Richard Branson’s Virgin Atlantic Airways faces a crunch vote in less than three weeks that will determine whether its hard-won £1.2-billion ($1.6 billion) rescue goes ahead or if the carrier is headed for collapse.

Meetings of four creditor groups will be held on August 25 after the company began a legal process in the UK seeking to stop any holdouts from blocking the package. Virgin told a London court on Tuesday that it faces collapse next month if the financing plan fails. It filed an ancillary petition for Chapter 15 bankruptcy protection in the US to freeze creditors there and ensure the UK process is recognised.

The airline’s plan, which brings in new money from Branson and US hedge fund Davidson Kempner Capital Management, will require a restructuring of existing debt. Virgin Atlantic says it has already secured backing from three of the four creditor groups: aircraft leasing firms, the providers of $280 million in revolving credit, and so-called related-party creditors including shareholder Delta Air Lines.

That leaves a fourth group to persuade, the airline’s trade suppliers. Virgin Atlantic is one of the first companies to use the new UK court process, which allows a judge to force holdouts to go along with a financial restructuring if enough creditors approve.

Virgin Atlantic told the London court that without the plan’s approval, available cash would fall below £75 million, allowing bondholders to enforce the sale of vital operating slots at London Heathrow airport.

Trans-Atlantic trade

The Crawley, England-based carrier has been hit particularly hard by the coronavirus crisis. The lucrative North Atlantic market on which it depends is still largely wiped out as the outbreak continues to rage in the US.

Since January 1, bookings are down 89 per cent year-over-year and second-half demand is at about 25 per cent of 2019 levels, according to court papers.