The Chapter 15 bankruptcy filing in New York allows Virgin Atlantic, founded by British billionaire Richard Branson, to reorganize as the coronavirus pandemic continues to rip through the global travel industry, the Business Insider report said on Tuesday.
Chapter 15 is a form of bankruptcy designed for cases involving multiple countries, providing a mechanism for foreign-based companies undergoing bankruptcy proceedings in their own country to access the US court system. It effectively protects Virgin's US assets from creditors as a UK court oversees claims.
Virgin Atlantic is the second Virgin airline to file for bankruptcy protection after Virgin Australia in April.
The carrier, which flies exclusively long-haul international routes and is 49 percent-owned by US-based carrier Delta, suspended operations in April as the coronavirus outbreak reached global proportions. Virgin Atlantic resumed flights in July despite little demand for international travel and has tried to limit costs by cutting more than 3,000 jobs, retiring planes, and closing operational bases.
Virgin Atlantic announced a £1.2 billion ($1.57 billion) private rescue package in July but had not finalized the agreement. The airline had also appealed unsuccessfully for a bailout from the British government. Richard Branson has offered his private island as collateral for a bailout or loan.