News

Virgin Atlantic files for bankruptcy protection in the United States

5 Aug 2020 by Tom Otley
Virgin Atlantic Boeing 787-9

Virgin Atlantic has filed for bankruptcy protection in the United States.

The filing under chapter 15 of the US bankruptcy code allows a foreign debtor to shield assets in the country.

The airline is emphasising that the filing is not under chapter 11 and is not a bankruptcy filing. Rather it is “a filing which supports the solvent recapitalisation of the airline”.

It says that there is no affect on bookings made with it, though it will increase travellers doubts about the airline after sister airline Virgin Australia, went into administration in April.

Bain Capital bought Virgin Australia and has outlined plans today to cut 3,000 jobs

Virgin Australia moves to an all-B737 fleet as part of relaunch plan

The court filing in the U.S follows yesterday’s moved in the High Court in the U.K where the airline said, according to reports on Bloomberg, that it will “run out of cash next month unless it secures approval for a 1.2 billion-pound ($1.6 billion) rescue package announced in July”.

The rescue package is essential, since without it “available cash will drop to about 49 million pounds by late September, below the 75 million pounds specified in bondholder contracts”

In that event, the airline would then have to sell its Heathrow slots against which the bonds are secured, “forcing the carrier to fold”.

Speaking yesterday, a Virgin Atlantic spokesperson said: “Virgin Atlantic attended court today as part of a solvent recapitalisation process under 26(A) of the UK Companies Act 2006. That process is proceeding with the support of the majority of our creditors.”
“Following the UK hearing held earlier today, ancillary proceedings in support of the solvent recapitalisation were also filed in the US under their Chapter 15 process. These ancillary US proceedings have been commenced under provisions that allow US courts to recognise foreign restructuring processes.”
“In the case of Virgin Atlantic, the process we have asked to be recognised is a solvent restructuring of an English company under Part 26A of the English Companies Act 2006.”
“We remain confident in the restructuring plan.”
Loading comments...

Search Flight

See a whole year of Reward Seat Availability on one page at SeatSpy.com

Business Traveller September / October 2020 edition
Business Traveller September / October 2020 edition
Be up-to-date
Magazine Subscription
To see our latest subscription offers for Business Traveller editions worldwide, click on the Subscribe & Save link below
Polls