury travel provider Windrose, the Erf24 service center in Erfurt, and the online platform 5vorFlug, have already been sold from the 110 FTI subsidiaries.
The first creditors' meeting will be held in Munich on November 20th. "I think few will attend," says Bierbach: Majority of the 350,000 creditors do not have substantial claims against the insolvency administrator warranting this trip.
FTI liquidation spans years
"The entire liquidation will take years," says Bierbach. "This is a marathon."
Approximately 175,000 travelers had already paid for their trip in full or part. Attempts to rebook them with other organizers failed just before the summer holidays. They will receive the money for the package tour from the DRSF - affecting 90% of vacationers. However, some travelers had additionally booked excursions. Money paid for these excursions is not replaced by the DRSF; the claim can, however, be asserted against the insolvency administrator.
Customers who had booked individual services with FTI can submit their claims to the insolvency table. However, the insolvency administrator encourages customers to initially use the refund routes via the DRSF and payment service provider to avoid clogging the procedure.
Travel agencies typically receive their commission after their customers have departed. Whether this is the case when departure does not occur and possibly no damage occurs due to the travel agency selling an alternative trip, needs to be examined, says Bierbach.
Despite the dissolution of FTI Tourism, several of its hotels continue operations and are expected to be sold to interested buyers. The WSF, which lent 600 million euros to FTI during the pandemic, is yet to determine the final payout to its creditors in this liquidation process, overseen by insolvency administrator Axel Bierbach.
As part of the liquidation, FTI's primary assets, including its 54 hotels, will be sold, with negotiations currently underway with several potential buyers for all but one of these properties.
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