With the resumption of Virgin Atlantic after four months of suspension since April due to Covid-19, the airlines have declared itself bankrupt and are seeking protection from creditors in the US, according to a court filing in New York on Tuesday.
The airline is seeking protection under chapter 15 of the US bankruptcy code, which allows a foreign debtor to shield assets in the country. The announcement comes little more than a month after Virgin Atlantic announced it had secured funding to survive for another 18 months.
Virgin Atlantic flies only long-haul international routes and
The bankruptcy is the second from a Virgin Group airline this year. Virgin Australia, the country’s second-largest airline, went into administration in April, owing $6.8bn to more than 12,000 creditors.
Virgin Atlantic’s filing in the US bankruptcy court in the southern district of New York said it has negotiated a deal with stakeholders “for a consensual recapitalization” that will get the debt off its balance sheet and “immediately position it for sustainable long-term growth”.
On Tuesday the airline also filed a proceeding in the high court in London, where Virgin Atlantic obtained approval on Tuesday to convene meetings of affected creditors to vote on the plan on 25 August.
A Virgin Atlantic spokeswoman said the restructuring plan was before the UK court “to secure approval from all relevant creditors before implementation”.
Bloomberg reported Virgin Atlantic told the high court it could run out of money in September if a restructuring deal is not approved.
Non-US companies use chapter 15 to block creditors who want to file lawsuits or tie up assets in the US.