Virgin Atlantic creditors approve rescue deal

Virgin Atlantic’s creditors have approved the proposed rescue plan. 99 percent of its shareholders voted in favour.

The plan is set to deliver a 1.2 billion pounds refinancing package for over the next 18 months in addition to cost-cutting measures that have already been taken and the £280 million and £880 million saved by delaying aircraft deliveries. Shareholders will provide 600 million pounds in support, of which the Virgin Group is set to pay £200 million and other shareholders £400 million. Furthermore, investment management firm Davidson Kempner Capital Management will provide £170 million in financing.

Creditors have eased the burden on Virgin Atlantic, allowing £450 million to be repaid at a later date. In July, Virgin Atlantic drew up a restructuring plan for the British branch of the company for the next five years. Among others, the balance must be rebuilt to become profitable from 2022 onwards. Earlier this month, the airline “Chapter 15 bankruptcy” filed in the United States by Virgin Atlantic to protect itself from US creditors.

Before the rescue plan can be implemented, the plan must go through a court approval process under Part 26A of the Companies Act 2006. The next step in this process will be taken on September 2 when there will be a hearing at the British Supreme Court to ratify the restructuring.