Virgin Atlantic Airways has filed for individual bankruptcy protection for its United States enterprise, as it tries to nail down a £1.2 billion ($1.6 billion) rescue prepare announced last month. It’s the next of Richard Branson’s airlines to do so through the COVID-19 pandemic, just after Virgin Australia submitted for “administration” — a variety of bankruptcy in nations like Australia and England — previously this 12 months.
Virgin Atlantic filed for Chapter 15 bankruptcy protection in the Southern District of New York on Tuesday. Chapter 15 is a way for overseas providers to allow US bankruptcy courts identify restructuring initiatives going on abroad. The corporation is not but going out of business enterprise or liquidating its operations, which is what Chapter 7 individual bankruptcy safety is for.
That claimed, Virgin Atlantic explained to a London court that it will operate out of dollars following month if the rescue prepare is not accepted. In unique, Virgin Atlantic is trying to renegotiate leases on most of its planes as well as loans it has taken in the past and can’t fully repay. Virgin Atlantic, which operates typically in the United Kingdom, has administrative places of work in Atlanta, Ga and a staff in New York as well. (Virgin America, a distinct airline run by Branson focused on the US market place, was bought by Alaska airways in 2017.)
The company has an asset administration business waiting around to bank loan it £170 million ($222 million) to cease the speedy money bleeding as shortly as the 5-yr program will get the ok from stakeholders and creditors. The rest of the worth of the rescue approach will come from shareholders, including £200 million ($261 million) from Branson’s more substantial Virgin Group, price cost savings, and potentially non-public buyers. In court filings, Virgin Atlantic’s lawyers say the organization presently has guidance for the system from a “substantial proportion of its stakeholders.”
“The ongoing COVID-19 pandemic has experienced an adverse impact on not only [Virgin Atlantic], but the aviation market as a complete, occasioning the in the vicinity of shutdown of the world-wide passenger aviation industry,” the company’s attorneys wrote in the filing. “While [Virgin Atlantic] has taken several steps to take care of its liquidity in gentle of the unprecedented fiscal and functioning conditions it faces, a a lot more comprehensive recapitalization is essential to secure the long run of its small business and make certain that it is ready to meet its liabilities and funding requirements beyond mid-September 2020.”