Virgin Atlantic has filed for Chapter 15 bankruptcy protection in the United States. The British airline aims to prevent the seizure of aircraft and other assets oversees.
Earlier on Tuesday, Virgin Atlantic said that it was at risk of running out of cash in September if creditors do not approve of its rescue plan. Approval is due for August 25. Within the rescue plan, debts are cancelled, deferred or converted into shares. Shareholders will also invest more money into Virgin Atlantic. On the other end, costs will be cut deeply by restructuring the company and postponing the delivery of new aircraft. In case the plan is rejected, bankruptcy would be unavoidable.
Chapter 15 is part of U.S. bankruptcy law that protects foreign companies from creditors. When a company, such as Virgin Atlantic, has properties in the United States, they may be protected from creditors under Chapter 15. This gives companies time to restructure and become financially healthy again. Over in the U.K., Virgin Atlantic is in the midst of a restructuring and filed for a similar sort of bankruptcy protection. The airline is not receiving government support, and as such recently decided to close its base at London Gatwick. VA furthermore retired its last Boeing 747s and Airbus A340s.