Virgin Atlantic has been granted permission to press ahead with its proposed £1.2 billion restructure and refinancing plan.
The airline on Tuesday (4 August) filed bankruptcy proceedings in the UK to allow creditors to vote on the proposals later this month.
According to the Press Association, the court was told Virgin Atlantic’s cash flow and headroom would be "critical" by the end of September.
Virgin has also filed for Chapter 15 bankruptcy protection in New York to protect its assets in the US.
A Virgin Atlantic spokesperson said the filing was part of its restructuring efforts in the UK, and that the process was supported by the airline’s creditors.
They added the airline remained confident the plan would come into effect in September.
Last month, Virgin Atlantic revealed details of its five-year refinancing package, worth around £1.2 billion.
It includes cost savings of up to £280 million per year, and £600 million support from shareholders – including £200 million from Richard Branson’s Virgin Group.
Virgin’s first attempt to negotiate a Covid rescue package was knocked back by the UK government, with the carrier told to first seek help from the private sector.
Announcing its plans last month, Virgin said creditors and investment firms were ready to stump up more than £600 million in support of the effort.
The airline has been hit hard by coronavirus, with the majority of its long-haul destinations inaccessible owing to the effects of the crisis.
It resumed passenger flights last month after a three-month grounding.
A Virgin Atlantic spokesperson said: "In order to progress the private-only solvent recapitalisation of the airline, the restructuring plan is going through a court-sanctioned process under Part 26A of the Companies Act 2006, to secure approval from all relevant creditors before implementation.
"With support already secured from the majority of stakeholders, it’s expected that the restructuring plan and recapitalisation will come into effect in September. We remain confident in the plan."
Creditors will vote on the restructuring plan on 25 August.