Virgin Australia Group announced on Tuesday that the company’s Administrators have reported to creditors and recommended approval of the Deeds of Company Arrangement (DOCA’s) proposed by Bain Capital.
Today (August 25, 2020), the Administrators of the Virgin Group issued their report to creditors recommending the Deeds of Company Arrangements (DOCS’s) proposed by Bain Capital. The proposal ensures all employee entitlements are paid in full, customer travel credits are honored, the continuation of some supply and finance arrangements and a return of between $462 and $612 million to unsecured creditors. In Tuesday’s announcement, Deloitte’s Joint Voluntary Administrator, Vaughan Strawbridge said,
“We have set out our opinion to creditors that it is in their best interest to approve the deed of the company arrangement proposed by Bain Capital as it provides for the best return to creditors in what are extraordinary circumstances, and that were impossible to foresee. This will provide certainty for the business under new and committed owners. It provides certainty for employees and customers, a return to creditors, and it can be completed sooner, and at less cost than other alternatives. It achieves all the objectives of the voluntary administration process that we sought from the outset. Now we just need to bring the airline out of administration as soon as possible. Where we are today is a testimony to the commitment of the staff and all stakeholders of the business who have made this possible and so strongly supported the administration process.”
The second meeting of creditors will be held on September 4, 2020 and they will be asked to decide whether to accept the DOCAs, return the company to the control of the directors or put the companies into liquidation. The Administrators signed a binding agreement for the sale of the business to Bain Capital on June 26, 2020. The sale can be completed if there is an execution of the DOCAs and transfer of shares from Virgin Australia Holdings Limited to Bain Capital or through an asset sale agreement (ASA) that transfers the business and assets into a new corporate structure, and the existing companies are placed into liquidation.
Bain Capital proposes the sale of the company be completed by a DOCA structure involving 10 separate DOCAs covering the entities currently in voluntary administration, which will preserve most current employee jobs and preserve their entitlements. Additionally, any entitlements not retained would be paid in full without having to claim in the DOCAs. Under Bain’s proposal, unsecured creditors are expected to receive claims between 9 and 13 cents on the dollar, which will be paid from a proposed Creditors’ Trust.
Source: Virgin Australia