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Virgin Atlantic\u2019s \u00a31.2 billion (\u20ac1.35 billion) bailout has been signed off by a UK High Court judge.<\/p>\nVirgin Atlantic\u2019s \u00a31.2 billion (\u20ac1.35 billion) bailout has been signed off by a UK High Court judge.<\/p>\n
Last week, the airline\u2019s creditors voted to approve the deal, which the airline said was a \u201csignificant milestone in safeguarding its future\u201d.<\/p>\n
At a remote court hearing on Wednesday, Mr Justice Snowden sanctioned the restructuring plan \u2013 a key step of the process for Virgin Atlantic to implement the rescue package.<\/p>\n
The senior judge said: \u201cThis is a plan that I propose to sanction.\u201d<\/p>\n
He said this will allow the airline to make the plan effective by Friday.<\/p>\n
The \u00a31.2 billion rescue deal, announced in July, involves only private funds, and includes a cash injection of \u00a3200 million from founder Sir Richard Branson\u2019s Virgin Group.<\/p>\n
David Allison QC, for Virgin Atlantic, told the court that four creditor meetings were held last week, with 100% attendance and 100% approval at three of them.<\/p>\n
The fourth saw the deal approved by the vast majority of those present and voting.<\/p>\n
In written submissions, Mr Allison said it was \u201cin the best interests of all stakeholders\u201d to reach an agreement that enables the airline \u201cto survive and thrive as a going concern\u201d.<\/p>\n
He said the firm is proposing the deal as part of a wider suite of financial arrangements with creditors and others, which will reduce the airline\u2019s debt to \u201ca sustainable level\u201d and \u201cprovide new liquidity so that the group will be able to continue trading for years to come\u201d.<\/p>\n
Mr Allison said the recapitalization arrangements are \u201cthe product of extensive negotiations\u201d over \u201ca couple of months\u201d, adding: \u201cIt is the only possible deal that can be implemented in the short time available before the group collapses.\u201d<\/p>\n
Creditors are being asked to accept 20% less than they are owed, and for repayments to be rescheduled.<\/p>\n
The airline has previously insisted that without a \u201csolvent recapitalization\u201d its directors would have \u201cno choice\u201d but to place it into administration, which would \u201cresult in a poor outcome for the company\u2019s creditors\u201d.<\/p>\n
In a statement after the hearing, a Virgin Atlantic spokesperson said: \u201cIn order to complete the private-only, solvent recapitalization of the airline, our restructuring plan has gone through a court-sanctioned process under Part 26A of the UK Companies Act 2006, to secure approval from certain creditors before implementation.<\/p>\n
\u201cToday, Virgin Atlantic attended an English High Court hearing where the restructuring plan was formally sanctioned.<\/p>\n
\u201cA US procedural hearing will follow tomorrow, 3 September, ensuring the restructuring plan is recognized in the US, paving the way for completion of the \u00a31.2 billion private-only, solvent recapitalization of Virgin Atlantic.<\/p>\n
\u201cAchieving this significant milestone puts Virgin Atlantic in a position to rebuild its balance sheet, restore customer confidence and welcome passengers back to the skies, safely, as soon as they are ready to travel.\u201d<\/p>\n
Virgin Atlantic has said it does not expect demand for air travel to return to pre-pandemic levels until 2023.<\/p>\n
In May it announced it would shrink its operations, including closing its Gatwick base and cutting 3,550 jobs.<\/p>\n