Law Firms Line Up as Virgin Australia Enters Administration
With numerous possible bidders and the Australian Government, the board and creditors also requiring legal advice, there is potential for several legal roles.
April 22, 2020 at 06:34 AM
3 minute read
A host of local and international law firms are working on the voluntary administration of Virgin Australia after the coronavirus crisis and its high debt put its future in doubt.
The Virgin Australia board put the airline into voluntary administration – similar to the Chapter 11 bankruptcy protection in the US – on Monday night after the government refused financial assistance to the airline and major shareholders Singapore Airlines and Etihad Airways, Chinese conglomerates Nanshan Group and HNA Group declined to further support the carrier.
Local top-tier Australian firm Clayton Utz, including Sydney-based restructuring partner Tim Sackar, is advising the administrator Deloitte. The firm had been advising management before the company entered administration.
Deloitte said it was aiming for a quick sale of the airline and at least 10 separate parties had already expressed interest in the airline.
With so many potential bidders and the Australian Government, the board and creditors also requiring legal advice, there is potential for several law firms to be involved in the administration.
However, many law firms remain coy about their roles, not wanting to be seen to be profiting from the airline's COVID-19 crisis predicament.
Baker McKenzie has been advising the Virgin board, according to one person with knowledge of the situation. The firm declined to comment.
King & Wood Mallesons said it could not comment on reports in the Australia media it was advising the Government in its dealings with the Deloitte administrators. While the Government has declined to provide financial help to Virgin, it has said it wants the airline to survive so as not to leave Australia's largest airline Qantas with an effective monopoly over the nation's airways.
Other local media reports said Corrs Chambers Westgarth is advising bond holders with A$1.8 billion ($1.14 billion) in debt and that Clifford Chance is advising some of the lenders. Both firms declined to comment.
There is an "extraordinary number of parties who are very keen to be involved in the process and the restructuring to see if they can play a part in the relaunch of the business going forward," Vaughan Strawbridge, one of the Deloitte administrators, told reporters after the announcement.
Deloitte will send out an information memorandum next week and seek expressions of interest in the next three weeks. "This is a matter of months, not longer than that. It's not six, nine, 12 months," Strawbridge said of the sale.
Virgin has been operating in Australia since 2000 and employs 10,000 people and flies to 41 local and international destinations.
In recent weeks it has stood down 80% of its workforce and reduced its flights by 95% as travel restrictions have slashed airline revenues and put in doubt its ability to repay A$5 billion ($3.2 billion) in debt.
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