Virgin Atlantic has filed for bankrupt safety from collectors within the US, in keeping with a courtroom submitting in New York on Tuesday.
The airline is looking for the safety beneath chapter 15 of the US chapter code, which permits a international debtor to defend property within the nation. The announcement comes little greater than a month after Virgin Atlantic introduced it had secured funding to outlive for an additional 18 months.
Virgin Atlantic flies solely long-haul worldwide routes and suspended flights in April because of the coronavirus pandemic.
The chapter is the second from a Virgin Group airline this 12 months. Virgin Australia, the nation’s second largest airline, went into administration in April, owing $6.8bn to greater than 12,000 collectors.
Virgin Atlantic’s submitting within the US chapter courtroom within the southern district of New York stated it has negotiated a cope with stakeholders “for a consensual recapitalization” that may get debt off its stability sheet and “instantly place it for sustainable long-term development”.
On Tuesday the airline additionally filed a continuing within the excessive courtroom in London, the place Virgin Atlantic obtained approval on Tuesday to convene conferences of affected collectors to vote on the plan on 25 August.
A Virgin Atlantic spokeswoman stated the restructuring plan was earlier than the UK courtroom “to safe approval from all related collectors earlier than implementation”.
Bloomberg reported Virgin Atlantic advised the excessive courtroom it may run out of cash in September if a restructuring deal is just not accepted.
Non-US firms use chapter 15 to dam collectors who need to file lawsuits or tie up property within the US.
In July, the airline stated its non-public cope with stakeholders eradicated the necessity for help from the British authorities that billionaire founder Richard Branson had sought. The reorganisation is anticipated to be accomplished in direction of the tip of this summer season and be unfold throughout the subsequent 18 months.
The airline, 51% owned by Branson’s Virgin Group and 49% by US airline Delta, closed its Gatwick base and reduce greater than 3,500 jobs to deal with the fallout from the Covid-19 pandemic, which has grounded planes and hammered demand for air journey.
It stated it wanted to recapitalise “to not solely survive the exigent threats posed by the Covid-19 world pandemic however to thrive as soon as the fast world well being disaster passes”.
In July, Virgin Atlantic stated it had agreed a rescue deal with shareholders and collectors price £1.2bn ($1.57bn) to safe its future past the coronavirus disaster.
Virgin stated in a courtroom submitting reservations are down 89% from a 12 months in the past and present demand for the second half of 2020 is at approximately 25% of 2019 levels. 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 a authorities bailout for Virgin Atlantic to survive the downturn.