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Holders of credit insurance on Thomas Cook Group Plc are drawing up plans to potentially block the U.K. travel agent’s $1.1 billion rescue in order to ensure they get a payout.

The group of hedge funds, including Sona Asset Management and XAIA Investment GmbH, may vote against a bailout led by Fosun Tourism Group at a creditor meeting on Sept. 18 if they don’t secure their payment before then, according to people familiar with the plan. Fosun’s rescue includes a debt-for-equity swap that could prevent compensation on their default insurance.

The hedge funds are drawing up the plans because they fear the conversion into equity swap that’s central to the restructuring may leave their holdings of credit-default-swaps with no debt to insure. This would prevent a payout in accordance with the contracts.

Law firm Fieldfisher LLP is representing them, the people said asking not to be named discussing private information. The investors also bought Thomas Cook bonds entitling them to attend the meeting.

Under the rules of schemes of arrangement — a U.K. court procedure — the investors will need to hold at least 25% of Thomas Cook’s bonds to influence the debt restructuring. Investors hold about $261 million of swaps on Thomas Cook in total, according to the latest data from the International Swaps & Derivatives Association.

Representatives for Fieldfisher, Sona and XAIA declined to comment on the plans.

The group has already contacted Thomas Cook’s financial adviser PJT Partners and the bondholders’ legal adviser Milbank, according to the people familiar with the matter.

Representatives from PJT and Milbank declined to comment.

Thomas Cook declined to comment. As part of the schemes of arrangement, the company may file for Chapter 15 court protection from creditors in the U.S. That could trigger a payout on the default swaps before next week’s bondholder meeting and solve the problem for the insurance holders.

The travel company sought its rescue amid wilting profits as its core north-European customers vacationed at home during successive summer heatwaves. Uncertainty over the economic impact of Brexit has also weighed on demand.

Sona has successfully steered a similar maneuver in the past. The London-based fund ensured payouts on New Look Retail Group Ltd.’s swaps earlier this year by buying enough of the U.K. fashion retailer’s bonds to influence its debt restructuring.

©2019 Bloomberg L.P.

This article was written by Katie Linsell from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to

Photo Credit: A Thomas Cook A321 aircraft. The carrier is working on a rescue plan. Andy Mitchell / Flickr