If Virgin does go into administration it gets instant protection from creditors and if there is $800 million or so in the bank that should allow for a period of operation whilst the future is worked out. The administrators won't allow it to run at a loss so basically it will just be the peak hour flights between main centres with the dear tickets that continue. Every employee's job gets looked at and those deemed unnecessary are laid off. Costs are ruthlessly cut as the administrators are on the hook for every debt incurred by the company once they take over, if there isn't enough in the kitty it will be down to them to pay the bill themselves.
The administrators run the show and the creditors will make the final decision. I previously worked for a company which went into administration and can still remember walking into the GM's office and finding him sitting at a small table in the corner whilst the new appointee made himself comfortable behind the main desk.
During this period a creditors committee is formed and they get to decide what happens. Basically the two options on offer are:
1. Wind things up, sell off the assets and get back a percentage of what's owed.
2. Restructure the company so it's profitable which generally involves cutting out loss making areas and reducing staff numbers. Also debts are examined and proposals made which involve writing off a percentage of what's owed and/or more favourable terms for the balance, eg write off 20% of the debt, defer payments for a year and extend the repayment period with a lower interest rate. This is a very good time for a potential purchaser to come in as all the difficult work has been done and they are seen as a saviour, backs are up against the wall and substantial losses or redundancies are the next step. Negotiations are very one sided to say the least as they only need to pay the creditors a bit more than they would receive in a fire sale, and can take on the employees they want on the terms they want.
The purchaser gets to take over a company which is restructured into going concern on their terms, rather than moving in early, being liable for debts and having to negotiate with the unions.