By Bev Fearis, published 05/08/20
Virgin Atlantic has filed for U.S. bankruptcy, less than a month after it agreed a rescue deal worth £1.2 billion to secure its future amid the pandemic crisis.
The airline is seeking protection under chapter 15 of the U.S. bankruptcy code, which allows a foreign company to shield assets in the country.
The New York court filing said it had negotiated a deal with stakeholders for a ‘consensual recapitalisation’ that will remove debt from its balance sheet and ‘immediately position it for sustainable long-term growth’.
Meanwhile, in the UK High Court yesterday Virgin Atlantic obtained approval to hold four meetings of affected creditors to vote on the rescue package on August 25.
The airline told the High Court that without the refinancing plan it will run out of cash in the week beginning September 21, with bookings down 89% year-on-year and current demand for the second half of this year at a quarter of 2019 levels.
The rescue deal will see Sir Richard Branson’s Virgin Group inject £200 million, with additional funds from investors and creditors.
It was put together after earlier calls for UK Government support were rejected.