U.S. Markets close in 1 hr 14 mins

Thomas Cook Files for U.S. Bankruptcy Protection

Irene García Pérez and Katie Linsell

(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.

Thomas Cook Group Plc has filed for Chapter 15 court protection in the U.S. as part of a broader debt restructuring for the U.K. travel agent.

The company’s Chapter 15 petition was filed in the Southern District of New York, court papers dated Sept. 16 show. Law firm Latham & Watkins is representing the company, according to the documents.

Chapter 15 of U.S. bankruptcy law shields foreign companies from lawsuits by U.S. creditors while they reorganize in another country. The filing may also trigger the payout of default insurance on Thomas Cook debt.

Read more: Thomas Cook Rescue Under Challenge From Hedge-Funds Plan

The travel agent’s creditors are set to vote on Sept. 27 on a proposed scheme of arrangement, a U.K. court procedure that will allow Chinese investor Fosun Tourism Group to lead a planned rescue of the company.

Thomas Cook proposed to swap 1.67 billion pounds ($2.07 billion) of bank debt and bonds for 15% of the equity and at least 81 million pounds of new subordinated notes, which will pay interest with more debt, according to the documents. After the injection of at least 900 million pounds of new money, Fosun will hold 75% of the shares of the tour operator arm and up to 25% of the airline.

The case is Thomas Cook Group Plc, 19-12984, U.S. Bankruptcy Court for the Southern District of New York.

(Adds restructuring plan details in fifth paragraph)

To contact the reporters on this story: Irene García Pérez in London at igarciaperez@bloomberg.net;Katie Linsell in London at klinsell@bloomberg.net

To contact the editors responsible for this story: Vivianne Rodrigues at vrodrigues3@bloomberg.net, Luca Casiraghi

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.