Virgin Atlantic files for bankruptcy

[andypspotter]

Virgin Atlantic filed for Chapter 15 bankruptcy in New York on Tuesday

The company earlier Tuesday told a London court it will be forced to fold if a rescue deal isn't reached by next month

Virgin Atlantic is the second airline in the Virgin Group to file for bankruptcy this year after Virgin Australia filed for voluntary administration in April

The airline industry has been devastated by the pandemic as travel bans and border closures forced carriers to ground planes

Virgin Atlantic has become billionaire Richard Branson's second airline to file for bankruptcy this year as the industry continues to be ravaged by the coronavirus pandemic.

The Virgin Group airline filed for Chapter 15 bankruptcy protection in the Southern District of New York on Tuesday, just hours after the company told a London court it will be forced to fold if a rescue deal isn't reached by next month.

This marks yet another blow for Branson's Virgin brand, coming just months after sister airline Virgin Australia filed for voluntary administration in April.

Airlines have been some of the hardest hit by the pandemic as borders shuttered and travel bans issued when nations went into lockdown earlier this year.

Virgin Atlantic, which is based in London and 49% owned by Delta Air Lines, was forced to ground all passenger operations back in April.

The airline took its planes to the skies once more in July but, as travel restrictions continue and consumer confidence is low, it has failed to draw the crowds back in.

'The ongoing COVID-19 pandemic has had an adverse impact on not only [Virgin Atlantic], but the aviation industry as a whole, occasioning the near shutdown of the global passenger aviation industry,' the company's lawyers wrote in Tuesday's filing.

[andypspotter]

Bankruptcy update...

Virgin Atlantic has reached another milestone in its journey toward securing its future, undertaking a hearing in the US courts to support its plan for a private-only solvent recapitalisation.

The London-based carrier unveiled plans for the £1.2 billion recapitalisation last month.

The move has been made necessary by the severe impact of the Covid-19 pandemic on the global economy, the nation and the travel and aviation industry, Virgin said in a statement.

A spokesperson added: “Virgin Atlantic attended UK court on Tuesday, as part of a solvent recapitalisation process under Part 26A of the UK Companies Act 2006.

“On the same day, proceedings in support of the solvent recapitalisation were also filed in the US under their chapter 15 process.

“These US proceedings were 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 UK Companies Act 2006.”

Virgin pointed out this process is not a chapter 11 bankruptcy filing, but a process which supports the solvent recapitalisation of the airline.

The restructuring is based on a five-year business plan, and with the support of shareholders Virgin Group and Delta, new private investors and existing creditors, and paves the way for the airline to rebuild its balance sheet and return to profitability from 2022.

A spokesperson added: “The US court has supported the company’s restructuring plan by extending its order of August 4th.

“The US proceeding is a standard procedural step to protect the airline’s assets while Virgin Atlantic’s recapitalisation is completed in the UK.

“The US court has scheduled a hearing for September 3rd to immediately follow the final hearing before the English court.

“With support already secured from the majority of our creditors and stakeholders, it’s expected that the Restructuring Plan and solvent recapitalisation will come into effect in September.

“We remain confident in the plan.”

[andypspotter]

Virgin Atlantic has today had its restructuring plan approved by the English High Court. The plan, worth £1.2 billion ($1.6 billion), will see the airline receiving cash injections as well as implementing cost-saving measures in a bid to turn its fortunes around and return to profitability. The sanction comes around a week after the plan secured overwhelming support from the airline’s shareholders and creditors.

Virgin Atlantic has been granted the lifeline it needs today as it has confirmed that its £1.2 billion ($1.6bn) rescue plan has been sanctioned by the English High Court. The court hearing, which took place this morning, was presided over by Judge Richard Snowden, who gave the airline the go-ahead for its restructuring plan to weather the COVID crisis.

A Virgin Atlantic spokesperson stated,

“In order to complete the private-only, solvent recapitalisation of the airline, our Restructuring Plan has gone through a court-sanctioned process under Part 26A of the UK Companies Act 2006, to secure approval from certain creditors before implementation.

“Today, Virgin Atlantic attended an English High Court hearing where the Restructuring Plan was formally sanctioned. A US procedural hearing will follow tomorrow, 3 September, ensuring the Restructuring Plan is recognised in the US, paving the way for completion of the £1.2bn private only, solvent recapitalisation of Virgin Atlantic.

“Achieving this significant milestone puts Virgin Atlantic in a position to rebuild its balance sheet, restore customer confidence and welcome passengers back to the skies, safely, as soon as they are ready to travel.”

The airline’s creditors voted in favor of the plan last week, but required the approval of the High Court to begin implementation. A further court hearing is scheduled for Thursday in the United States, in order for the plan to be recognized there. However, this is purely procedural and will not affect the outcome of today’s hearing.

Virgin Atlantic hopes to make this plan effective by Friday.