The budget tour operator Lowcostholidays has gone bust, warning customers already on holiday that they could be asked to pay their hotel bills again and potentially ruining the summer plans of tens of thousands of Britons yet to travel.

Smith & Williamson, which has been appointed as administrator, said in a statement that there were approximately 27,000 customers currently at resorts and 110,000 who had booked trips but were yet to set off. About 55% of the group’s customers are British.

In 2013, the Civil Aviation Authority had warned holidaymakers to avoid booking with Lowcostholidays after the company relocated to Spain, which meant that its holidays were no longer protected under the Atol scheme run by the CAA. This ensures that customers can return home and get their money back if a company goes bust. Lowcostholidays had dismissed these warnings, stating that holidaymakers had protection under a Spanish scheme.

A message on the company’s website on Friday night said: “We deeply regret to announce that the lowcosttravelgroup ceased to trade on 15 July 2016, following exhaustive attempts by the group’s directors to rescue the group, which has been hampered by the recent and ongoing turbulent financial environment.”

The operator told holidaymakers via its website that their flights home would be still be valid, but warned that hotel owners, as well as companies offering services such as airport transfers, may ask them to settle their bills before leaving.

On its website, the company advises customers to claim for any extra payments that they are asked to make to their travel insurer, credit card company or the government of the Balearic Islands, which licensed Lowcostholidays.

Smith & Williamson said the company’s failure “would affect many customers who have purchased flights or holidays, some of whom are on holiday in resorts and some of whom have not travelled as yet. All flights as regards those currently in resorts have been paid for and hence customers will be able to fly home when their holidays are over.”

“Unfortunately, as regards customers who have not travelled, a small number will have problems as regards their flights not having been paid for, and many will have problems as regards their hotel rooms not having been paid for,” the administrator added.

Lowcosttravelgroup was founded in 2004 by Paul Evans, a travel industry executive who started out as a resort manager for Club 18-30. The company has offices in the UK, Spain, Switzerland and Poland, but has already made redundant the majority of its 451 staff, including the 120 based at Gatwick.

Until recently, the Lowcostholidays website had promised holidaymakers: “You can have confidence when travelling with lowcostholidays. We have been successfully trading for 10 years and we have full financial protection arrangements as required by European law. We are established in Spain. Spain, just as the UK does, has financial protection requirements for travel companies. We comply fully with those financial protection requirements.”

The last filed accounts for Lowcosttravelgroup show that the business had sold holidays worth £477m in the year to October 2014, making a pretax loss of £47,000. The company’s auditors resigned in March, following the departure of two directors in December.

Finbarr O’Connell of Smith & Williamson said a number of factors had contributed to the group’s demise, including the EU referendum, which led some customers to delay holiday decisions. “The group experienced significant market headwinds in the run-up to the EU referendum as holidaymakers delayed decisions,” he said. “This was compounded by the leave vote itself and the subsequent fall in value of the pound.

“We are planning to meet with the appropriate Spanish regulators and authorities to investigate what compensation may be available to customers who have lost money due to this collapse.”