Richard Branson’s airline Virgin Atlantic files for bankruptcy

Virgin Atlantic has filed for bankruptcy as Richard Branson's airline becomes the latest to collapse during the pandemic.

The billionaire's company is on the brink of collapse after a number of attempts to save it have been rejected after the coronavirus outbreak.

It comes after Virgin Australia filed for voluntary administration – a type of bankruptcy – in April.

The company's Atlantic airline, based in London, previously appealed for a bailout from the government but ministers rejected the request.

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Virgin boss Sir Richard Branson even offered to mortgage his Caribbean holiday island Necker in exchange for investment.

The airline said it was on course to run out of cash in September.

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According to a number of sources, Virgin Atlantic filed for Chapter 15 bankruptcy protection in the Southern District of New York on Tuesday, just hours after the company told a London court it will be forced to fold if a rescue deal isn't reached by next month.

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A Virgin Atlantic spokesperson said: “Virgin Atlantic attended court today (4 August) as part of a solvent recapitalisation process under 26(A) of the UK Companies Act 2006. That process is proceeding with the support of the majority of our creditors.

“Following the UK hearing held earlier today, ancillary proceedings in support of the solvent recapitalisation were also filed in the US under their Chapter 15 process.

"These ancillary US proceedings have been commenced under provisions that allow US courts to recognise foreign restructuring processes.

“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.”

This marks yet another blow for Branson's Virgin brand, coming just months after sister airline Virgin Australia filed for voluntary administration in April.

David Allison QC, for Virgin Atlantic Airways Limited, previously said: "The group's financial position has been severely affected by the ongoing Covid-19 pandemic, which has caused unprecedented disruption to the global aviation industry.

"Passenger demand has plummeted to a level that would, until recently, have been unthinkable.

"As a result of the Covid-19 pandemic, the group is now undergoing a liquidity crisis."

The airline unveiled a restructuring plan to secure its future, involving only private funds, last month.

The proposal needed to secure approval from creditors under a court-sanction process.

At a High Court hearing on Tuesday, Mr Allison old Mr Justice Trower that the Virgin Atlantic Group has "a fundamentally sound business model which was not in any problems at all before the Covid-19 pandemic".

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