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What happened in the US?
Yesterday there was a lot of misreporting about the Chapter 15 filing for Bankruptcy in the US. Rest assured this is not Chapter 11 where airlines are protected to stop them from going bankrupt.
A Virgin Atlantic spokesperson said: “Virgin Atlantic attended court yesterday (4th August) as part of a solvent recapitalisation process under 26(A) of the UK Companies Act 2006. That process is proceeding with the support of the majority of our creditors.
“Following the UK hearing held yesterday (4th August), ancillary proceedings in support of the solvent recapitalisation 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 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 English Companies Act 2006.”
Background
This is not a Chapter 11 bankruptcy filing. It is a filing that supports the solvent recapitalisation of the airline. You can read about the deal that Virgin agreed to save the company in this article.
Virgin are continuing to operate a limited schedule flying to Hong Kong, New York, Los Angeles and Barbados from London Heathrow and these flights continue as normal. All upcoming flight and holiday bookings remain valid; Flying Club members can continue to earn and redeem their miles as usual; customers with cancellations can continue to request refunds and these are being processed. In court, Virgin did reveal that it will collapse in September if the restructuring does not proceed. This happens when it gets down to its last £75 million which is due to happen in September at the current run rate
Note: I finally received confirmation I was getting my refund this week after a 5-month battle to get it back.
Statement on UK Court Hearing on 4 August
A Virgin Atlantic spokesperson said: “In order to progress the private-only solvent recapitalisation of the airline, the Restructuring Plan is going through a court-sanctioned process under Part 26A of the Companies Act 2006, to secure approval from all relevant creditors before implementation. With support already secured from the majority of stakeholders, it’s expected that the Restructuring Plan and recapitalisation will come into effect in September. We remain confident in the plan.”
Yesterday’s court hearing was procedural. At that hearing, Virgin Atlantic obtained an order from the Court to convene meetings of affected creditors to vote on the Restructuring Plan on 25 August. 3 out of 4 creditors have already agreed to the plan so it should just be a formality. The final step will be a meeting on 2 September to formally impose the agreement on creditors.
