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Did Virgin Atlantic really file for bankruptcy? Not entirely…

Aug. 05, 2020
3 min read
Did Virgin Atlantic really file for bankruptcy? Not entirely…
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“Virgin Atlantic airline files for US bankruptcy protection.”

The headline – or some variation of it – blared across newswires and online media sites Tuesday.

But the splashy headlines detailing Virgin Atlantic’s “bankruptcy filing” may require an asterisk – or at least an explanation.

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It is true that the London-based carrier founded by British tycoon Richard Branson did file a type of bankruptcy protection in the United States on Tuesday. But Virgin Atlantic sought what’s known as “Chapter 15” protection, a relatively obscure filing that’s different than the Chapter 11 protection normally sought be ailing carriers that are seeking to reorganize.

In fact, Virgin Atlantic hasn’t even entered into “administration” – the U.K.’s version of bankruptcy – in its home market. In March, regional carrier Flybe entered administration, ceasing operations with immediate effect.

So, what’s with all of Tuesday’s internet headlines about bankruptcy?

It’s all part of the plan, Virgin Atlantic executives said late Tuesday as they belatedly began to push back against the mushrooming news reports that appear as though they may have caught the company off guard.

Related: Good news: Virgin Atlantic unveils £1.2 billion rescue plan, avoids pandemic-induced bankruptcy

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The airline sent a statement to media early Wednesday morning to address what it called "misreporting overnight."

Virgin Atlantic characterized the Chapter 15 filing in the U.S. as a procedural move, saying in its statement that the "ancillary US proceedings" are only part of an effort to have "U.S. courts to recognize foreign restructuring processes."

The carrier's ongoing restructuring effort includes a voluntary restructuring package with creditors that’s currently working its way through British courts.

That “process is proceeding with the support of the majority of our creditors”, Virgin Atlantic said in a statement on Wednesday.

Still, there’s no question that Virgin Atlantic is struggling. In a British court appearance on Tuesday, Virgin Atlantic warned that it could run out of money next month if its rescue package fails, according to Bloomberg News.

And that’s what led to the Chapter 15 filing in a New York court. It’s not an outright filing of bankruptcy protection in the U.S., but rather a move to protect the airline’s assets in the United States against possible claims by creditors here as it pursues its rescue plan in the U.K.

“The process we have asked to be recognized is a solvent restructuring of an English company,” Virgin Atlantic said in a statement about the Chapter 15 filing. It also noted that “the U.K. process is proceeding...”

The airline resumed scheduled passenger flights on July 20, a return to the skies after suspending service during the early stages of the coronavirus pandemic. Currently, it's operating a limited flying schedule to Hong Kong, New York, Los Angeles and Barbados from its hub at London Heathrow.

By October, the carrier plans to operate at least 19 routes.

Featured image by AFP via Getty Images

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  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
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Best card for premium perks while traveling
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
5X5X miles on flights booked through Capital One Travel.
2X2 Miles per dollar on every purchase, every day
  • Intro Offer
    Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel

    75,000 bonus miles
  • Annual Fee

    $395
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    740-850
    Excellent

Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,400+ lounges, including Capital One Lounges and our Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023