Virgin Atlantic appoints advisors to manage a bankruptcy process

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• TGLoyalty says:

  9 May9 May 15:43

  I thought the laws around committing a criminal offence if technically insolvent and taking out debt were relaxed at the start of the lockdown?

  • Rob says:

    9 May9 May 15:57

    Added, thanks.

    • Adam says:

      9 May9 May 16:32

      They haven’t been suspended yet – helpfully the government has said they will suspend them but hasn’t yet modified the law leaving directors in a sticky situation.

      Not to mention the fact that disapplying wrongful trading is only half the battle; creditors will still have a Sequana duty to consider the interests of creditors once there it is reasonably likely they are/will become insolvent, and if they don’t do so will open themselves up to claims for breach of duties that may amount to a similar position as wrongful trading liability. It’s a little half-baked as a protection for died tors! Best to get the administrators in and be protected that way…

• Neil says:

  9 May9 May 15:57

  Well 286000 virgin miles on the line now! Here we go

  • Secret Squirrel says:

    9 May9 May 17:25

    Get em out quick, best to call as other ways take 3x days!

• Clive says:

  9 May9 May 16:06

  Rob you transferring out of holding?

  • Rob says:

    9 May9 May 16:10

    No, but my circumstances may not be your circumstances. As I’ve said, I have ZERO requirement for 3 million Hilton points.

    • davvero says:

      9 May9 May 16:16

      I’m sick of people asking you this. How many times do you have to tell them the same thing? The advice will never change.

      • BJ says:

        9 May9 May 18:28

        @RHYS …do you think I should transfer my Virgin miles to Hilton points? I’ve got just over 500 at stake, I was going to ask Rob but…

        • Rhys says:

          9 May9 May 19:37

          For what it’s worth I haven’t transferred my 60k worth out. I want to use them for flying, less interested in a hotel redemption.

    • Al says:

      9 May9 May 17:46

      Oh no…
      That sinks my heart…
      I can do Maldives Waldorf with half of those 3 million points

      • Rob says:

        9 May9 May 17:52

        Not with 2 kids!

        • Alex Sm says:

          10 May10 May 12:56

          Can do a romantic kid-free vacation while kids spending time with gran!

• Jonathan Atkins says:

  9 May9 May 16:06

  Rob,
  What would you suggest I do with 400,000 virgin points ?
  Thanks

  • Rob says:

    9 May9 May 16:08

    Up to you! See https://headforpoints.com/2020/03/17/will-avios-and-virgin-flying-club-go-bankrupt/

    Take a guaranteed 50% loss or a possible 100% loss.

    • Neil says:

      9 May9 May 16:12

      I have always been willing to roll the dice on these points! Access to KLM is worth the risk frankly

    • Alan says:

      9 May9 May 17:38

      I’ve moved 350k out and left 100k in my VS account, with another 30k due soon from credit card and potential Tesco vouchers that could also be moved across if all turns out to be OK. Even if all turns out OK I’m happier to have hedged my bets.

      • Peter K says:

        9 May9 May 19:22

        Exactly. Peace of mind, though intangible, is worth a lot.

  • BLT says:

    9 May9 May 18:00

    I hedged my bets last month. Transferred 600k to Hilton and ket 500k in Virgin.

• JP says:

  9 May9 May 16:08

  I think the loan against the slots sits with Virgin Atlantic International and not Virgin Atlantic Airways so the pre-pack could be for VAA which carries most of the assets.

  • memesweeper says:

    9 May9 May 16:30

    I think you’re right:

    ‘The deal was made possible by the creation of an airline company – Virgin Atlantic International – which will be on standby to take over the slots if the main airline goes bust.’

    see

    https://www.travelweekly.co.uk/articles/58818/virgin-atlantic-unleashes-value-of-heathrow-slots
    and
    https://www.travelweekly.co.uk/articles/58644/virgin-to-raise-cash-from-heathrow-slots

  • Adam says:

    9 May9 May 19:43

    It matters not too much where the loan sits – if security has been granted over the slots (either by VAA or VAI, even if you secured the debt of the other), that security would prevail through a prepack unless the secured creditors agree to release it (which they of course will not unless the commercially approve the deal).

  • insider says:

    9 May9 May 22:41

    i assume the bondholders could push to liquidate the slots to recover their money. Could leave Virgin in a tricky position?

    • BrightonReader says:

      10 May10 May 03:50

      Who has the money to buy them though?

      It’ll look so good for BA to spend millions on new slots when it’s making thousands of its own staff redundant and shrinking the fleet and will have problems opening all its existing slots anyway unless there is an extended relaxation of the 80/20 rule at all the slot restricted airports on its route network.

• davvero says:

  9 May9 May 16:13

  Don’t panic, don’t panic! Your Flying Club miles are safe!

  • memesweeper says:

    9 May9 May 16:32

    If the airline goes under, and is bought out, are future bookings going to be honoured by the successor? I think that’s more important than my miles.

    • Rob says:

      9 May9 May 17:11

      Unlikely, you would be expected to get a refund via your credit card.

      • memesweeper says:

        9 May9 May 18:29

        That has the potential to be very brand damaging and materially hurt those that bought with debit cards or from countries without s75 equivalents.

        • Mike says:

          9 May9 May 21:06

          Indeed. But if New Virgin is going to honour existing bookings and existing miles so as not to alienate their most valuable customers, what liabilities exactly is it shedding with a prepack? Some leased aircraft? Unsecured debt, if there is any? What else have I missed?

          Also prepack is not going to help much with the cash burn, which even if they fire a third of the staff is going to be painful, given flying is not going to be back to normal for years.

• Tom1 says:

  9 May9 May 16:27

  Two virgin a330s went from lhr to dsa this afternoon.

  https://www.instagram.com/p/B_-NkEOB-Zf/?igshid=hzgq2vp9dgmi

  • Josh says:

    9 May9 May 16:32

    I was always hopeful there would one day be a flight from Heathrow to Doncaster 😂

    • Rob says:

      9 May9 May 17:11

      I flew London City to Sheffield when BA used to do it.

• Josh says:

  9 May9 May 16:29

  This type of administration is what Debenhams has been through recently isn’t it?

  I won’t transfer out my Virgin miles. No need for further hotel points.

  • Rob says:

    9 May9 May 17:13

    Correct. When done properly it works well (unless you’re owed money, of course). Problem is that Virgin has always championed its support of small British suppliers ….

    For clarity, VS owes us nothing at the moment except a tiny bit of flight commission.

    • kruggs says:

      9 May9 May 22:43

      I don’t understand the New Virgin bit though. I assume it would need agreement from all the lessors and debt holders, presumably at a big haircut? Who would want to lend money against New Virgin in the future if they go through this?

      • Rob says:

        9 May9 May 23:10

        New Virgin would be debt free so easy to get a loan. Probably from the same banks. That’s how it goes.

        An eg – my wife restructures bad shipping debt. Her bank gives soft loans to people to buy ships which have defaulted on their loans so the bank can claim it has got rid of the first problem ….

    • Alex Sm says:

      10 May10 May 13:02

      What is flight commission?

      • Rob says:

        10 May10 May 13:35

        Peanuts. 2% ex taxes and charge, so around £1 on a £300 Economy ticket. Business is better of course.

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