30 April 2020 | Financial

VAH (Administrators appointed): Statement following first creditors meeting

30 April 2020: Deloitte Restructuring Services, the Administrators of the Virgin Australia Group, today held the first virtual meeting of creditors. Approximately 1,300 creditors and their representatives joined the call, including financiers, employees, unions and bond holders.

One outcome was the appointment of a Committee of Inspection. The Committee will represent the various creditor groups, and Deloitte will consult with members on matters as needed.

Given the number of creditors, Deloitte believes the Committee will be useful to assist with the conduct of its work across the main operating and employing entities.

Deloitte was appointed as administrator on 20 April 2020 and, since then, has moved quickly in its plan to restructure and refinance the business and seek interested parties for a sale.

A large number of parties have expressed an interest, 8 have signed non-disclosure agreements and negotiations are continuing with a further 12. An Information Memorandum was issued to those parties who have signed non-disclosure agreements on Tuesday. Each of them now has access to the data room.

Morgan Stanley has been appointed, alongside Houlihan Lokey, to run the sale process.

Virgin Australia continues to operate during the voluntary administration process, with 64 return domestic services each week, contracted domestic charter flights and federal government-supported international flights to Hong Kong and Los Angeles.

The Administrators also advised their intention to seek an extension of the convening period of three months – based on the scale and scope of their work to position the business for a successful sale. This would take the period before which a second meeting of creditors was required to approximately 22 August, and is not unusual in a complex voluntary administration such as this.

Attributable to lead Voluntary Administrator and Deloitte Restructuring Services partner, Vaughan Strawbridge:

“Our objective is to restructure and refinance the business so it emerges stronger on the other side of the COVID-19 crisis. It’s still early days, yet I’ve been encouraged by the level of sophisticated party interest in the sale of Virgin Australia.

“We are now moving quickly to finalise a business plan to help guide interested parties and, in terms of next steps, mid-May is currently the timeframe for the receipt of indicative offers. Binding offers will then be required in June. We remain confident that our target of achieving a sale by the end of June is achievable.

“We remain strongly focused on restructuring and refinancing the business, creating a viable operation that will appeal to prospective new owners, and bringing Virgin out of external administration as soon as possible in an outcome that will retain jobs and the airline’s contribution to Australia and its economy.

“Management had already put in place a transformation plan to enhance profitability. Voluntary administration provides a process where that can be accelerated in a way that it couldn’t before.

“I would like to acknowledge everyone at Virgin for the support they have been providing at a time marked by so many challenges. We remain acutely aware of the impact this process has on the 16,000 direct and indirect employees and it’s important that they’re flying again as soon as possible.”