The appointment of a liquidator can lead to very different outcomes: some businesses continue under new ownership, whilst others close with substantial job losses. In certain cases, extensive recovery work returns significant sums to customers and creditors.
This article highlights the different outcomes for British Steel, MF Global and Thomas Cook, and why a positive result for one group does not necessarily mean everyone recovers their losses.
British Steel, UK: Operations Preserved and Thousands of Jobs Secured
On 22 May 2019, the High Court placed British Steel Ltd. into compulsory liquidation and appointed the Official Receiver as liquidator. The business continued trading while a buyer was sought.
As of March 2020, parts of its business and assets were sold to Jingye – a major Chinese private steel manufacturer that acquired the company before entering a major compensation dispute, following the plant’s nationalisation by the UK government in 2026. The 2020 transaction secured approximately 3,200 jobs, including operations at Scunthorpe, Teesside and Skinningrove. However, around 400 employees did not receive employment offers, according to the Official Receiver’s announcement.
The sale preserved substantial employment and productive capacity. Nevertheless, the original company remained in liquidation under a different name.
British Steel illustrates how a liquidation can preserve business operations through a sale, with this assessment indicating concerns regarding the outcome of the 2020 transaction, rather than the business’ subsequent performance.
MF Global Inc., US: Full Recovery of Allowed Customer Claims
The US brokerage MF Global Inc. entered liquidation on 31 October 2011. The court appointed James W. Giddens as liquidation trustee, as confirmed by the US Securities and Exchange Commission.
This was a specialist brokerage liquidation under the Securities Investor Protection Act, rather than the UK compulsory liquidation procedure.
By the conclusion of the case in February 2016, approximately $6.9 billion had been distributed to customers, covering 100% of their allowed claims, with the claims accepted in the proceedings. Non-affiliate unsecured general creditors received 95% of their allowed claims, according to the Securities Investor Protection Corporation’s closing announcement.
Arguably this was a strong financial recovery, achieved through more than four years of persistent work. It did not mean the business survived or that customers avoided disruption while awaiting their money.
The case demonstrates that a company’s collapse does not always determine the eventual level of recovery. The assets available, recovery efforts and applicable legal protections all matter.
Thomas Cook, UK: Major Losses with a Partial Recovery for Employees
On 23 September 2019, winding-up orders were made against Thomas Cook Group PLC and associated companies. The court appointed the Official Receiver as liquidator. The official case information records the appointments and states that there was no prospect of a return to shareholders.
The immediate employment consequences were severe. Around 6,000 staff were made redundant within the first few days, according to the Insolvency Service’s 2019 – 2020 annual report.
Some value was preserved. Hays Travel agreed to acquire the 555-store UK retail estate, and the annual report records that the retail sale secured the re-employment of more than 2,000 former employees.
Thomas Cook therefore presents a mixed outcome: substantial losses and disruption, alongside opportunities created by selling a viable part of the business. Sadly, those opportunities did not reverse the wider collapse.
What these cases mean for business owners
These examples suggest that outcomes should be assessed separately for employees, customers, creditors and shareholders. Saving jobs, recovering customer property and returning money to investors are all different measures of success.
They also involved large businesses and, in MF Global’s case, a specialist legal regime. Their results should not be treated as predictions for another company, but instead as learning points on how to best handle liquidation threats.
For founders and directors facing a possible appointment, understanding what can still be preserved and where personal responsibilities arise is a useful starting point. At Essential Counsel, we provide the exact support you may need, depending on your specific business model and situation. In need of assistance to chart a clear path forward, Get in Touch to discuss your circumstances.
Disclaimer: This article provides general information only. It is not legal advice and does not create a solicitor-client relationship. Laws and interpretations change. Readers are encouraged to confirm details with current primary sources or a qualified solicitor.