Virgin Atlantic files for US bankruptcy protection

Virgin Atlantic files for US bankruptcy protection.

 

Virgin Atlantic is seeking protection from creditors in the United States under Chapter 15 of the US Bankruptcy Code.

 

The filing allows a foreign debtor to shield its assets in the country whilst continuing to operate.

 

The news comes as Sir Richard Branson today warned that the airline could run out of cash in the next month if creditors do not approve a Β£1.2 billion rescue deal.

 

Virgin Atlantic, who only operates long-haul routes, suspended all flights in April due to the coronavirus pandemicΒ and only resumed flights in July.

 

The carrier was forced to end its operation at Gatwick Airport, leading to more than 3,000 job cuts.

 

The bankruptcy court in the southern district of New York said it has negotiated a deal with stakeholders “for a consensual recapitalization” that will “immediately position it for sustainable long-term growth”.

 

A Virgin Group airline already went bust this year after Virgin Australia went into administration, owing $6.8 billion to more than 12,000 creditors.

 

The UK government has made it clear that Virgin Atlantic will not receive financial help from British taxpayers.

 

Branson said he would pledge his Caribbean island resort as collateral for a government loan – but was rejected.