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E-Clear instructed to hand over £35 million Flyglobespan money

PricewaterhouseCoopers, the administrators for fallen Scottish airline Flyglobespan, has today gone public with a demand that £35 million which has been withheld from the company is released immediately by credit firm E-Clear. It looks as though there will be a formal investigation by the UK government with regards to the relationship between Flyglobespan and E-Clear with many concerned that the group collapsed because of this specific funding issue.

At this point in time is unclear exactly why, if the rumours are correct, E-Clear decided to hold back around £35m of funds which were due to Flyglobespan but there has been an ongoing issue regarding the insurance of holiday for those buying through Flyglobespan. The mechanics of the UK travel industry are complicated to say the least, as many holidaymakers are finding out having been left stranded overseas and forced to make their own way home. Unfortunately, it is too late to save the day for the Flyglobespan but the authorities are keen to ensure that a similar situation does not emerge in the future which could bring down more companies.

Funding has been an issue in the UK economy for some months now with UK banks holding back on significant funding after being instructed by the government to "reduce their risk taking". However, this has backfired somewhat in many areas with previously rock solid businesses deprived of much needed short-term capital funding, with many on the verge of collapse.

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