COVID-19: Virgin Atlantic files for bankruptcy

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.”
The UK based airline is seeking for protection under chapter 15 of the US bankruptcy code, which allows a foreign debtor to shield assets in the country.
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This move is coming less than a month after the airline disclosed that it had agreed a rescue deal worth $1.6 billion to secure its future beyond the Coronavirus crisis. Under the arrangement, Virgin’s boss, Richard Branson, would inject $200 million, with additional funds provided by investors and creditors.
This proposal needed to secure approval from creditors under a court-sanction process.
Mr Allison told Justice Trower that the Virgin Atlantic Group has sound business model during a high court hearing on Tuesday.
It can be recalled that Virgin Atlantic, who have been heavily impacted by the coronavirus pandemic had put in some measures to ensure the future of the airline is safeguarded. Some of these measures include the reduction of its schedule to prioritize core routes based on demand, cut over 3,000 jobs and so on.