British businessman Sir Richard Branson’s airline is on the verge of bankruptcy due to the Covid-19 crisis, after it was not able to get support from the UK government.
Virgin Atlantic launched a so-called Chapter 15 procedure in New York on Tuesday 4 August. This is a process by which non-U.S. companies operating in the U.S. ask for a deferment of all debts, thus protecting them from creditors’ legal claims.
Under such bailout, Virgin Atlantic’s debts are deferred or forgiven. In addition, certain creditors, including co-shareholder Delta Airlines, can convert their loans into shares. Suppliers are asked to cancel part of their claims with the ailing airline.
Earlier in the day, Virgin Atlantic reported to a British court that its treasury will be empty next month without a rescue package worth £ 1.2 billion. The company hopes that the UK judge will declare the rescue plan binding on all creditors.
Branson and his Virgin Group own 21% of the struggling airline.