The company, which is based in the United Kingdom, filed for Chapter 15 bankruptcy protection in New York on Tuesday, which shelters the US assets of foreign companies undergoing restructuring proceedings in their home country. The US filing followed a UK court hearing earlier the same day, where Virgin Atlantic obtained approval to call a meeting of creditors on August 25 to vote on the restructuring plan, CNN Business reported.
The company said it is not technically bankrupt and that it plans to continue to operate as it restructures, a process it hopes to complete by the end of September. Still, Virgin Atlantic said in a court filing that it will run out of cash and have to shut down by the end of the month if it can’t reach a deal before then. Virgin Atlantic, which primarily offers long-haul travel between the United Kingdom and other parts of the world, had just over 8,500 employees at the end of 2018, according to company records. It also had $630 million in cash and about $850 million in long-term debt at the time
Last month, the company agreed a rescue deal worth £1.2bn ($1.6bn) to secure its future beyond the coronavirus crisis. The court in London heard 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. David Allison QC, for Virgin Atlantic, told Mr Justice Trower in written submissions that the group had “a fundamentally sound business model which was not in any problems at all before the Covid-19 pandemic”. “Passenger demand has plummeted to a level that would, until recently, have been unthinkable,” he said, according to BBC.
Following our return to the skies, we’re currently operating our flying schedule from our London Heathrow base, and these flights continue as normal. All upcoming flight and holiday bookings remain valid; Flying Club members can continue to earn and redeem their miles as usual; customers with cancellations can continue to request refunds and these are being processed; and our people are ready to ensure you Fly Safe and Fly Well. If your trip is cancelled as a direct result of the Covid-19 crisis and the global travel restrictions imposed, we will be in touch, is written in Airlines statement.
For detailed information visit: https://flywith.virginatlantic.com/gb/en/news.html
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