Virgin Atlantic secures US recognition for restructuring plan

Virgin Atlantic Airways was granted US bankruptcy protection as the carrier controlled by Richard Branson pursues a GBP1.2b rescue plan in the UK. The provisional ruling by US Bankruptcy Judge Michael E. Wiles in Manhattan on Friday protects the airline’s American assets and ensures that the debt reorganization will be overseen under the British legal process. After the company takes its next major restructuring step in the U.K., the company will return to Wiles to ask him to make the protections permanent at a hearing scheduled for early September. That next step will be a meeting of creditors scheduled on Aug. 25 as part of the British process, under which any holdouts can be forced to accept the restructuring even if some classes vote against it. Virgin Atlantic says that only one of four creditor groups, comprising trade suppliers, hasn’t backed the plan yet. The rescue will bring in new money from Branson and US hedge fund Davidson Kempner Capital Management, while requiring a restructuring of existing debt.<br/>