The pandemic has caused a massive economic lull for most businesses. And the latest to fall victim to it is Virgin Atlantic airlines. The airways recently filed for bankruptcy protection for its US operations and is said to be progressing on a rescue plan to keep afloat amid the COVID-19 crisis.
The airlines filed for the said protection in the Southern District of New York on Tuesday – Aug 5. It has primarily sought legal cover from creditors in the United States under Chapter 15 of the U.S. Bankruptcy Code that allows a foreign debtor to shield assets in this country. Pertinently, the company is not going out of business or liquidating its operations yet.
As part of its rescue plan, Virgin Atlantic will attempt to renegotiate leases on most of its planes as well as all of its outstanding loans. However, if the said strategy is to fail, the airlines may in all probability run out of cash next month. Commenting on the situation, the company’s lawyers in the filing wrote, “The ongoing COVID-19 pandemic has had an adverse impact on not only [Virgin Atlantic], but the aviation industry as a whole, occasioning the near shutdown of the global passenger aviation industry.”
They further added, “While [Virgin Atlantic] has taken various measures to manage its liquidity in light of the unprecedented financial and operating conditions it faces, a more comprehensive recapitalization is necessary to secure the future of its business and ensure that it is able to meet its liabilities and funding requirements beyond mid-September 2020.” Here’s hoping the airlines can brave the storm and emerge successful!
[Via: The Guardian]