Today in one of the last steps in recusing Virgin Atlantic from insolvency, the UK High Court approved the restructuring plan for the airline. Virgin have recently announced a lot of improvements for the Virgin Flying Club and the onboard service in Upper Class.
A Virgin Atlantic spokesperson said: “In order to complete the private-only, solvent recapitalisation of the airline, our Restructuring Plan has gone through a court-sanctioned process under Part 26A of the UK Companies Act 2006, to secure approval from certain creditors before implementation.”
“Today, Virgin Atlantic attended an English High Court hearing where the Restructuring Plan was formally sanctioned. A US procedural hearing will follow tomorrow, 3 September, ensuring the Restructuring Plan is recognised in the US, paving the way for completion of the £1.2bn private only, solvent recapitalisation of Virgin Atlantic.
“Achieving this significant milestone puts Virgin Atlantic in a position to rebuild its balance sheet, restore customer confidence and welcome passengers back to the skies, safely, as soon as they are ready to travel.”
Background
The Restructuring Plan was announced on 14 July 2020. On 25 August, the airline secured the overwhelming support of all four creditor classes, including 99% support from trade creditors who voted in favour of the Plan. The four classes of creditors comprise (1) creditors under the company’s revolving credit facility (100% support), (2) lessors of aircraft to the company under operating leases (100% support), (3) our shareholders (100% support) and (4) certain of the company’s trade creditors (99% support).
Virgin Atlantic’s solvent recapitalisation is based on a five-year business plan, and with the support of shareholders Virgin Group and Delta, new private investors and existing creditors, it paves the way for the airline to successfully rebuild its balance sheet and return to profitability.
The solvent recapitalisation will deliver a refinancing package worth c.£1.2bn over the next 18 months in addition to the self-help measures already taken, including cost savings of c.£280m per year and c.£880m rephasing and financing of aircraft deliveries over the next five years.
- Shareholders are providing c.£600m in support over the life of the business plan including a £200m investment from Virgin Group, and the c.£400m of shareholder deferrals and waivers
- Virgin Atlantic welcomes new partner Davidson Kempner Capital Management LP, a global institutional investment management firm which is providing £170m of secured financing
- Creditors have also supported the airline with over £450m of deferrals
- The recapitalisation plan also has the full support of credit card acquirers (Merchant Service Providers) Lloyd’s Cardnet, First Data and American Express
The US proceeding on 3 September is the final stage in the standard procedural steps available to Virgin Atlantic to protect its assets in the US jurisdiction while (i) Virgin Atlantic’s Restructuring Plan was completed via the UK court process and (ii) then beyond, as the solvent recapitalisation is enacted and delivered going forward. This is not a Chapter 11 bankruptcy proceeding. It is a proceeding that supports and recognises the solvent recapitalisation of the airline in the UK courts.
