News: Germany will pay compensation to customers of the German branch of Thomas Cook
News: Germany will pay compensation to customers of the German branch of Thomas Cook
The collapse of the British travel agency Thomas Cook in September also affected its subsidiaries in various EU countries, including Germany. On Wednesday, the German government promised to compensate the clients of the agency's local subsidiary.
"The state will compensate for the damage," the chancellery said in a statement after the government meeting.
While Thomas Cook Germany agency was insured against bankruptcy with the help of Zurich Insurance Group, the maximum payout of 110 million euros ($122 million) is far from sufficient to cover the expected costs. Last month, the Swiss company said it had already received claims totaling €250 million. However, the final amount is likely to be between €300 million and €500 million, according to experts quoted by the German public broadcaster ARD.
Now the government has committed to fill this gap at the expense of the federal budget.
Preventing "a flood of lawsuits"
The Minister of Justice and Consumer Protection, Christine Lambrecht, said that the money would come from the "unplanned expenses" section of the financial plan. One of the reasons for the Government's promise is to prevent multiple compensation claims that could burden the courts.
"It's about preventing the flow of lawsuits and lengthy legal proceedings, which also bring a very high risk of paying legal fees," Lambrecht said.
Separately, the government said that the collapse of Thomas Cook has raised many "complex legal issues that have not yet been resolved."
"It is unreasonable to expect clients to resolve these complex legal issues on their own.", - the statement says.
"Admission of guilt"
Klaus Mueller, head of the German Consumer Association, praised the government's decision, but also criticized the company's inadequate insurance. Taxpayers will now have to pay for the "political mistake and lobbying success of the tourism and insurance sector."", he said.
Michael Theurer, a senior lawmaker with the business-friendly FDP party, described the government's decision as "an admission of guilt.""."
"You cannot socialize risks and privatize profits," he said.
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