Virgin Atlantic Airways Ltd is searching for protection from collectors within the United States beneath Chapter 15 of the U.S. Bankruptcy Code, which permits a overseas debtor to defend property on this nation, in accordance with a court docket submitting on Tuesday.
Virgin Atlantic’s submitting in U.S. bankruptcy court docket within the southern district of New York stated it has negotiated a cope with stakeholders “for a consensual recapitalisation” that can get debt off its steadiness sheet and “immediately position it for sustainable long-term growth.”
In July, Virgin Atlantic stated it has agreed a rescue cope with shareholders and collectors price 1.2 billion kilos ($1.57 billion) to safe its future past the coronavirus disaster.
The U.S. submitting is an ancillary continuing tied to a separate motion filed in a British court docket, the place Virgin Atlantic obtained approval on Tuesday to convene conferences of affected collectors to vote on the plan on August 25.
An airline spokesperson stated the restructuring plan was earlier than a British court docket “to secure approval from all relevant creditors before implementation.” She added the “process is proceeding with the support of the majority of our creditors.”
Bloomberg reported Virgin Atlantic informed a London court docket it might run of cash in September if a restructuring deal is just not authorised.
Non U.S.-companies use Chapter 15 to dam collectors who wish to file lawsuits or tie up property within the United States.
In July, the airline stated its personal cope with stakeholders eliminates the necessity for assist from the British authorities that billionaire founder Richard Branson had sought. The reorganisation is anticipated to be accomplished in the direction of the tip of this summer season and be unfold throughout the subsequent 18 months.
The airline, 51% owned by Bransons Virgin Group and 49% by U.S. airline Delta, closed its Gatwick base and minimize greater than 3,500 jobs to take care of the fallout from the COVID-19 pandemic, which has grounded planes and hammered demand for air journey.
“Delta said it supported the plan and was “optimistic” that it might assist Virgin Atlantic “maintain its position” within the journey market.
Virgin Atlantic stated it wanted to recapitalise “to not only survive the exigent threats posed by the COVID-19 global pandemic but to thrive once the immediate global health crisis passes.”
It added in a court docket submitting reservations are down 89% from a yr in the past and present demand for the second half of 2020 is at roughly 25% of 2019 ranges. Virgin Atlantic additionally owns Virgin Atlantic Holidays, a tour operator enterprise and Virgin Atlantic Cargo.
The high-profile Branson had attracted criticism after calling for authorities assist for Virgin Atlantic to outlive the downturn.