The First UK Restructuring Plan: Virgin Atlantic’s Solvent Recapitalisation
At a Glance
Kirkland is advising the UK Civil Aviation Authority on the restructuring of Virgin Atlantic Airways Limited (the “Company”), in the first restructuring plan under the new Part 26A of the Companies Act 2006. The convening hearing was held on 4 August, at which the Court granted permission to convene creditor meetings in accordance with the Company’s proposals. Creditor meetings and the sanction hearing will be held at the end of August.
This represents a major first test of the new procedure, recently introduced under the Corporate Insolvency and Governance Act 2020 (effective from 26 June). The new plan offers the possibility of cross-class cram-down, to impose a restructuring on dissenting stakeholders, and the possibility of compromising operational as well as financial creditors.
The Company’s solvent recapitalisation deal — which has the backing of key financial stakeholders — seeks to ensure the survival of the airline against the backdrop of the existential crisis in the travel industry, owing to Covid-19 and related restrictions. Crucially, the restructuring allows the Group’s planes to continue in operation.The convening hearing raised no major surprises, but illustrated a number of practical points which will inform practice and assist the growing numbers of companies and stakeholders considering pursuing a plan on potential restructurings. Those points are explored in this deck.
If successful, the deal will serve as an important template for restructurings under the new procedure.
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