September 24, 2019 / 8:38 AM / 22 days ago

Windfall for investors that bet on Thomas Cook collapse

FILE PHOTO: General view of Thomas Cook headquarters in Mallorca as an announcement is expected on the tour operator's attempts to secure 200 million pounds in extra funding to reach agreement over its recapitalisation and secure its future, Palma de Mallorca, Spain, September 23, 2019. REUTERS/Enrique Calvo

LONDON (Reuters) - A panel of bankers has ruled that some investors in Thomas Cook’s (TCG.L) credit derivatives worth as much as $2.7 billion are eligible for a payout following the world’s oldest tour operator’s collapse on Monday.

The Credit Derivatives Determinations Committees (DC) said in a statement posted on its website on Tuesday that its EMEA panel had determined at a meeting on Monday that a bankruptcy credit event had occurred.

That ruling by the DC, which is made up of representatives from big banks, means that most holders of Credit Default Swaps (CDS), instruments used to insure exposure to credit, will get paid for their bets against the company.

The weekly gross notional value for Thomas Cook’s CDS was $2.69 billion, according to the Depositary Trust & Clearing Corp (DTCC).

The ruling applies to credit derivative transactions with a scheduled termination date on or after Sept. 23 and doesn’t apply to transactions with a termination date of Sept. 20, the statement said.

The judgement comes after hundreds of thousands of holidaymakers were stranded on Monday by the demise of the company, sparking the largest peacetime repatriation effort in British history.

The liquidation marks the end of a British company that started in 1841 running local rail excursions and grew to pioneer the family package holiday.

Reporting by Josephine Mason and Karin Strohecker; Editing by Mark Potter

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