A technical question for the beancounters


Flybe, Europe’s largest regional airline, has collapsed into administration less than two months after the government announced a rescue deal.

OK, shrug.


However, the airline’s owners Connect Airways – a consortium of Virgin Atlantic, Stobart Air and hedge fund Cyrus Capital – have pulled the plug, a little over a year after buying it.

Ah, but. So, rather famously they transferred the Heathrow landing slots – worth, apparently, £65 million – out and into Virgin. Or summat like that. Those landing slots being one of the very few things in there that had any value. They also paid only £2 million for the equity.

Sure, they apparently put more capital in but that was aided by having charges over absolutely everything else that was of any value at all.

So, there is something along the lines of fraudulent transfer. No, of course, not, I am not alleging that here. But if the administrator or receiver or whatever things that assets were transferred out, unrighteously, of the soon to be bust organisation there can be a certain “Ahem” and can we have it back please. For the creditors, you unnerstan.

So, how far back can that go? And is it, by chance, 12 months and no more?

6 thoughts on “A technical question for the beancounters”

  1. More legal than bean counting?

    Wrt the transfer to Virgin or elsewhere: Ignoring the when issue, if the assets transferred across were worth £65 million, they presumably would have been transferred / sold for £65 million – no diminution of balance sheet value within Flybe? Ie, Flybe would have had to have sold the slots to Virgin deliberately under value for the creditors of Flybe to be concerned? Is there any evidence of a “loss on sale” in Flybe?

  2. Dennis, CPA to the Gods

    That’s a legal question, not an accounting question.

    I don’t know that answer, but I’d bet that many lawyers vetted the decision before it was made.

  3. Transfer at undervalue is two years I believe, PF is quite correct in that as long as was an arms length transaction the creditors of Flybe have no recourse. Unsure how much of a market there is to actually check the open market value on the slots to prove this though.

  4. Well, right this moment would be an excellent time to argue that a slot is worth the square root of fuck all, wouldn’t it?

    Hypothetically, of course, only if you really really had to do it, and isn’t a dead airline so lucky they could sell it to you for a far higher price some time ago.

  5. BiG

    The only way the slots (rather than the land itself) gets to TSROFA is by Boris opting for a shiny new airport on the other side of town…

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