Virgin Atlantic files for bankruptcy due to COVID-19
Virgin Atlantic Airways has filed for bankruptcy protection for its United States business, as it tries to nail down a £1.2 billion ($1.6 billion) rescue plan announced last month. It’s the second of Richard Branson’s airlines to do so during the COVID-19 pandemic, after Virgin Australia filed for “administration” — a form of bankruptcy in countries like Australia and England — earlier this year.
Virgin Atlantic filed for Chapter 15 bankruptcy protection in the Southern District of New York on Tuesday. Chapter 15 is a way for foreign companies to let US bankruptcy courts recognize restructuring efforts happening abroad. The company is not yet going out of business or liquidating its operations, which is what Chapter 7 bankruptcy protection is for.
The company has an asset management firm waiting to loan it £170 million ($222 million) to stop the immediate financial bleeding as soon as the five-year plan gets the okay from stakeholders and creditors. The rest of the value of the rescue plan comes from shareholders, including £200 million ($261 million) from Branson’s larger Virgin Group, cost savings, and possibly private investors.