Virgin Atlantic reaches refinancing milestone
Virgin Atlantic has reached another milestone in its journey toward securing its future, undertaking a hearing in the US courts to support its plan for a private-only solvent recapitalisation.
The London-based carrier unveiled plans for the £1.2 billion recapitalisation last month.
The move has been made necessary by the severe impact of the Covid-19 pandemic on the global economy, the nation and the travel and aviation industry, Virgin said in a statement.
A spokesperson added: “Virgin Atlantic attended UK court on Tuesday, as part of a solvent recapitalisation process under Part 26A of the UK Companies Act 2006.
“On the same day, proceedings in support of the solvent recapitalisation were also filed in the US under their chapter 15 process.
“These US proceedings were commenced under provisions that allow US courts to recognise foreign restructuring processes.
“In the case of Virgin Atlantic, the process we have asked to be recognised is a solvent restructuring of an English company under Part 26A of the UK Companies Act 2006.”
Virgin pointed out this process is not a chapter 11 bankruptcy filing, but a process which supports the solvent recapitalisation of the airline.
The restructuring is based on a five-year business plan, and with the support of shareholders Virgin Group and Delta, new private investors and existing creditors, and paves the way for the airline to rebuild its balance sheet and return to profitability from 2022.
A spokesperson added: “The US court has supported the company’s restructuring plan by extending its order of August 4th.
“The US proceeding is a standard procedural step to protect the airline’s assets while Virgin Atlantic’s recapitalisation is completed in the UK.
“The US court has scheduled a hearing for September 3rd to immediately follow the final hearing before the English court.
“With support already secured from the majority of our creditors and stakeholders, it’s expected that the Restructuring Plan and solvent recapitalisation will come into effect in September.
“We remain confident in the plan.”