Originally Posted by
Batwhacker
That’s a convenient theory but unfortunately it is in black and white that VAH Newco 2 (VARA) is in default of its obligations in notes to the values of AU$400,000,000 and US$350,000,000 hence the insolvency trigger.
VAH Newco 2 is not VARA; they are two separate but related entities.
VAH Newco 2 is the sole shareholder of an entity called A.C.N. 098 904 262 Pty Ltd - it was one of the 38 business entities placed under voluntary administration when the overall parent company, Virgin Australia Holdings Limited, entered administration. A.C.N. 098 904 262 in turn holds 100 percent of shares issued by VARA. VARA was also one of the 38 business entities placed under voluntary administration when VAH entered administration.
All the recently filed submissions are looking to do is to move VAH Newco 2 onto the list of companies currently under administration. The applicant, Richard Hughes (Deloitte), is essentially saying look I was given the job of winding up some VAH companies that were thought to be dormant and solvent pursuant to section 491(1) of the Corporations Act 2001. In the course of my work I found that two of them - Newco 2 and Investco - weren't dormant or solvent so I cannot deal with them under section 491(1).
In his affidavit Hughes says that there are three options available for Newco 2 (and Investco) :
- wind them up in involuntary insolvency;
- appoint an administrator; or
- convene a meeting of creditors and obtain permission to wind them up in voluntary insolvency.
He recommends 2. appointing an administrator and further recommends that the administrator be the same as those handling the rest of the Virgin administration.
The guarantor status of Newco 2 on some of the notes is interesting but I don't think it changes much in the grand scheme of things. It's not like it's new debt - it's part of the approximately $1,988,250,000 in unsecured debt owed to bondholders that was identified from the get-go.
As for VARA, I cannot see any material impact. They had already been placed under voluntary administration when VAH entered voluntary administration. We had previously assumed that all the unsecured debt associated with the bonds was held against VAH, the ultimate owner of VARA. We now know that some of that debt is guaranteed by a VAH subsidiary - Newco 2 - and that Newco 2 sits in the chain of ownership that extends from VAH down to VARA.
If you think that the recent Newco 2 revelation has some more material impact, I'm all ears.