Almost 5,000 consumers could be left out of pocket after the collapse of a claims management company specialising in flight delay compensation.
Administrators were appointed at Manchester-based Flight Reclaim Ltd last month after international travel plummeted due to the pandemic.
A statement of Flight Reclaim’s affairs published last week revealed that the company had debts of almost £3m when it went under. Unsecured creditors are expected to lose around £2m from the £2.4m they were collectively owed.
The document shows that 4,753 consumer creditors are owed £2.45m. These are likely to be customers who opened claims before the company collapsed. There is no indication their claims are still being pursued or what, if any, compensation, they will recover.
Flight Reclaim Ltd was incorporated in October 2014 and is owned by the same people behind Blue Panda Finance, which handles claims for payment protection insurance and payday lending. It pledged that its legal specialist could help secure up to £510 in flight compensation when a service had been re-routed or a connecting flight missed.
According to its most recent abridged accounts, covering the year ending 30 September 2018, the company had assets of around £1.67m and company creditors of £1.8m.
The flight reclaims industry has sprung up in recent years on the back of legislation making it easier to claim for compensation from delayed services of more than three hours. This was followed by a series of challenges by airlines, culminating in the Court of Appeal ruling in February 2019 that Ryanair was entitled to respond directly to passengers with no liability to pay solicitors who may have helped in the claims.
The travel restrictions and plummeting passenger numbers of recent months are likely to have had a major impact on the delay compensation sector. It was reported earlier this month that easyJet's passenger numbers slumped 99.6% in the three months to 30 June. British Airways has said its passenger numbers were down 98% year-on-year in the second quarter of 2020. Continuing quarantine rules on tourists hotspots such as Spain and Croatia are likely to mean numbers are still well down compared on last year – with the knock-on effect of far fewer delayed passengers seeking compensation.