The Federal Court on Tuesday knocked back a final plea from shareholders to halt the sale of Virgin Australia to Bain.
The decision means the company will finally exit administration early next week but will leave many of those who invested in the company without any return at all.
On 25 August, administrator Deloitte revealed the sale would see unsecured creditors, including bondholders, receive between just nine and 13 cents in the dollar on their investment, while shareholders would walk away with nothing.
Employee entitlements and customer travel credits, however, will be covered in full.
While many of the larger shareholders, such as Nanshan, Etihad and Singapore Airlines, accepted the write-off, a number of small parties fought on.
However, Justice John Middleton sided with Deloitte and ruled that, while there were valuable aspects to the former business such as loyalty scheme Velocity, the outstanding liabilities were too great.
Tuesday’s court case was unlikely to change the direction of the deal, which was rubber-stamped by stakeholders at a meeting on 4 September.
While Bain beat out Cyrus Capital Partners in May to become the administrator’s preferred bidder, the decision needed to be waived through by parties owed money. The airline’s bondholders had threatened to table a rival bid, but pulled out late in August leaving Bain’s victory as a formality.
A comprehensive restructuring of the business means it will emerge from administration with 3,000 fewer jobs and without the Tigerair brand.
However, it will significantly continue to fly international routes and continue to offer domestic lounges and business-class flying.
The new network will operate with a slimmed-down fleet, operating a 737 mainline fleet for domestic services but removing ATR, Boeing 777, Airbus A330 and Tigerair Airbus A320s. Its regional and charter fleet will also be maintained.
Last month, Australian Aviation reported how the TWU would resume negotiations with Virgin over working terms after suspending talks the day before Paul Scurrah apparently resigned as chief executive.
National secretary Michael Kaine said the organisation, and other unions, would go back to the table with new owner Bain after receiving information “reconfirming” the carrier’s plan to become a mid-market hybrid and not a low-cost carrier.
The news comes after Scurrah last month announced his exit to be replaced by former Jetstar boss Jayne Hrdlicka.
His departure was significant because he was synonymous with the airline’s plan to operate as a mid-market ‘hybrid’ rather than reverting to being a low-cost carrier like predecessor Virgin Blue.
Hrdlicka, meanwhile, also had a notoriously fraught relationship with unions in her earlier role at the Qantas Group.
In July, Australian Aviation revealed the total breakdown of money owed was:
- Secured lenders and aircraft financiers are owed $2,284 million;
- Unsecured bondholders are owed $1,988 million;
- Trade creditors are owed $167 million;
- Aircraft lessors are owed $1,884 million;
- Landlords are owed $71 million;
- Employees are owed $451 million (in the event of liquidation); and
- Customers entitled to credits for flights that were cancelled due to the pandemic are potentially owed $604 million.
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