Sir Richard Branson’s Virgin Group has moved to deny reports his Virgin Atlantic airline has filed for bankruptcy, as widely reported in the U.K. media.
A spokesperson for the group told Forbes that Tuesday’s double court appearance in London and New York by Virgin Atlantic was very much “all part of the process” denying that the airline had filed in the U.K. court for Chapter 11 bankruptcy.
Virgin Atlantic is keen to stress that it is business as usual and the court appearances are needed to bring shareholders onboard to finalize the $1.5 billion “solvent recapitalization” plan announced in mid July.
Branson and his team claim to have already “secured” support from the majority of stakeholders, and expect the Virgin restructuring will come into effect in September. However, Virgin must secure approval from all relevant creditors before moving forwards – “We remain confident in the plan,” the spokesperson said.
“Virgin Atlantic attended court today as part of a solvent recapitalization process,” a Virgin Atlantic spokesperson confirmed. “That process is proceeding with the support of the majority of our creditors.”
Virgin Atlantic are pushing the process through the New York court to ensure the U.S. system recognizes the U.K.’s foreign restructuring processes. The statement adds, “In the case of Virgin Atlantic, the process we have asked to be recognised is a solvent restructuring of an English company under Part 26A of the English Companies Act 2006.”
The bankruptcy rumors were heightened yesterday after Atlantic sought protection under chapter 15 of the U.S. bankruptcy code, which allows a U.K. debtor, in this case Virgin, to shield its assets in the country.
Part Of The Plan
On 14 July this year Virgin Group confirmed rumors that Branson and his team would restructure his business empire.
Following the sale of $500 million of Virgin Galactic shares from May through June, Virgin welcomed new partner Davidson Kempner Capital Management LP, a global institutional investment management firm which is providing $233 million of secured financing, alongside $587 million of deferrals from creditors, $522 million of shareholder deferrals and waivers and $783 million raised from existing shareholders, including Delta Airlines.
Tuesday’s court hearing was described to Forbes by the Virgin Atlantic spokesman as “procedural.” The hearing granted Virgin Atlantic an opportunity to convene meetings of affected creditors to vote on the restructuring plan on 25 August.
In March Branson described the coronavirus pandemic as “the most significant crisis the world has experienced in my lifetime,” later describing the work ahead of him as a “massive battle to survive and save jobs.” Forbes estimates Richard Branson’s net worth at a current $4.7 billion.