VIRGIN Atlantic (VS) has filed for Chapter 15 bankruptcy protection in the United States yesterday, as the carrier works to secure a rescue deal from the British Govt by next month.
VS told a London court it would run out of cash by Sep if no rescue plan was approved, with chapter 15 bankruptcy allowing foreign companies with US assets to protect themselves against United States-based claims while they work out a turnaround in their home country.
A current rescue plan is already supported by a majority of Virgin Atlantic’s stakeholders, which the airline hopes will come into effect in Sep, as it seeks emergency funding of 1.2 billion (A$2.2b).
Under the proposal, alternative investment management firm Davidson Kempner Capital Management will provide about 170 million in secured financing, while Branson himself will contribute 200 million after raising money from his Virgin Galactic venture.
Virgin Atlantic said it obtained an order from the court to convene four creditor meetings on 25 Aug to vote on the restructuring as part of a process that will bind all debt classes to the rescue plan.
VS had previously announced plans to lay off more than 3,150 staff across all functions of the business in May, in an attempt to ensure it emerged from the COVID-19 crisis in a recoverable position (TD 06 May).
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Source: traveldaily