Virgin Atlantic files for bankruptcy and seeks protection from creditors in the US,
according to a court filing in New York on Tuesday.
The UK based airline is seeking protection under chapter 15 of the US bankruptcy code, which allows a foreign
debtor to shield assets in the country.
NSL Understands: Virgin Australia filed for voluntary administration, a type of bankruptcy, in April.
An earlier appeal by the airline for a bailout from the British Government was turned down by ministers,
leaving the airline in a race against time to secure new investment.
The airline’s boss, Sir Richard Branson, even offered to pledge his Caribbean holiday island Necker in
exchange for investment.
In the meantime, the airline said it will most likely run out of cash by September.
David Allison QC, for Virgin Atlantic Airways Limited, previously said:
“The group’s financial position has been severely affected by the ongoing COVID-19, which has caused
unprecedented disruption to the global aviation industry.’’
‘’Passenger demand has plummeted to a level that would, until recently, have been unthinkable. As a result of
the COVID-19 pandemic, the group is now undergoing a liquidity crisis.’’
A spokesperson for Virgin Atlantic disclosed that the airline attended a court session on Tuesday as part of
a solvent recapitalization process under 26(A) of the UK Companies Act 2006.
That process would be going ahead
with the support of the company’s majority creditors.
The airline’s official said, “Following the UK hearing held earlier today, ancillary proceedings in support of the solvent recapitalization were also filed in the US under their Chapter 15 process.
These ancillary US proceedings have been commenced under provisions that allow US courts to recognize
foreign restructuring processes.’’
‘’In the case of Virgin Atlantic, the process we have asked to be recognized is a solvent restructuring of an English
company under Part 26A of the English Companies Act 2006.”