Virgin Atlantic files for US Chapter 15 bankruptcy protection in bid to shield assets
- The airline had told a London court it could run of money in September if a restructuring deal is not approved
- A separate action has already been filed in British court
Virgin Atlantic Airways Ltd is seeking protection from creditors in the United States under Chapter 15 of the US Bankruptcy Code, which allows a foreign debtor to shield assets in this country, according to a court filing on Tuesday.
Virgin Atlantic’s filing in US bankruptcy court in the southern district of New York said it has negotiated a deal with stakeholders “for a consensual recapitalisation” that will get debt off its balance sheet and “immediately position it for sustainable long-term growth.”
In July, Virgin Atlantic said it has agreed a rescue deal with shareholders and creditors worth £1.2 billion (US$1.57 billion) to secure its future beyond the coronavirus crisis.
The US filing is an ancillary proceeding tied to a separate action filed in a British court, where Virgin Atlantic obtained approval Tuesday to convene meetings of affected creditors to vote on the plan on August 25.
An airline spokeswoman said the restructuring plan was before a British court “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 told a London court it could run of money in September if a restructuring deal is not approved.