Tags: virgin atlantic | restructuring | bankruptcy | airline

Virgin Atlantic Secures US Recognition for Restructuring Plan

Virgin Atlantic Secures US Recognition for Restructuring Plan
(Mike Fuchslocher/Dreamstime)

Friday, 07 August 2020 02:14 PM

Virgin Atlantic Airways Ltd. was granted U.S. bankruptcy protection as the carrier controlled by Richard Branson pursues a 1.2 billion-pound ($1.6 billion) rescue plan in the U.K.

The provisional ruling by U.S. Bankruptcy Judge Michael E. Wiles in Manhattan on Friday protects the airline’s American assets and ensures that the debt reorganization will be overseen under the British legal process. After the company takes its next major restructuring step in the U.K., the company will return to Wiles to ask him to make the protections permanent at a hearing scheduled for early September.

That next step will be a meeting of creditors scheduled on Aug. 25 as part of the British process, under which any holdouts can be forced to accept the restructuring even if some classes vote against it. Virgin Atlantic says that only one of four creditor groups, comprising trade suppliers, hasn’t backed the plan yet.

The rescue will bring in new money from Branson and U.S. hedge fund Davidson Kempner Capital Management, while requiring a restructuring of existing debt.

Tight Cash

During the Friday court hearing, which was held by telephone, Wiles said once final wording changes are made to the document, he will sign an order implementing the protections under Chapter 15 of the U.S. bankruptcy code.

Virgin Atlantic told a London court on Tuesday that available cash will fall below 75 million pounds without the plan’s approval, allowing bondholders to enforce the sale of London Heathrow airport slots and compelling it to fold.

The Crawley, England-based carrier has been hit particularly hard by the Covid-19 pandemic, with the lucrative North Atlantic market on which it depends still largely wiped out as the virus continues to rage in the U.S.

Bookings are down 89% this year and second-half demand is at about 25% of 2019 levels, according to court papers filed for the Chapter 15 application.

The case is Virgin Atlantic Airways Limited, 20-11804, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

© Copyright 2020 Bloomberg News. All rights reserved.


   
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Virgin Atlantic Airways Ltd. was granted U.S. bankruptcy protection as the carrier controlled by Richard Branson pursues a 1.2 billion-pound ($1.6 billion) rescue plan in the U.K.
virgin atlantic, restructuring, bankruptcy, airline
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2020-14-07
Friday, 07 August 2020 02:14 PM
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