Virgin Atlantic Restructure Plan approved

Last month we reported on the first hearing of the Virgin Atlantic Airways Restructure Plan where creditor meetings had been convened. On 4 September 2020 the plan was sanctioned, after 100 per cent of creditors in three classes approved, and 99.2 per cent in the fourth, making it the first scheme approved following the reforms earlier in the year.

At this second hearing, Snowden J confirmed the Court would still follow the “tried and tested” approach established for Schemes of Arrangement which were:

  1. Compliance with the statute.
  2. Each class being fairly represented by those attending the meeting.
  3. Whether the scheme was fair and one which a creditor could reasonably approve.
  4. Was there any “blot” or defect in the scheme.

This was applied here – in particular there were no difficulties approving the scheme where a group of 1,000 or so trade creditors owed less than £50,000 each had been excluded from the trade creditor class. They represented less than 1 per cent of the trade creditors and all classes voted overwhelmingly in favour.  

The judgment offers little in the way of clues as to how discretion will be exercised where there is a dissenting class – this is not something which would have been considered under the Scheme of Arrangement and so we shall need to wait until a more controversial scheme comes before the Courts. 

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