Deloitte will hold the first meeting of Virgin Australia’s creditors on April 30 as a buyer is sought from 10 parties for the debt-laden carrier which entered voluntary administration last week.
The purpose of the meeting is to provide creditors with information on the process and confirm if they want to form a committee.
Deloitte will then investigate the affairs of the airline (pdf) and report their findings back to creditors and employees, and make recommendations about the future of each of Virgin’s many subsidiaries, except for Velocity which remains solvent.
The administrators will seek an extension of the standard 25 days from the first meeting to report their findings.
Deloitte has retained Houlihan Lokey to advise them on restructuring and finding a new buyer as soon as possible. It is estimated that Virgin owes nearly $7 billion (US$4.5 billion) to more than 12,000 creditors.
More than 10 parties are reported to have expressed interest in the airline, including Melbourne-based BHG Capital and U.S. private equity firms Apollo Global Management and Oaktree Capital Management.
On April 30, the Australian Financial Review reported that billionaire mining magnate Andrew Forrest is putting together a consortium via his Mindaroo Foundation to put in a bid.
Shares in Virgin lost nearly 44 percent of their value in 2020 and were priced at just 8.6 cents per share when the airline suspended trading on the ASX on April 14.
It stood down 8,000 staff in March to try and stay afloat but went into freefall on the back of strict travel bans caused by the CCP (Chinese Communist Party) virus, commonly known as novel coronavirus.
Today is the first Virgin Australia creditors meeting.
This is a critical step in the administration process and the ASU will be there with a seat at the table to get the best outcome for our members. #SaveVirgin #SaveAviation #VirginAustralia pic.twitter.com/ggfN48QmZx
— Australian Services Union (@ASUnion) April 30, 2020
As Australia faces a gloomy economic outlook with 1 million job losses recorded in a 4-week period between March and April, the federal government asked Virgin to turn to its wealthy foreign investors and the free market for a solution.
Unions and the Labor Party have pressured the government to buy a stake in the airline to prop it up in order to protect the jobs of its 10,000 employees.
The Australian Services Union wrote on Twitter to assure its Virgin members on April 30: “This is a critical step in the administration process and the ASU will be there with a seat at the table to get the best outcome for our members.”
The airline is 90 percent foreign-owned by Singapore Airlines, Etihad Airways, and Chinese state-owned conglomerates HNA Group and Hanshan, while Richard Branson’s Virgin Group owns 10 percent.