Virgin Atlantic has become Richard Branson’s second airline to file for Chapter 15 bankruptcy in the U.S. this year as the industry continues to be ravaged by the coronavirus pandemic.
The company’s filing in U.S. bankruptcy court in the Southern District of New York said it has negotiated a deal with stakeholders ‘for a consensual recapitalization’ that will get the debt off its balance sheet and ‘immediately position it for sustainable long-term growth’.
This move came on the same day the billionaire’s space firm, Virgin Galactic, announced he will become one of the first to go into space on his company’s rockets in an initiative costing millions of pounds.
The U.S. filing is in addition to a proceeding filed in a British court, where Virgin Atlantic obtained approval Tuesday to convene meetings of affected creditors to vote on the plan on August 25.
Virgin Atlantic spokesperson said that the company was pursuing a ‘solvent restructuring’ under British law. The filing means the airline is not yet going into liquidation or going out of business – but the company warned that if a deal with creditors isn’t reached, it could run out of cash by September.
The company’s filing comes just a day after Branson announced he could launch into space aboard his Virgin Galactic aircraft as its first passenger early 2021, potentially blazing a path for commercial flights.