VIRGIN ATLANTIC AIRLINE IS GOING BANKRUPT IN THE USA

The UK-based airline has filed a complaint in the court of the USA hoping to obtain protection from creditors while its financial claims are being settled at home. According to the bankruptcy experts, the Bankruptcy Code which is in force in the United States allows the foreign companies having the assets in the United States to file for bankruptcy.

The air carrier's petition is based on Chapter 15 of the Code, which makes it possible to consider such cases and enforce the decisions of English courts in foreign jurisdictions.

In its statement, Virgin Atlantic refers to the pandemic that has hit the aviation industry. This forced the company's management to take unprecedented recapitalization measures.

However, the announced in the UK restructuring program depends on whether the rehabilitation procedure would be approved by the US court.

It is reported that the airline's shareholders have reached the necessary agreements with investors and creditors both. The company plans to raise £ 1.2bn ($ 1.57bn) in funding. The main shareholders of the company are the Virgin Group and the American Delta Air Lines, which have already announced financial support. Delta has a 49% stake, which was the ground for the opportunity to appeal to American justice. It is known that as part of the restructuring, the company plans to attract a new investor, the American hedge fund DKCM.

The experts note that an appeal to the US judicial authorities will allow the Richard Branson's brainchild to settle conflicts with creditors in the UK itself and protect the company's assets in the United States.

Earlier, the airline had to take unpopular measures, having cut more than 3.5 thousand employees.

This represents about a third of the total number of employees. Now the company employs about 6,500 people, including its travel subsidiary Virgin Atlantic Holidays.

The UK court will have to make a final decision on the restructuring program on August 25. By this time, the agreement with the creditors and shareholders of the company should be finalized. The chance that the airline, founded in 1984, can weather the current crisis, sill remains, taking into account the experience of another airline operating under the Virgin brand.

It is known that the Virgin Australia bankrupt company, which was previously acquired by the American investors from the Bain Capital, has already launched the restructuring process.

As a part of this process, the company plans to lay off about 3,000 employees, similar to what the Virgin Atlantic has done in May. In addition, the new owner announced the plans to halve the number of aircraft and continue to operate domestic flights only.