Finablr - the collapse of travel and a liquidity crunch
(owner of Travelex retail and UAE Exchange)
The trouble started in January with a liquidity crunch which then turned into $100m of undisclosed checks and, most recently, into defaulting on a $300m loan. Its shares have since been suspended from the London Stock Exchange and insolvency options are being reviewed.
Two weeks ago, the Travelex retail business attempted to position itself away from the group. However, with the current collapse of the travel and tourism industry, it is unclear what market the company will be able to serve. This past week, it shut all its UK outlets.
EncoreFX and Alpha FX - too many margin calls
EncoreFX, the Canadian based corporate FX broker founded by Custom House's founder Peter Gustavson, filed for bankruptcy protection this week. It simply stated: "a number of customers to whom the Company granted credit have defaulted on their obligations".
Alpha FX, who reported both strong 2019 numbers and an expectation of a solid 2020 just a few weeks ago, is down by over 60% from its peak after reporting troubles with its hedging book this week. Covid-19 and the associated swings in the FX market have caused 223 of its customers to be hit with margin calls (Alpha had 648 customers as of Dec 2019). Most significantly, it reports: "One client faced with working capital shortages in its own business requires more time to settle its outstanding payment obligations of £30.2m to the Group."
We hope all three companies are able to find ways out of their current difficulties and our thoughts are with those employees, ex-employees and their families having to deal with these difficult times.
Sadly, we do not expect this to be the last of such news in the sector. We wait to see how many other players are severely impacted by the current squeeze.