Virgin Australia’s administrators, Deloitte, have revealed that the airline was struggling with debt before the advent of COVCID-19, reporting that its preliminary analysis indicates the group was insolvent from 22 March 2020 and possibly as early as 18 March 2020.
Deloitte said Virgin Group balance sheet was already weakened from “cumulative losses” accrued from 2009, well before the impact caused by COVID-19.
“During this period revenue had continued to grow, however it was not profitable growth,” Deloitte said.
Creditors are due to vote on 4 September 2020 on the proposal by Bain Capital to buyout the airline.
The US private equity firm is offering $3.5 billion for Virgin Australia, including a payment of $450 million in worker entitlements and $2.3 billion of debt Virgin owes to secured creditors.
Deloitte estimated the return to unsecured bondholders would be between $462 million and $612 million.
