Virgin Australia’s administrators have all but ruled out a deal with anyone but Bain Capital, despite moves by bondholders to derail the sale process with a “superior proposal”.
Following on from last week’s court hearing at which two bondholders failed to get access to confidential information about the sale transaction with Bain, Deloitte has defended its handling of the administration.
Deloitte restructuring services partner Vaughan Strawbridge said the sale process undertaken had been extensive and managed to a tight time frame to avoid the airline going into liquidation.
• “In such extraordinary circumstances, driven by the COVID-19 pandemic and its impact on the airline, resulting in a lack of liquidity in the business, liquidation was a significant risk,” said Mr Strawbridge.
“The sale to Bain Capital means we have achieved a big part of the objectives we set when we were appointed administrators, being the airline is able to continue to operate, the number of jobs retained is maximised, and the best outcome can be delivered for all creditors as the business comes out of voluntary administration as soon as possible.”
He said the Committee of Inspection, made up of 35 creditors and their representatives, had endorsed the sale process undertaken by Deloitte.
“We have also consulted regularly with the bondholder creditor group, and will continue to do so,” Mr Strawbridge said.
Next step
The next step in the process was the second creditors meeting on August 22, at which creditors would vote on whether to complete the sale to Bain Capital via a Deed of Company Arrangement (DOCA).
Mr Strawbridge said the alternative was a traditional asset sale, that would take significantly longer to achieve, and be a costly exercise.
“The return to unsecured creditors is expected to be significantly better if terms of a DOCA is approved by creditors at the second meeting,” he said.
An alternative proposal, such as that being prepared by bondholders, would only be put to creditors if the administrators determined it represented a better deal for all those concerned.
A creditors report, including details of the sale to Bain Capital would be distributed to creditors five business days before the meeting.
Mr Strawbridge said they opposed bondholders’ Broad Peak and Tor’s application for access to those details because it would have put the sale transaction at risk.
“The offer previously put forward by these bondholders was not taken forward due to its conditional nature, lack of committed funding or certainty of an outcome,” he said.
“There is still a lot of work to do in restructuring the airline before completion of the sale transaction to Bain Capital, and we are now working hard on this with the Virgin team.”
Virgin Australia went into voluntary administration on April 21 with debts of $6.8bn owed to more than 10,000 creditors, including $2bn owed to bondholders.
Sourced from The Australian.com.au