UNITED Kingdom based carrier, Virgin Atlantic has filed for Chapter 15 bankruptcy protection in New York in the United States as the global airline industry reels from the coronavirus pandemic.
The protection under chapter 15 of the US bankruptcy code allows a foreign debtor to shield assets in the country.
The crisis-hit Airline in July received a £1.2 billion ($1.5 billion) rescue deal to keep it solvent just days before it was due to resume passenger flights.
The carrier said that the recapitalization plan would be deployed over 18 months and has the support of shareholders, new investors and existing creditors.
Virgin Atlantic’s US bankruptcy court filing said it had negotiated a deal with stakeholders “for a consensual recapitalization” that will get debt off its balance sheet and “immediately position it for sustainable long-term growth”.
Under that plan Richard Branson’s Virgin Group injected £200m, with additional funds provided by investors and creditors.
The billionaire Virgin boss had a request for UK government money rejected, leaving the airline in a race against time to secure new investment.
The US filing is tied to a separate action filed in a British court, where Virgin Atlantic obtained approval on Tuesday to convene meetings of affected creditors to vote on the plan on 25 August.
In May, Virgin Atlantic, which is 51% owned by Virgin Group and 49% by US airline Delta, announced that it would cut more than 3,000 jobs in the UK and close its operation at Gatwick airport.