Great Britain

Richard Branson’s Virgin Atlantic files for bankruptcy protection as its revealed airline may run out of cash next month

RICHARD Branson's Virgin Atlantic has filed for bankruptcy protection as its revealed airline may run out of cash next month.

The last gasp bid comes after Virgin Australia fell into administration earlier this year amid the coronavirus pandemic grounding international flights.

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Virgin Atlantic has filed for bankruptcy protection in the US as Branson tries to nail down a £1.2billion rescue plan.

It came just hours after the company told a court in London it could be forced to fold as earlier as next month.

The Virgin Group airline filed for Chapter 15 bankruptcy protection in the Southern District of New York on Tuesday.

The court filing means it is protected from the US bankruptcy courts, and signals to them about rescue plans underway abroad.

Branson's flights have been hit hard by the pandemic, with thousands of plans grounded worldwide due to fears over the spread of the virus.

Virgin Atlantic, which is based in London and 49% owned by Delta Air Lines, was forced to ground all passenger operations back in April.

It was back flying again in July, but travel restrictions and low consumer confidence has still seen small passenger numbers.

Virgin's filing in the US court said it had negotiated a deal with stakeholders "for a consensual recapitalization".

It said it would get debt off its balance sheet and "immediately position it for sustainable long-term growth."

A Virgin Atlantic spokeswoman said the restructuring plan was before a British court "to secure approval from all relevant creditors before implementation."

Chapter 15 bankruptcy protection is used to block creditors who want to file lawsuits or tie up assets in the US.

It does yet not mean the company is going out of business.

Virgin warned a court in London that it might run out of the cash at the end of September unless it secures a rescue plan.

The company has an asset management firm waiting to loan it £170 million to help prop it up as it restructures.

In a court filing, it said reservations are down 89 per cent from a year ago - and demand for the rest of year is down 25 per cent.

Virgin Atlantic bosses will now be allowed to meet with their creditors to vote on the resuce plan on August 25.

It comes after Branson - who has a net worth of almost £4billion - faced criticism after calling for the Government help for Virgin Atlantic to survive the downturn.

More to follow...

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