Richard Branson’s Virgin Atlantic Airways Ltd. filed for chapter 15 bankruptcy protection in the U.S. yesterday after telling a London court it was set to run out of cash next month if a pending rescue deal isn’t approved, Bloomberg News reported. The airline filed its petition in the Southern District of New York. Chapter 15 allows foreign companies with U.S. assets to protect themselves against claims while they work on a turnaround plan at home. The company had said during proceedings in the U.K. that it planned to apply for the U.S. protection while it finalizes a rescue plan that’s already supported by a majority of its stakeholders. Virgin is seeking to secure a a 1.2 billion-pound ($1.6 billion) rescue, which was announced in July. Since Jan. 1, Virgin’s reservations are down 89 percent year-over-year and demand for the second half of 2020 is at approximately 25 percent of 2019 levels, according to court papers. Virgin’s restructuring plan in the U.K. depends on the approval of its chapter 15 filing in the U.S., the company said in its court filing. Without the plan, there’s uncertainty as to whether Virgin could get enough creditor support to implement its restructuring in time to avoid going into formal insolvency proceedings, according to the filing.
