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Kirkland advises Civil Aviation Authority on first UK restructuring plan

Kirkland & Ellis is advising the UK Civil Aviation Authority on the restructuring of Virgin Atlantic Airways, in the first restructuring plan to be launched under the new Part 26A of the Companies Act 2006.

Virgin Atlantic’s plan represents a major first test of the new restructuring plan procedure, recently introduced under the Corporate Insolvency and Governance Act 2020 (effective from 26 June). The new plan offers the possibility of cross-class cram-down, to impose a restructuring on dissenting stakeholders, and the possibility of compromising operational as well as financial creditors. For analysis of the reforms, see our Alert deck.

Virgin Atlantic Airways Limited launched its restructuring plan on 14 July, with the backing of key financial stakeholders. The deal seeks to ensure the survival of the airline against the backdrop of the existential crisis in the travel industry, owing to COVID-19 and related restrictions.

The comprehensive, solvent recapitalisation deal involves a significant shareholder support package (including £200m in cash and the deferral of £400m of fees), £170m third party secured debt financing, and creditor support (including deferrals and advances from payments companies and aircraft lessors), together worth up to £1.2bn over 18 months.

The court convening hearing is scheduled for 28 July, with stakeholder meetings and the court sanction hearing scheduled to follow in the week commencing 17 August. Recognition of the plan will be sought under Chapter 15 of the U.S. Bankruptcy Code.

Crucially, the restructuring allows Virgin Atlantic’s planes to continue in operation. If successful, the deal will serve as important template for restructurings under the new procedure.

The Kirkland team was led by London restructuring partner Elaine Nolan with restructuring associate Kai Zeng.

Scottish aviation company names Giles Wilson as new CEO

Aviation services business John Menzies – one of Scotland’s oldest and largest companies – has announced the appointment of Giles Wilson as chief executive with immediate effect.

He was named chief financial officer of the group in June 2016 and was made interim chief executive on 12 March this year on the departure of Forsyth Black.

Wilson joined the group in 2011, and has held senior roles including finance director of Menzies Aviation and senior vice president of African, Middle East and Indian Operations.

Menzies, which dates back to 1833 when it opened a bookshop on Edinburgh’s Princes Street, selling The Scotsman, said Wilson “brings great financial acumen and a deep knowledge of the aviation services market to this role”.

Chairman Dermot Smurfit said: “Giles provides excellent continuity whilst bringing great energy and enthusiasm to the role. He has strong relationships with our shareholding base, a sound understanding of our business, and is already tackling the challenges and opportunities that lie ahead.

“The board are confident that Giles will provide strong leadership as we continue our drive to sustainably grow our business in the aviation services market.”

Wilson said his appointment comes at a “very exciting” time for Menzies. “We have a strong team in place and I look forward to working with them as we drive further efficiencies from the business, pursue sustainable organic growth, deliver excellent service to our customers and increase shareholder value.”

Black had been ratified as chief executive in September, returning Menzies to what it described at the time as a “more standard executive structure”.