Virgin Atlantic reaches significant milestone as creditors vote in favour of our Restructuring Plan

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A Virgin Atlantic spokesperson said: “In order to complete the private-only, solvent recapitalisation of the airline, our Restructuring Plan is going through a court-sanctioned process under Part 26A of the UK Companies Act 2006.”

“Today, Virgin Atlantic has reached a significant milestone in safeguarding its future, securing the overwhelming support of all four creditor classes, including 99% support from trade creditors who voted in favour of the Plan.  

“The next step is an English High Court hearing on 2 September to sanction the Restructuring Plan. We remain confident that the plan represents the best possible outcome for Virgin Atlantic and all its creditors and believe that the court will exercise its power to sanction the Restructuring Plan, at a hearing scheduled on 2 September. A US Chapter 15 procedural hearing will follow on 3 September, ensuring Virgin Atlantic’s Restructuring Plan is recognised in the US, paving the way for the £1.2bn private only, solvent recapitalisation of Virgin Atlantic.

“Achieving this milestone puts Virgin Atlantic in a position to rebuild its balance sheet, restore customer confidence and welcome passengers back to the skies as soon as they are ready to travel.”

Background
The Restructuring Plan was announced on 14 July 2020. The four classes of creditors comprise (1) creditors under the company’s revolving credit facility (100% support), (2) lessors of aircraft to the company under operating leases (100% support), (3) our shareholders (100% support) and (4) certain of the company’s trade creditors (99% support from those voting in favour of the Plan).

Virgin Atlantic’s Restructuring Plan is based on a five year business plan, and with the support of shareholders Virgin Group and Delta, new private investors and existing creditors, it paves the way for the airline to successfully rebuild its balance sheet and return to profitability.

The recapitalisation will deliver a refinancing package worth c.£1.2bn over the next 18 months in addition to the self-help measures already taken, including cost savings of c.£280m per year and c.£880m rephasing and financing of aircraft deliveries over the next five years. 

  • Shareholders are providing c.£600m in support over the life of The Plan including a £200m investment from Virgin Group, and the deferral of c.£400m of shareholder deferrals and waivers
  • Virgin Atlantic welcomes new partner Davidson Kempner Capital Management LP, a global institutional investment management firm which is providing £170m of secured financing
  • Creditors have also supported the airline with over £450m of deferrals

The US proceeding on 3 September is a continuance of the standard procedural steps available to Virgin Atlantic to protect its assets in the US jurisdiction while (i) Virgin Atlantic’s solvent recapitalisation is completed via the UK court process and (ii)  then beyond, as the recapitalisation plan is enacted and delivered going forward. This is not a Chapter 11 bankruptcy filing.  It is a filing which supports and recognises the solvent recapitalisation of the airline in the UK courts.

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