Flybe’s largest shareholder has threatened a legal challenge over the regional carrier’s proposed £2.2 million take-over by Virgin Atlantic and Stobart Group, accusing its directors of breaching their duties to investors.

Sky News has reported that London-based asset management firm Hosking Partners, which owns a 19 per cent stake in Flybe, has instructed its lawyers to ‘explore its options’ in the proposed sale to Connect Airways, a consortium made up of Virgin Atlantic, Stobart Group and Cyrus Capital.

According to Sky News, this could include trying to obtain an injunction against the deal, which would prevent the sale from being completed.

Hosking Partners is understood to be concerned that Flybe allowed a ‘false market’ in the company’s shares to develop by failing to update investors on its financial position. It has raised doubts about whether the £2.2 million offer reflects the carrier’s value.

The firm also alleges the handling of the proposal blocked a rival offer from coming to light at a higher price.

The news comes after Connect Airways revised its offer for Flybe when it failed to meet the conditions to secure a £20 million loan to remain solvent. The carrier said the restructuring of the deal was due to its urgent need for liquidity, but Hosking Partners has challenged this claim, saying the airline could have raised funds through the sale of assets, such as those of its take-off and landing slots at Gatwick – some of which it has already agreed to sell to Vueling.

In a statement, a spokesman for Flybe said: “The board of Flybe was faced with a very tough decision based on Flybe’s current difficult liquidity position and the expectation that this pressure will continue.

“Obtaining the revised facility, as announced on 15 January, from the consortium provides the security that the business needs to continue to trade, which preserves the interests of its stakeholders, customers, employees, partners and pension members.

“Flybe will be responding directly to letters received from shareholders.”

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