Originally Posted by
Section28- BE
You might have noticed that despite the lengthy list of representatives on the COI there is no one representing customers who are currently holding travel credits.
That is because while the business remains a going concern no one holding a travel bank credit is considered a creditor; they are what are known as contingent creditors and the travel bank credits (what is usually known as Unearned Revenue) are contingent debt. Because of that contingent position the value of the travel bank has not yet been reflected in the business's declared $6.88 billion debt position. When you include those travel bank credits Virgin's truer liabilities are more like $8 billion than $6.8 billion.
And to a certain extent the contingent debt represented by the travel credits is more difficult to deal with for an administrator than noncontingent unsecured debt like bonds and bondholders. That's because unlike other unsecured debt that can be negotiated down, any prospective buyer really has no option other than honouring travel credits at full or close to full face value if they hope to bank on customer loyalty shoring up their market share on the other side, . That contingent debt becomes pretty much non-negotiable.
That's conservatively a $1 billion hit to revenue that any buyer is going to have to suck up in their first year of flying.
So, yeah, that odd shaped brownish object bobbing up and down at the deep end of the pool, that's not a Chokito.