British owned airline Virgin Atlantic filed for Chapter 15 bankruptcy protection in the U.S. on Tuesday due to the disruption in the airlien industry caused by the COVID-19 pandemic. This filing will enable the airline shield assets in the country. The company had negotiated a deal with stakeholders “for a consensual recapitalization” that will get debt off its balance sheet and “immediately position it for sustainable long-term growth”.
In April this year, Virgin Australia also filed for voluntary administration, a type of bankruptcy, in Australia. Virgin Australia was already struggling with a long-term A$5bn (£2.55bn; $3.17bn) debt. It was later bought by Bain Capital.
The Richard Branson airline stated in a London court that it was set to run out of cash next month if a pending rescue deal worth £1.2bn wasn’t approved. The company stated in the court that the airline’s cash flow would drop to “critical levels” by the middle of next month and it would “run out of money altogether” by the week beginning 28 September. Out of the funds, Sir Richard’s Virgin Group will inject £200m, with additional funds provided by investors and creditors
Like most airlines, the airline has been badly hit by the COVID-19 pandemic which grounded operations for all the airlines.
