20 buyers now circling Virgin Australia

[Section28- BE]

Heck, if you feel you can't talk to someone about it, you can reach out to me, the anonymous bloke on the internet.

Sorry for the thread drift, but just felt that needed to be said.

'Tremendously', well said 'Sir'!!!!

And, for what it is (/or not) worth well onboard- as 'another' anonymous bloke on the Interweb, reckon we have all been busted-up by this Gig at one point or another......???
(Which- is separate to the machinations of 'this Event'- and 'appropriate' Corporate Governance/& communication inside the process.....).

Be Well/and rgds all
S28- BE

[Come in spinner]

Gentlemen
its alway darkest before the dawn.
Hang in there.
Think of the money being spent on research.
May I suggest not paying attention to local media, Australian media seems to be more gloomy than the rest of the world.
plan for the worst but hope for the best.

[wheels_down]

RIP Go Cat. 2007-2020


First Flight MEL-OOL 23/11/2007 under the command of Ken Broomhead (now long retired).


Inagural Flight

https://cimg6.ibsrv.net/gimg/pprune.org-vbulletin/1928x1260/58460941_2301819543209995_3538622709065842688_o_d02ecf11c8c2 2c6e3f64b5e4a3c5962e1fe253de.jpg



https://cimg7.ibsrv.net/gimg/pprune.org-vbulletin/604x453/tiger8_2_af117a27c7af378ad12f7824a51a3f0c533f7269.jpg

[machtuk]

RIP Go Cat. 2007-2020


First Flight MEL-OOL 23/11/2007 under the command of Ken Broomhead (now long retired).


Inagural Flight

https://cimg6.ibsrv.net/gimg/pprune.org-vbulletin/1928x1260/58460941_2301819543209995_3538622709065842688_o_d02ecf11c8c2 2c6e3f64b5e4a3c5962e1fe253de.jpg



https://cimg7.ibsrv.net/gimg/pprune.org-vbulletin/604x453/tiger8_2_af117a27c7af378ad12f7824a51a3f0c533f7269.jpg
I don't remember those girls, I should have! -)!
Broomy was a character, had the priv of flying with the old codger a few times -)
RIP Tigers, once VA set the trap you where doomed! -(

[KRUSTY 34]

It reads somewhat like... We’re not equipped to do this!

And this is just the beginning of sorting out the ownership and leasing liabilities of aircraft and engines.

[-41]

Relax Blackout, I’m sure Paul Scurrah is still getting $22,000 a week.

The debt shall be whisked away with the power of gender neutral unicorns and trendy stay strong hash tags.

[Sunfish]

........and that is why I suggested staff don't wait around for the phone to ring. Try and find alternative employment and if VB wants you back its a bonus. I know its hard, maybe even impossible, but you wont know if you don't have a go.

I have no idea where this Virgin mess will end.

[On eyre]

........and that is why I suggested staff don't wait around for the phone to ring. Try and find alternative employment and if VB wants you back its a bonus. I know its hard, maybe even impossible, but you wont know if you don't have a go.

I have no idea where this Virgin mess will end.

The fat lady just picked up the score for “Liquidation Liquidation” today 😳😳

[Aussie Fo]

........and that is why I suggested staff don't wait around for the phone to ring. Try and find alternative employment and if VB wants you back its a bonus. I know its hard, maybe even impossible, but you wont know if you don't have a go.

I have no idea where this Virgin mess will end.


When the lawyers have bled it for every penny, after the administrator maximises their profits and runs off into the sunset, the previous management watching from the sidelines still trying to count their bonuses, leaving the employees of all Airlines on significantly reduced conditions, proudly telling everyone how great a job we did, whilst refloatIng the airline maximising profit to gullible investors praying this investment might save their retire plans.

[Icarus2001]

The fat lady just picked up the score for “Liquidation Liquidation” today 😳😳 Can you add anything to that? Or give me a clue?

[On eyre]

Can you add anything to that? Or give me a clue?

Just my crystal ball gazing.
However with the Administrators “Locked in Bain bid” and the alternative bond holders proposals surely to be tested in court, as usual the winners will only be the lawyers. I surmise that neither party will win out to a workable solution hence my allusion to the unpalatable conclusion above.
If only I was wrong for all staff involved but you know crystal balls 😳😳.

[MacTrim]

Just my crystal ball gazing.
However with the Administrators “Locked in Bain bid” and the alternative bond holders proposals surely to be tested in court, as usual the winners will only be the lawyers. I surmise that neither parties will win out to a workable solution hence my allusion to the unpalatable conclusion above.
If only I was wrong for all staff involved but you know crystal balls 😳😳.

yes, I wish I was wrong too, but unfortunately we are in agreement... I hope some of you guys can still go for a VR package 🤞🤞🤞

[Servo]

The VR is open to all crew and as I am on 737 have the option in the back of my mind. Difficult decision, do I take the money and have no where to go or take my chance that Bain will get the airline back up, conditions are suitable to get through this next peak in Australia and beyond.

I want to point out that I am ok, my reference in a previous post was just speaking out loud. Given the circumstances, I and my family are taking one day at a time and hoping for the best. I wish to thank all those of you that have reached out to me offering words of support and care. Thank you. It means a lot.

It is hard to stay focused and keeping the chin up though.

Please, everyone, take care. Be careful. Wear a mask. I hope you and your families stay healthy and safe.

Servo

[DUXNUTZ]

What’s VR worth?

[Turnleft080]

Union: Don’t reject Bain out of spiteVirgin Australia employees facing the axe have been urged by a key union not to vote against the sale to Bain Capital out of spite.

Does anyone know which union 'The Australian' was talking about.

[Sunfish]

That will be the TWU for sure.

[MickG0105]

That will be the TWU for sure.
ALAEA, actually.

Australian Licensed Aircraft Engineers Association secretary Steve Purvinas said he was disgusted to see talk by some of those workers suggesting a “no” vote to the deal with Bain.

“It amounts to ‘if I can’t have a job, I will go out of my way to make sure you don’t have one either’,” Mr Purvinas said.

“A ‘no’ vote by them does not increase their lot and I would be extremely disappointed if any union supports a position based on spite.”

[Section28- BE]

The Australian, now quoting (35 mins ago):Virgin bondholders’ plan ‘not credible’Virgin Australia’s new owners Bain Capital have lost patience with bondholders’ attempts to derail the sale process.

rgds
S28

[Boeingpilot738]

ALAEA, actually.

I’d really like to know who these people are that he’s hearing this from, I’ve spoken to at least half a dozen A330 and 777 crew over the last few days, both cabin and flight crew and this simply isn’t the sentiment that’s out there.

[Section28- BE]

Link: https://www.fedcourt.gov.au/__data/assets/pdf_file/0009/78444/Interlocutory-Application-1182020.pdf

Wonder- How that information sharing issue, is all going.....???
rgds all
S28- BE

[Sunfish]

So Bain stamps it’s little foot. My guess is that these guys plan to trouser at least a billion when they exit this deal. My guess is also that the creditors are on the hook for twice what Bain has already spent sorry, “invested. if Deloittes can’t deliver Virgin to them.

[turbantime]

Rumour has it that Bain are proposing the award wage on the 737. Fun times.

They just might find that they’ll get more VR requests than originally intended if it is true.

[Ragnor]

Oh crap I hope not.... AJ first words in last weeks town hall was what ever EBA Bain give to VA we will have to match it to remain competitive.

[TBM-Legend]

Virgin Australia has told staff about 400 Queensland roles will be made redundant as part of the airline's restructure.
It is not clear how many people will leave the business, with redeployment and voluntary redundancy discussions underway.
Last week the company revealed its plans to make about a third of its workforce redundant (https://www.9news.com.au/national/virgin-australia-staff-to-lose-jobs-airline-unveils-future-plans-bain-capital/8212acfb-3442-4614-9a8e-9e8dc4852fc3) with approximately 3000 jobs expected to go under new owners Bain Capital.

Qld Govt $200M is in disarray according to Govt insiders...

[Icarus2001]

Rumour has it that Bain are proposing the award wage on the 737. Fun times. Mmmmm I was under the impression that when one "buys" the company then the current EBA comes with it. An EBA that has expired remains in force until a new one replaces it. Fun times ahead.

[Section28- BE]

Without, wanting to Spook-Horses, nor prosecute/apply 'a' view.... and given, the 'stuff' that has occurred today in various fields/jurisdictions....

AFR Link here: https://www.afr.com/companies/transport/there-should-be-no-side-deals-bain-capital-outs-note-holders-20200811-p55kix

And then, ex Mr 'Icarus's observation:

Mmmmm I was under the impression that when one "buys" the company then the current EBA comes with it. An EBA that has expired remains in force until a new one replaces it. Fun times ahead.

Is- 'it' reasonable to 'offer' the view that, this GIG ain't done....., by- Anyway, Shape nor Form, yet!!!!????

Given, Middleton J's- preceding 'comments' in the running/on the journey of this 'Process', for want of a 'term'.....????

rgds/ & evening all
Be Well
S28- BE

Extract:'There should be no side deals': Bain Capital outs noteholdersJemima Whyte (https://www.afr.com/by/jemima-whyte-gkpi1r) Senior reporterAug 11, 2020 – 10.30amBain Capital has revealed it was approached by the two hedge funds leading a rival recapitalisation proposal for Virgin Australia, just days after the funds sent a seven-page proposal to administrator Deloitte and attempted to gather more support from creditors.

In a statement, the US-based private equity firm dismissed the recapitalisation proposal led by Broad Peak Investment Management and Tor Investment Advisers, which are owed $300 million, as "not credible", "incomplete" and "indicative".
Deloitte says it is not going to consider the alternative proposal after signing a binding deal with Bain Capital for Virgin Australia.Under the hedge funds' proposal, which is conditional on meeting Virgin management and stakeholders including unions, lessors and QIC, unsecured creditors swap their debt for shares in the airline and the two funds would underwrite an $800 million capital raising to be offered on a pro-rata basis to all creditors. Virgin would then be relisted on the ASX.

In its statement, Bain also said it does not believe in "side deals" and the funds are "trying to frustrate the administration process by creating as much noise and interference as possible".

"The two hedge funds recently approached Bain Capital. It wouldn’t take much to imagine what they are seeking. Bain Capital has rejected the proposal. Bain Capital believes that similarly situated creditors should be treated equally and that there should be no side deals," the private equity firm said in a statement.
A Bain Capital spokesman declined to give further details.

The bondholder group have previously attempted to unseal the confidential terms of Virgin's proposed sale to Bain in the Federal Court, and sought a Takeovers Panel intervention to ensure they can put their proposal to creditors for a vote at that September meeting. On Tuesday, the latest Federal Court legal appeal to ensure the proposal is put on the ballot and a facilitator between the group and the administrator was adjourned until next week.Ruled out by DeloitteIn a statement, a spokesman for the bondholder group said it was standard to meet with the preferred bidder about expected returns.

"As is usual in many voluntary administration processes, we have held discussions with Bain Capital to examine various options for an appropriate recovery for all creditors, including the bond holders," the statement said.

"We continue to progress our proposal and have been heartened by the widespread support for our proposal in recent days."

Administrators Deloitte has already said it would not consider the alternative proposal after naming Bain Capital as its preferred bidder.

"While it is open to any party to submit an alternative proposal, it cannot be considered by the administrators, or recommended to creditors, given the binding agreement already in place," the administrator said.

The Australian Financial Review's Street Talk column reported this week that Faraday, which was advising the bondholder group, has been sidelined from the process (https://www.afr.com/street-talk/virgin-bondholders-change-tack-adviser-drops-away-20200803-p55hx7).

On Friday, the bondholder group circulated a summary of a proposed deed of company arrangement to drum up support from more bondholders and other creditors, which the group says it has been restricted from speaking to by administrators.

The airline's 12,000 or so creditors, owed nearly $7 billion, will vote on proposals to buy the airline or liquidate the group at a meeting on or before September 4. Bondholders are one of the more significant groups by value.

They say their plan would deliver between 50¢ and 67¢ on the dollar to bondholders who elect to participate in the new capital raising. Under the proposal, the return for those who do not is estimated to be between 38¢ and 47¢ on the dollar.

Bain has already injected $125 million (https://www.afr.com/link/follow-20180101-p55bkh) to ensure the business remains solvent until creditors approved its takeover.

Broad Peak and Tor said they would repay this interim funding.

Jemima Whyte (https://www.afr.com/by/jemima-whyte-gkpi1r) writes on business, specialising in companies, capital markets and innovation. Jemima has reported on business for The Australian Financial Review for more than 13 years. Email Jemima at [email protected]

[Turnleft080]

Rumour has it that Bain are proposing the award wage on the 737. Fun times.

They just might find that they’ll get more VR requests than originally intended if it is true.
For goodness sake she still got that chainsaw in her hands, would someone please take it off her.

[slice]

So the play by Bain would presumably be if the new ultra-flexible award level salary agreement doesn’t get voted up then they threaten to make 200~250 more 737 pilots redundant.

[Derfred]

Standard industrial play - make a low-ball offer before negotiations even begin, then your opponent won’t feel so insulted by your “real” offer, no matter how insulting it may actually be...

[Sunfish]

You still haven’t seen the claws or smelt the rotting breath of this vampire. Nothing you can think of in your worst nightmares is impossible as long as it’s legal. Don’t you realise that you are standing between the Bain staff and a generational fortune? Some of you still don’t get it. These guys are going to walk away with fortunes that will support their great grandchildren. That is why I keep reminding you about their exit strategy.

When you sit down at table with them remember that. What is at stake is your salary versus them becoming rich beyond the dreams of avarice. Plan accordingly.

[non_state_actor]

Rumour has it that Bain are proposing the award wage on the 737. Fun times.

They just might find that they’ll get more VR requests than originally intended if it is true.



Someone might want to have a read of the whole document before trying that on. Just about every roster ever published previously would have been in breach of the award. Not to mention meal breaks every 5 hours, 24 hour rest periods, allowances for everything, 38 hour work week, guaranteed a weekend off every month, $7.40 for every sign on/off between 1900 and 0700, annual leave that can be forced to be taken within 12 months etc etc An airline would grind to a halt under those arrangements.

[Dale Hardale]

For goodness sake she still got that chainsaw in her hands, would someone please take it off her.

That will be the Jetstar CEO standard issue chainsaw which should have been handed back when she left to go and milk cows.

[Rashid Bacon]

The bondholders are probably snookered because a condition of Bain taking over Virgin was that "no competing proposal would go before creditors because Bain required certainty its bid would be successful in providing interim funding." (AFR 13 July).

I would be surprised if a creditors' meeting could successfully overturn that.

[Sunfish]

Rashid, Bain may have made it a condition, but it’s unenforceable.

[Rashid Bacon]

Legally it might be unenforceable, but will the creditors go elsewhere on the day and does the bondholder proposal definitely guarantee a higher return ??

[krismiler]

Rumour has it that Bain are proposing the award wage on the 737. Fun times.

They just might find that they’ll get more VR requests than originally intended if it is true.

This would be correct if there were other jobs available in the usual places such as Asia and the Middle East, those highly paid China jobs would become worth going for too. At the moment there are so many pilots stood down that getting ANY flying job at all would be a miracle. Even when borders reopen, travel isn't forecast to return to 2019 levels until 2024.

If Bain simply post out contracts paying award wages, starting at the top of the list of people they want to keep on, they will probably have enough takers before they reach the bottom. Having to take the basic award for a few years in order to keep the B737 job and BNE base would be a price many would pay, given the lack of alternatives.

[Oz Pilot]

You still haven’t seen the claws or smelt the rotting breath of this vampire. Nothing you can think of in your worst nightmares is impossible as long as it’s legal. Don’t you realise that you are standing between the Bain staff and a generational fortune? Some of you still don’t get it. These guys are going to walk away with fortunes that will support their great grandchildren. That is why I keep reminding you about their exit strategy.

When you sit down at table with them remember that. What is at stake is your salary versus them becoming rich beyond the dreams of avarice. Plan accordingly.


I totally agree and I’ll add something that came to light 6 days ago.
Bain (via the so called PS puppet) announces massive redundancies even after months of blowing sun up your ass 🤦‍♂️ (Saw that coming months ago) but wait, this was their plan all along, why?

Take this scenario, Bain’s history is chiseled into stone (go ask all their other victims), they announce massive redundancies and cancel a well run B777 cash flow freight run between Australia and the US, and 4 weeks prior creditors meeting where a vote would confirm (or not) Bains ownership of VA BUT instead of waiting (hiding/more BS) they made that announcement 🤷‍♂️

Their plan was never to run/own anything, their plan was to buy assets (be it little in the case of VA) strip and make money! as they have first dibs in a liquidation 💡
They wanted to upset the apple cart and your staff played right into their hands of showing how much you loved the company and your 2 faced CEO.
Bain are praying the latest 3000 victims plus previous ones from Tiger and NZ hate Bain so much they might just vote NO along with the Bond Holders, thus it has a very good chance the liquidation will finally go ahead.

Good work PS, you didn’t see that coming OR did you? Or was moving your office into the same building as your Administrator an accident? 😎

I feel sorry for you lot, now it’s time for the rest to pull your heads out of the sand and have a good look around, Bain blind sided you! Are you still going to send 😍😍😍😍👄👄👄👄👄❤️🧡💛💚💙🥰🥰🥰🥰 to PS and his team now? Replaced with this 💔💔💔 I’m guessing

[chookcooker]

I totally agree and I’ll add something that came to light 6 days ago.
Bain (via the so called PS puppet) announces massive redundancies even after months of blowing sun up your ass 🤦‍♂️ (Saw that coming months ago) but wait, this was their plan all along, why?

Take this scenario, Bain’s history is chiseled into stone (go ask all their other victims), they announce massive redundancies and cancel a well run B777 cash flow freight run between Australia and the US, and 4 weeks prior creditors meeting where a vote would confirm (or not) Bains ownership of VA BUT instead of waiting (hiding/more BS) they made that announcement 🤷‍♂️

Their plan was never to run/own anything, their plan was to buy assets (be it little in the case of VA) strip and make money! as they have first dibs in a liquidation 💡
They wanted to upset the apple cart and your staff played right into their hands of showing how much you loved the company and your 2 faced CEO.
Bain are praying the latest 3000 victims plus previous ones from Tiger and NZ hate Bain so much they might just vote NO along with the Bond Holders, thus it has a very good chance the liquidation will finally go ahead.

Good work PS, you didn’t see that coming OR did you? Or was moving your office into the same building as your Administrator an accident? 😎

I feel sorry for you lot, now it’s time for the rest to pull your heads out of the sand and have a good look around, Bain blind sided you! Are you still going to send 😍😍😍😍👄👄👄👄👄❤️🧡💛💚💙🥰🥰🥰🥰 to PS and his team now? Replaced with this 💔💔💔 I’m guessing

Tiger and VANZ are no longer creditors so don’t get a vote, you dimwit. But you go ahead and continue playing 4D chess

[Boeingpilot738]

I totally agree and I’ll add something that came to light 6 days ago.
Bain (via the so called PS puppet) announces massive redundancies even after months of blowing sun up your ass 🤦‍♂️ (Saw that coming months ago) but wait, this was their plan all along, why?

Take this scenario, Bain’s history is chiseled into stone (go ask all their other victims), they announce massive redundancies and cancel a well run B777 cash flow freight run between Australia and the US, and 4 weeks prior creditors meeting where a vote would confirm (or not) Bains ownership of VA BUT instead of waiting (hiding/more BS) they made that announcement 🤷‍♂️

Their plan was never to run/own anything, their plan was to buy assets (be it little in the case of VA) strip and make money! as they have first dibs in a liquidation 💡
They wanted to upset the apple cart and your staff played right into their hands of showing how much you loved the company and your 2 faced CEO.
Bain are praying the latest 3000 victims plus previous ones from Tiger and NZ hate Bain so much they might just vote NO along with the Bond Holders, thus it has a very good chance the liquidation will finally go ahead.

Good work PS, you didn’t see that coming OR did you? Or was moving your office into the same building as your Administrator an accident? 😎

I feel sorry for you lot, now it’s time for the rest to pull your heads out of the sand and have a good look around, Bain blind sided you! Are you still going to send 😍😍😍😍👄👄👄👄👄❤️🧡💛💚💙🥰🥰🥰🥰 to PS and his team now? Replaced with this 💔💔💔 I’m guessing

No need to feel sorry for us, we don’t need your pity. Bain haven’t blind sided anyone, we know what’s coming, we’ve known it for months and despite knowing it, there’s still not a damn thing we can do about it, we’re along for the ride and wherever it ends we’ll get off and move along.

Seems to be there’s a large amount of people here who think that VA crew have no idea what’s about to happen to them and everyone else here does. We’re well aware it’s not rainbows and unicorns.

[Turnleft080]

Oz Pilot and Sunfish. Do you think Cyrus, Indigo, Brookfield, GBH would of done anything different. If anything the last 3 would of turned it into Ryanair with 20 planes.
I remember Cyrus saying keeping the fleet intact. They were very much less capitalised and when Deloittes through them out the door they revealed they would
also scale back the airline to what Bain is doing now.

[slice]

I don't quite know how VIrgin Staff 'played into their hands' ? Staff always knew big redundancies were coming. No one was under any illusions about what was going to occur. I don't think looking at Workspace really gives any sense of what everyone (at least Flight crew anyway) knew and sensed ? Oz pilot speaks as if any of them had any control over events. Other than the Unions fighting the good fight for entitlements, ongoing terms and conditions, re-employment, and stand down provisions etc. Virgin employees are just passengers in this giant turd of a roller coaster ride.

[Led Zeppelin]

About the only certain thing one can say about this unholy mess is that there will be a creditors' meeting and that there will be a vote - everything else is speculation.

I don't believe Tiger and VANZ have any voting rights at this meeting.

[The Bullwinkle]

This would be correct if there were other jobs available in the usual places such as Asia and the Middle East, those highly paid China jobs would become worth going for too. At the moment there are so many pilots stood down that getting ANY flying job at all would be a miracle. Even when borders reopen, travel isn't forecast to return to 2019 levels until 2024.

If Bain simply post out contracts paying award wages, starting at the top of the list of people they want to keep on, they will probably have enough takers before they reach the bottom. Having to take the basic award for a few years in order to keep the B737 job and BNE base would be a price many would pay, given the lack of alternatives.

Maybe not!

https://youtu.be/j6FnJMlNWSU

[krismiler]

This guy sounds like he's reading off a script prepared by the Chinese government. Whilst domestic air travel in China is increasing, most of the foreign pilots were laid off or given LWOP, those remaining are increasingly on local terms rather than the high $$$ contracts which got them there in the first place. Moving to China was a big gamble due to the high failure for medical and sim ride, agencies used to send over any pilot they could get their hands on who met the minimums as the percentage that got through was so low. Then there was the issue of commuting or moving families there.

All Bain need to do is offer contracts to the exact number they want moving down the list, the percentage that sign will indicate the "no show rate". They then make up the shortfall in round two by accounting for that rate eg. send out 200 more offers if they need 170 pilots. Job done.

[Derfred]

I’m sorry, I must be missing something.

Everyone seems to think that Bain can dictate the terms and and conditions of the pilots who work for them.

That is not true.

This is Australia. There are a lot of things in Australian employment law that favour the employer, but this is not one of them! Bain Capital cannot force you to vary your EBA. They will ask you, they will try to bluff you, but you do not need to agree to it.

They will try on a huge bluff: for example if you don’t agree to xxx then yyy pilots will be made redundant.

Do not accept that bluff.

I’ve seen it before,

regards, Fred.

[Sunfish]

The bond holders are not without support.

https://www.theage.com.au/business/companies/virgin-s-rebel-bondholders-get-ubs-credit-suisse-deutsche-support-20200812-p55l3j.html

What is Bains exit strategy?

Whatever it is, you can be assured they will plan to walk away with every dollar they can hoover up from Creditors, suppliers, staff, the public and the state and federal government.

I promise you, Deloittes by now is wishing they never heard of Bain because they are going to be dragged through the mincing machine by the terms of the heads of agreement they signed.

I refer you to the terminology of the news report about one aspect; Bain “injected “ $120 million or so into Virgin. Not “invested” because they aren’t solvent, not “lent” because there is no entity to lend to. Anyone care to guess the terms of that little earner? My guess is that the interest rate on that money, if you can call it that, is effectively 100% every three months. In other words, Bain will get to double its money even if the deal falls through. They have probably ALREADY covered the costs of this deal and made a handsome profit even if Virgin was liquidated tomorrow. The poor schmucks responsible are Deloittes.

”we have a. secret deal”. “No, we won’t look at your deal because ours is better”. “we will never show you the deal”. Don’t you poor guys understand the games being played here?

[havick]

I’m sorry, I must be missing something.

Everyone seems to think that Bain can dictate the terms and and conditions of the pilots who work for them.

That is not true.

This is Australia. There are a lot of things in Australian employment law that favour the employer, but this is not one of them! Bain Capital cannot force you to vary your EBA. They will ask you, they will try to bluff you, but you do not need to agree to it.

They will try on a huge bluff: for example if you don’t agree to xxx then yyy pilots will be made redundant.

Do not accept that bluff.

I’ve seen it before,

regards, Fred.

^^^^ This.

They will make the same amount of crew redundant no matter how you vary your pay scales etc.

[Boeingpilot738]

The bond holders are not without support.

https://www.theage.com.au/business/companies/virgin-s-rebel-bondholders-get-ubs-credit-suisse-deutsche-support-20200812-p55l3j.html

What is Bains exit strategy?

Whatever it is, you can be assured they will plan to walk away with every dollar they can hoover up from Creditors, suppliers, staff, the public and the state and federal government.

I promise you, Deloittes by now is wishing they never heard of Bain because they are going to be dragged through the mincing machine by the terms of the heads of agreement they signed.

I refer you to the terminology of the news report about one aspect; Bain “injected “ $120 million or so into Virgin. Not “invested” because they aren’t solvent, not “lent” because there is no entity to lend to. Anyone care to guess the terms of that little earner? My guess is that the interest rate on that money, if you can call it that, is effectively 100% every three months. In other words, Bain will get to double its money even if the deal falls through. They have probably ALREADY covered the costs of this deal and made a handsome profit even if Virgin was liquidated tomorrow. The poor schmucks responsible are Deloittes.

”we have a. secret deal”. “No, we won’t look at your deal because ours is better”. “we will never show you the deal”. Don’t you poor guys understand the games being played here?

Again...why do you assume that “us poor guys” don’t understand what’s happening?

You’ve talked a lot about Bain’s exit strategy. With the ‘guesse’s’ ‘probably’s’ and ‘maybe’s’ from the above post, why don’t you inform us what it is.

[Sunfish]

If I knew Bains exit strategy I would. However I’m afraid, based on overseas experiences, that it is not beneficial to anyone but Bain, although no doubt it will be perfectly legal as are all their actions. The secrecy surrounding their offer suggests it.

‘What I am trying to explain is that the types of behaviour that manifest themselves in these deals is what I would term “non empathetic “ to an extreme. This is because people’s behaviour changes when they stand to make a real fortune out of manipulating you and your situation. They have no compunction whatsoever about destroying you and your career.

The American exit strategy is to strip the remaining cash out of the business, load the company to the rafters with debt and then flog it to the stock market. The resulting mess then falls apart to
the dismay of staff, investors, creditors the public and the government AGAIN.

[Servo]

This guy sounds like he's reading off a script prepared by the Chinese government. Whilst domestic air travel in China is increasing, most of the foreign pilots were laid off or given LWOP, those remaining are increasingly on local terms rather than the high $$$ contracts which got them there in the first place. Moving to China was a big gamble due to the high failure for medical and sim ride, agencies used to send over any pilot they could get their hands on who met the minimums as the percentage that got through was so low. Then there was the issue of commuting or moving families there.

All Bain need to do is offer contracts to the exact number they want moving down the list, the percentage that sign will indicate the "no show rate". They then make up the shortfall in round two by accounting for that rate eg. send out 200 more offers if they need 170 pilots. Job done.

Although it does sound very scripted, I know for a fact that Myles would 100% believe and feel what was being said in that video. Having known Myles for 20+ years, he has always been a honest, straight up and decent guy. His character is certainly beyond reproach. I believe him over the likes of PS, SA and anyone in management at VA Flt Ops. Very good operator, also great personality for training. His dad was the same.

[Boeingpilot738]

If I knew Bains exit strategy I would. However I’m afraid, based on overseas experiences, that it is not beneficial to anyone but Bain, although no doubt it will be perfectly legal as are all their actions. The secrecy surrounding their offer suggests it.

‘What I am trying to explain is that the types of behaviour that manifest themselves in these deals is what I would term “non empathetic “ to an extreme. This is because people’s behaviour changes when they stand to make a real fortune out of manipulating you and your situation. They have no compunction whatsoever about destroying you and your career.

The American exit strategy is to strip the remaining cash out of the business, load the company to the rafters with debt and then flog it to the stock market. The resulting mess then falls apart to
the dismay of staff, investors, creditors the public and the government AGAIN.

But why the continued suggestion that VA staff don’t understand this?

[Servo]

But why the continued suggestion that VA staff don’t understand this?

This. I keep saying it. It is not like MOST of us have any choice. I have no doubt the ones left behind are going to cop a MAJOR pineapple........ dry. Whether as a group we allow that, is up to the group.

Please dont confuse the sheeple on Workplace with those that are on here. Certainly didnt show my Virgin designed nails yesterday. No gushing, loving comments to management from me and most other flight crew on there either.

I know Sunfish is trying to minimise the damage and blow by warning us. But I have no doubt his final statement in all this will be "I told you so".

[MacTrim]

Servo, B738, Sunfish and your colleagues, I’m sure no one here (except the most twisted Fu€£s) will tell you I TOLD YOU SO , it’s just a far too serious a situation that you guys & girls find yourself in. The bare truth is that any one of us could find ourselves in your situation, after all we took the first ticket we could get beit TAA, Ansett or QANTAS in my day or the choices you had to be where you are today.
As I’ve said before, if VR is still on the table, I hope you can avail yourselves of it. Put a portion of that to one side of you can (mortgage in MEL/SYD, kids in school...I hear you) and keep your Medical & MECIR current and when this virus runs its course you’ll ALL be ready to get back on the horse again. Time has run out for blokes in their late 50s, like me, but you fellas that are a decade or more younger will be the senior,experienced pilots of the next upturn.
Hang in there.

[Lookleft]

MacTrim, nice sentiment but please don't get confused by Sunfish that he has any skin in this game. I'm sure that you have come across the expression FIGJAM and that is what applies to Sunfish. Think of those occasions at a party where there has been someone a bit too loud who is regaling all and sundry with his flying experiences and what its like to be a pilot only to find out he is a clerk with a PPL. There are a lot of good people at Virgin who are going through a world of pain watching their world implode, Sunfish is not one of them. I have been through a similar situation but thankfully not this time.

[-41]

Mactrim, how can you advise VR, when no facts are available on what the final numbers are. NB VR is suicidal in this situation as rehire from GDOJ will be well beyond the 5 years. VR = CR on the NB.

[non_state_actor]

As I’ve said before, if VR is still on the table, I hope you can avail yourselves of it.

Can you explain that position for us please?? As -41 says it's a stupid move unless you were planning to retire or had some other source of reliable income be it a spouse or a business.

Don't forget the flip side of that decision is that if it all holds together you are out on the street whilst all your mates are still employed.

The American exit strategy is to strip the remaining cash out of the business, load the company to the rafters with debt and then flog it to the stock market. The resulting mess then falls apart to
the dismay of staff, investors, creditors the public and the government AGAIN.

That is a 1980's era move when airlines held huge assets. Every Airline CEO in the world has already asset stripped every airline with Southwest being the exception, so I am not sure how that can happen here as there is nothing to sell. Everything is outsourced anyway including a percentage of the staff so what are they going to take? You don't even own a brand that's rented too!!

[Sunfish]

Lookleft is right, I don’t have any skin in the game. However I have enough empathy not to want to see anyone get a taste of some of the crap that is going to be fed to the Virgin staff, and as a taxpayer and Australian, I don’t want to see the general public and the taxpayer screwed either. That is why I am suggesting that you cannot be too cynical about what is happening. Particularly since Bains strategy has been so secretive.

As for asset stripping, there is plenty to strip. The main asset is the simply huge cash flow that airlines generate, not the actual profit. Any financier will walk over broken glass to get at that. Then there are all the leasing arrangements. They can all bear a small overhead fee as well. That’s the name of the game these days - fees.

Bain could channel all leases through a company it owns (in the cayman islands?) and take a nice percentage. Then flog the airline as a. good news story, sell the leasing business and walk away..

[Icarus2001]

The main asset is the simply huge cash flow that airlines generate Understood but that is very much "past tense", there is no huge cash-flow now or for at least twelve months. Assets are aircraft that are actually owned, not financed, GSE, terminal equipment and office equipment...

[Turnleft080]

$800 million capitalisation under the plan. Are the bondholders still thinking they can go through this, even when Bain's holding a binding agreement.
https://www.smh.com.au/business/companies/virgin-co-founder-breaks-silence-over-role-in-rebel-bondholder-bid-20200813-p55lbp.html

[non_state_actor]

Bain could channel all leases through a company it owns (in the cayman islands?) and take a nice percentage. Then flog the airline as a. good news story, sell the leasing business and walk away..

They're already 20 years to late to that party hence the myriad of holding companies on the Administration paperwork. I would suggest this time round you will have to actually run an airline.

[MickG0105]

Understood but that is very much "past tense", there is no huge cash-flow now or for at least twelve months. Assets are aircraft that are actually owned, not financed, GSE, terminal equipment and office equipment...
Spot on. Just to be clear, while Scurrah had tried to talk it up when releasing the first half results in February, Virgin's free cash flow wasn't stellar. At less than 6 per cent, for an airline (where essentially all your revenue comes weeks to months ahead of expenditure), it was actually pretty ordinary.

And further to your observation that there is currently no cash flow, it's actually worse than that. Because of the decision to honour all of the travel credits that had been issued in lieu of refunds, the business will very likely have a negative to very low positive cash flow for the next twelve to eighteen months.

As to all this hoopla about Bain’s secret plans, I would have thought that their plan was blazingly obvious. Acquire the business at the right price, prop it up while knocking it into proper shape (that is, rework the debt, shed anything that doesn't make money whether it's a route or an entire business unit, get the cost base under control and try to instil an outcomes driven business focus), book at least a year's worth of solid underlying earnings and then refloat it. It is by necessity a medium term plan. This was never going to be an in-and-out.

[Section28- BE]

(Bolding)
$800 million capitalisation under the plan. Are the bondholders still thinking they can go through this, even when Bain's holding a binding agreement.
https://www.smh.com.au/business/companies/virgin-co-founder-breaks-silence-over-role-in-rebel-bondholder-bid-20200813-p55lbp.html

Yes, they are very much of that view, and are in the Federal Court on that very matter, it was adjourned on Tuesday 11 August- before Justice Middleton.

Transcript here: https://www.fedcourt.gov.au/__data/assets/pdf_file/0005/78458/NSD464-20200811.pdf

To reconvene- Monday, 17 August at 11:15 (AEST)- with regard to the Bondholders access to (/or lack thereof...) information, stakeholders and facilitation for the assembly of a (second) Deed of Company Arrangement (DOCA), to be presented at the Second Creditors Meeting (where, a DOCA must be adopted/passed by that meeting in Number of Votes and Value).

The Court is receiving 'Submissions' from the involved parties in the interim.

Bondholders have also, made application for the appointment by the court of a formal 'Facilitator'.

'Mention' was also made- as to the possibility of having to extend out the timeline for the Second creditors meeting, based on where the process is at and what needs to occur, prior that meeting.

Also, the Wells Fargo/engines, etc. matter shall follow this one at 14:15 on 17 August.

Could be wrong, but- that was my quick read of it, there are 31 pages of it......

rgds all
S28- BE

[chookcooker]

Spot on. Just to be clear, while Scurrah had tried to talk it up when releasing the first half results in February, Virgin's free cash flow wasn't stellar. At less than 6 per cent, for an airline (where essentially all your revenue comes weeks to months ahead of expenditure), it was actually pretty ordinary.

And further to your observation that there is currently no cash flow, it's actually worse than that. Because of the decision to honour all of the travel credits that had been issued in lieu of refunds, the business will very likely have a negative to very low positive cash flow for the next twelve to eighteen months.

As to all this hoopla about Bain’s secret plans, I would have thought that their plan was blazingly obvious. Acquire the business at the right price, prop it up while knocking it into proper shape (that is, rework the debt, shed anything that doesn't make money whether it's a route or an entire business unit, get the cost base under control and try to instil an outcomes driven business focus), book at least a year's worth of solid underlying earnings and then refloat it. It is by necessity a medium term plan. This was never going to be an in-and-out.

not according to the ex 2-ic at the paper clip factory

[MickG0105]

Virgin machinations won’t change a thing
By JOHN DURIE, SENIOR WRITER/COLUMNIST
8:28AM AUGUST 13, 2020

The Virgin bond holders have effectively split into two camps - the retail holders and the financial holders - with the latter now fighting an ultimately unwinnable fight.

Voluntary administrator Vaughan Strawbridge has the right to sell the company to whomever he thinks will be positioned for all creditors.’

The fight over which deed of company arrangement wins the day at the October 6 creditors meeting is a sham, because the assets have already been sold to Bain.

The alternative bid says lets vote the issue at the meeting. But what happens if the first vote is to approve the Bain DOCA?

Granted that creditors should know about the second offer before voting on the first, but you can’t have two votes passing control of the same asset.

The financial bond holders are said to be running around looking for a new backer to add financial muscle to their bid.

Even if that happened, the process is doomed because the sale has already been made and the creditors vote is a sham.

The bond holders are simply making noise in the hope of getting a better deal to keep them quiet.

That much is known to Bain and Strawbridge, and once that is more widely known the bond holder bargaining position is weakened.

It would surprise if Federal Court Judge Justice John Middleton did anything but rubber stamp Strawbridge’s actions.

https://www.theaustralian.com.au/business/aviation/virgin-machinations-wont-change-a-thing/news-story/cad4b19522ddaecd0dd83423620348f7

[Icarus2001]

Voluntary administrator Vaughan Strawbridge has the right to sell the company to whomever he thinks will be positioned for all creditors.’ If that were the case then a vote would not be required.

[Boeingpilot738]

https://www.theaustralian.com.au/business/aviation/virgin-machinations-wont-change-a-thing/news-story/cad4b19522ddaecd0dd83423620348f7

October 6th? Delayed by another month?

[MickG0105]

If that were the case then a vote would not be required.
The vote is not on whether the business should be sold to Bain - that has happened under the administrator's rights under section 437A (437A allows an administrator to act unilaterally to sell the company's business without reference to the creditors).

What the creditors are voting on is:

whether to accept the DOCA prepared by Bain,
take the business out of administration, or
liquidate it.

[MickG0105]

October 6th? Delayed by another month?
I don't know if John has inside info there but the last I saw the meeting was scheduled for 4 September.

​​​​​

[Section28- BE]

I don't know if John has inside info there but the last I saw the meeting was scheduled for 4 September.

​​​​​

Think/from memory, that (being, 4 Sept) was the date quoted as the target- on the 11th of August (in the proceedings).....

rgds
S28- BE

[Sunfish]

“knock virgin into proper shape” do you mean to survive as a sustainably profitable airline or as a quick listing on the stock exchange?

We will see what the courts say about legalities. Probably Bain will win and the Virgin deal will never see the light of day, like the 150% R&D allowance scam and the sale of Ansetts DC9’s to Evergreen.

[MickG0105]

“knock virgin into proper shape” do you mean to survive as a sustainably profitable airline or as a quick listing on the stock exchange?

I mean such that the airline's revenue routinely exceeds its expenses by a margin of around 15 percent, give or take, over a couple of reporting periods. In other words, in a markedly different fashion to the manner in which it had been run.

... the sale of Ansetts DC9’s to Evergreen.
Do tell. My recollection is that Ansett flew nine DC-9-31s (VH-CZA through CZI inclusive) from the late '60s through till 1982. Again, my recollection is that most of them were sold to Midway, the rest went to Marfreless/Corsair and ended up in US Navy service. None were sold to Evergreen; I'm pretty sure that they operated -32Fs and -32CFs, not -31s.

[oicur12.again]

Sorry to go off topic but some of the AN DC9’s wound up flying for Airborne Express and the tails of these aircraft can now be purchased from MotoArt as a desk.

An Ansett DC9 desk!


https://www.motoart.com/products/desks/airplane-desks/dc-9-wing-desk

[Sunfish]

Mick, my recollection was evergreen but maybe Corsair. From memory Evergreen did the conversion to U.S. registration and standards, then painted them in Navy colors. They were then contracted to the Navy for personnel transport. We sent a bunch of LAMES to Florida to do most of the work. They had a great time. We had Les Hong on the phone at least once a week. All of them were converted, kitted and repainted in navy colors at Ansetts expense. How do I know this? I was the one keeping track of LAME expenses, including telling the boys to get a few different receipt books and jumble up the receipt numbers a bit as I was finding it increasingly hard to ignore the sequential numbers in their expense accounts. This was before the use of credit cards.

They were CZA, etc. The Electras were RMA, etc. - Wombat Squadron.

Les Hong was an ex Boeing salesman and a personal friend of Rupert and Peter This whole operation was a “nice little earner”.

[MickG0105]

Mick, my recollection was evergreen but maybe Corsair. From memory Evergreen did the conversion to U.S. registration and standards, then painted them in Navy colors. They were then contracted to the Navy for personnel transport. We sent a bunch of LAMES to Florida to do most of the work. They had a great time. We had Les Hong on the phone at least once a week. All of them were converted, kitted and repainted in navy colors at Ansetts expense. How do I know this? I was the one keeping track of LAME expenses, including telling the boys to get a few different receipt books and jumble up the receipt numbers a bit as I was finding it increasingly hard to ignore the sequential numbers in their expense accounts. This was before the use of credit cards.

They were CZA, etc. The Electras were RMA, etc. - Wombat Squadron.

Les Hong was an ex Boeing salesman and a personal friend of Rupert and Peter This whole operation was a “nice little earner”.
Interesting yarn. Very different times back then.

Having done a bit of poking around it looks like CZA, B, D and F initially ended up with the US Navy via Marfreless/Corsair. The rest went to Midway. And when I say 'the rest' I had originally forgotten the final three AN DC-9s (they had a fleet of 12 in total) - CZJ, K and L.

[krismiler]

Here's a website about the DC - 9 in Australia.

Douglas DC9 Australia (http://www.aussieairliners.org/douglas/dc9aust.htm)

[Turnleft080]

Still off topic. Interested to know what did Ansett do with all the DC-9 crews. Did they convert to the 737-277s?

[MelbourneFlyer]

Looks like REX is making a move to pick up some of Virgin's leased B737s which the airline no longer needs, see https://www.executivetraveller.com/news/rex-set-to-swoop-on-virgin-australia-s-unwanted-boeing-737s.

[MelbourneFlyer]

https://www.theaustralian.com.au/business/aviation/battle-between-virgin-bond-holders-looks-to-be-very-onesided/news-story/5643415054e84c88a0e979582afaef2c

The Australian calling the bond holder proposal “a sham” and also says it’s just a maneuver by them to get more than any other creditors through a private agreement with Deloitte.

[Buster Hyman]

Looks like REX is making a move to pick up some of Virgin's leased B737s which the airline no longer needs, see https://www.executivetraveller.com/news/rex-set-to-swoop-on-virgin-australia-s-unwanted-boeing-737s.
I hope they have LAME's that know a thing or two about corrosion!

[Come in spinner]

Buster
let us know your fact on corrosion.
including case studies and peer review

[B772]

Turnleft080.
Most of the AN DC-9 Crew converted to the B737-277. There was even 2 x B727 Captains who converted to the B737-277 for the minimum period before returning to the B727.

[Ragnor]

Deloitte getting nervous or something, or, standard for a CEO to ensure they get the troops to fall in line!Virgin CEO says Bain sale ‘must go ahead’ROBYN IRONSIDE
Virgin Australia chief executive Paul Scurrah has written to employees outlining why the airline cannot afford for its sale to Bain Capital to be disrupted.

In an email seen by The Weekend Australian, Mr Scurrah said an essential element of the sale agreement was the provision of a loan to allow the airline to continue to trade until the sale was completed.

“Any delay to the administration process would mean we remain in administration for a longer period,” said Mr Scurrah.

“From day one the goal has been and remains, to bring this business out of administration as quickly as possible and avoid the potential outcomes of going into liquidation, which is not something any of us want.”

Virgin Australia went into administration on April 21 with debts of $6.8bn, including $2bn owed to bondholders who want to convert that debt to equity in the airline. Their proposal was rejected by administrators Deloitte due to the binding agreement signed with Bain.

But on Monday the Federal Court will consider whether the bondholders should be allowed to put their proposal to creditors for a vote.

Key bondholders, Broad Peak Investment Advisers and Tor Investment Management, claim to have received “indications of support” from a number of other financial institutions, including Credit Suisse, Deutsche Bank, UBS and Morgans.

In his email titled “message to everyone”, Mr Scurrah told employees it would be very disruptive to the sale of Virgin if “for some reason an alternative proposal was allowed” to be put to creditors and voted on.

“We are working incredibly well with Bain Capital and are aligned on our vision to get through COVID-19 and become a profitable and successful business in the future,” Mr Scurrah said. “Bain is the right partner for us and is committing an extraordinary amount of resources, time and expertise to this business.”

He described the proposal put forward by bondholders as “nonbinding, conditional, indicative and incomplete” and apologised that it had created so much noise in the media.

“I know this has a huge impact on you all personally and is unsettling,” Mr Scurrah wrote.

“I can assure you that Bain Capital remain 100 per cent committed to completing the sale and enabling us to be a fierce competitor for years to come with them as our partner.”

Monday’s court hearing before Justice John Middleton has been set down for 2.15pm.

The second creditors meeting is expected to be held on September 4, with the administrators to release their report to creditors in the week of August 24.

The bondholders’ bid has been advised by five former Virgin Blue executives, including co-founder Rob Sherrard.

Under the proposal Virgin Australia would remain an ASXlisted company and include an employees representative on the board.

An $800m capital raising would be undertaken to finance the airline.

[Sunfish]

To paraphrase the immortal Mandy Rice - Davies; Mr. Scurrah would say that, wouldn’t he?

[Section28- BE]

Who would know, where this all ends up- hopefully, Monday shall provide some 'clarity/productive direction' to what 'seems' from the outset to have been less than a smooth/stable/open process......????

All the Media outlets are running a similar story to the one quoted ex Mr 'Ragnor'- above.

It maybe/maybe not worth, revisiting the events/& reporting of 10 July (over 30 days ago)- 'should' it be of interest:

Hearing of 10 July: Interlocutory Hearing (mp4, 348 mb) (https://www.fedcourt.gov.au/media/online-file/NSD464of2020/interlocutory-hearing-20200710.mp4)

The SMH article of 10 July: https://www.smh.com.au/business/companies/virgin-sale-at-risk-as-bondholders-plan-last-gasp-bid-20200710-p55auo.html

Quote #1 (Bolding and inserted 'on'):

Federal Court judge John Middleton dismissed the bondholders' request for the documents after putting the administrator ('on' Notice, that is S28- faks me) notice to share information with bondholders to avoid a legal battle. He left the door open for bondholders to return to court if they were concerned about how the process was being handled by Deloitte.

"The administrators may have to make some rather hard decisions about how much they do disclose information for the purposes of the second creditors' meeting. If they take a particular approach the second creditors' meeting may become litigious," Justice Middleton said.

"I'm just... warning is putting too fine a point on it I may say," he said.

He said it was in "everyone's interest" for as much communication as possible to flow between administrators and creditors as this would alleviate concerns and allow people to gather information to consider the options available.

Quote #2:

Mr Jackman told the court his client had been confused by a public statement by Deloitte that the sale of Virgin was a done deal, given it now claimed Bain will also be putting forward a DOCA at the meeting."We are confused as to how the administrator, no doubt with advice, has come to the conclusion that it is a fait accompli and whatever happens at the second creditors' meeting can't change the asset sale to Bain."

Bondholders welcomed Justice Middleton's comments during the hearing and said they looked forward to working with administrators and other Virgin stakeholders to present their recapitalisation plan.

The Bondholder (second) DOCA was confirmed/a given back then, also Middleton J did 'ventilate/postulate' the appointment of a Formal Facilitator, at that time (10 July).

And we now arrive, today with the all points media spiel for the weekend papers- prior Monday and the Fed Court.

The SMH article today (dated pm 14/07/20): https://www.smh.com.au/business/companies/virgin-boss-urges-workers-to-ignore-bondholder-noise-20200814-p55lta.html

Extract (Bolding):Virgin boss urges workers to ignore bondholder 'noise'By Patrick Hatch (https://www.smh.com.au/by/patrick-hatch-hvf90) August 14, 2020 — 5.57pm

Virgin Australia's chief executive Paul Scurrah has warned his workforce that a gambit by bondholders to usurp Bain Capital and take control of the airline would cause disruption and delay the resurrection of the airline.

Hedge funds Broad Peak Investment Advisors and Tor Investments will have an application heard in the Federal Court on Monday to try and force Deloitte to put their rival proposal for Virgin to a vote of creditors on September 4

Virgin CEO Paul Scurrah and administrator Vaughan Strawbridge have dismissed the bondholders' chance of success.

The Singapore and Hong Kong investors, which have enlisted five former Virgin executives including co-founder Rob Sherrard (https://www.smh.com.au/link/follow-20170101-p55lbp), want bondholders to swap their $2 billion in debts for shares in Virgin and contribute to a $800 million capitalisation.

Mr Scurrah on Friday told workers - who make up the biggest group of creditors by number - that he knew "noise" in the media about the bondholders was unsettling but reassured them Bain remained "100 per cent committed" to Virgin after agreeing to buy the airline in June.

"If for some reason an alternative proposal was allowed to be put to the meeting to be voted on, it would be very disruptive to the sale process and problematic for us," Mr Scurrah said in a note sent to staff seen by this masthead. "Any delay to the administration process would mean we remain in administration for a longer period."

"From day one, the goal has been, and remains, to bring this business out of administration as quickly as possible and avoid the potential outcomes of going into liquidation, which is not something any of us want."

Mr Scurrah said it was important staff knew that the bondholder proposal was "non-binding, conditional, indicative and incomplete".

Virgn's administrator Deloitte has, meanwhile, told members of Virgin's creditors' committee of inspection in a letter sent on Thursday that the sale deal signed with Bain on June 26 precluded it from considering or even discussing any other deal.

"This remains the position unless the asset sale to Bain Capital is set aside by the court," joint administrator Vaughan Strawbridge said in the letter, seen by this masthead. "Currently, neither or any other party, have brought an application to court seeking to set aside the asset sale to Bain Capital."

He said the vote of creditors early next month would only determine how Virgin was sold - either via the asset sale or a deed of company arrangement (DOCA) - and not who it was sold to."We do not see how a competing DOCA that deals with the assets of the business that are subject to the agreement with Bain Capital can be put to the creditors," Mr Strawbridge said.

A key reason Deloitte chose to enter an asset sale was to secure funding to keep Virgin out of liquidation, with Bain immediately taking over financial liability of the airline. Mr Strawbridge said Broad Peak and Tor had not shown any evidence of funding and that their proposal remained "highly conditional".

Virgin went into voluntary administration with debts of $6.8 billion in April after the COVID-19 pandemic forced it to ground most of its fleet.

All of the media input (quotes and comments) into these articles of recent times would seem to be (in my view...??), 'ignorant of/or ignoring' ???- what transpired back on the 10th of July.

e.g. extract from the above article: "If for some reason an [b]alternative proposal was allowed to be put to the meeting to be voted on, it would be very disruptive to the sale process and problematic for us," Mr Scurrah said......

Was NOT 'that' always going to happen/be the case, since the 10th of July????, or is this 'news' to the process?????

Anyway- see what Monday brings.
rgds/good W/E all
S28- BE

[Turnleft080]

Thank you to the Honourable member S28- BE in providing the above information.
As I see it BP&T advised they would not provide interim funding unless their proposal was accepted
and of course they were not as written by Mr John Durie in todays Aus. I ask the Honourable Member S28- BE
in obtaining that article of substance if possible. Once we have all the information at hand I would have
more confidence in dealing with a Nigerian retirement fund so to all the Bond holders please gather
all your belongings you know where the door is and in the upmost respect PPOQ.

[Best Rate]

Thank you to the Honourable member S28- BE in providing the above information.
As I see it BP&T advised they would not provide interim funding unless their proposal was accepted
and of course they were not as written by Mr John Durie in todays Aus. I ask the Honourable Member S28- BE
in obtaining that article of substance if possible. Once we have all the information at hand I would have
more confidence in dealing with a Nigerian retirement fund so to all the Bond holders please gather
all your belongings you know where the door is and in the upmost respect PPOQ.

Terrific TL080 !! 👌

[Sunfish]

Mr. Scurrah also doesn’t yet realise he is on the outer - a mere employee.

[Sunfish]

“The assets” let’s look at them.

- A brand recognised throughout Australia. I will call that Marketing capital.

- A business conglomerates of staff and operational processes and systems (including IT and HR) that ensure Virgin is a going concern, even if it is hibernating now.

- Supplier/creditor/customer channels that are mature and workable.

- An AOC and the systems and capability to maintain the same.

- Airport chech in facilities and infrastructure around Australia.

- A considerable market share of domestic travel.

- Motivated and attractive workforce (in the marketing sense)

Folks, non of this stuff came cheap. None of this stuff carries a book value, no matter what accounting principles Deloittes dreams up. There is the core of the argument between Bain, Deloittes and the bond holders in my opinion.

- Bain is naturally trying to get ownership by paying for the rusty filing cabinets and office chairs - with the rest thrown in for free.

- The Bond holders see the reverse - the huge value of the non financial assets compared to the financial debt - which after all is just money that can and will be supplied by anyone, any time and quickly.

- Deloittes, being a bunch of accountants, however you want to put it, cannot and will not appreciate the non financial assets. In addition, I have observed repeatedly that there is precisely ZERO forensic aviation accounting talent outside Qantas and Virgin, so Deloittes are in the dark about the value of much of Virgin.

My assumption is that Deloittes have been rolled by Bain. Deloittes don’t have the skills to work on this scale, Bain does this every day of the week.

‘’So here is my conclusion: The Bain deal is secret because it values the REAL assets of the business at virtually zero and if it saw the light of day, anyone with aviation experience would know it and realise that Deloittes have been comprehensively outplayed by Bain, who stand to make billions out of Deloittes stupidity. This in itself is no sin, but my concern is that the Bain deal will leave Australia worse off on many levels.

I saw a similar situation when Saint Margaret Jackson and Geoff Dixon presided over the attempted privatisation of Qantas. They characterised Qantas as a rusty old beat up Holden ready for the wreckers. The reality was that all Qantas needed was a bit of a tonic - which it got when the oil price collapsed.

So to be optimistic for once, if Virgin got some financial breathing space, courtesy of the bond holders, an enlightened Board who actually have relevant experience instead of being politically correct dummies and a tough but intelligent and fair management - again not steeped in politically correct bull****, then a restructured Virgin has a good future.

[Ragnor]

Bain could provide the breathing space you suggest to Virgin they could out survive Qantas now, but how much would they be willing to tip in to a business thats grounded due to border closures with no end in sight! Victorians now having total disregard to stage 4 lock downs attending markets and cruising the streets of Melbourne as if the problem is gone.

Even if a vaccine is found tomorrow it will be 12-18months before we get any benefit from it due to testing for approval and its use in Australia premiers are closing borders just from a sniff of corona outbreak to protect their own I'm sure they wont let their own have anything injected into them. Then mass producing, having qualified medical staff to administer the dose the logistical list goes on,this has been reported on various media outlets. we are a very long way away from being out of the woods.

[1A_Please]

The bondholders are playing a very poor hand. Their unsecured debt is effectively worthless so offering to convert this shares doesn't really improve anything. The company requires operating cashflow and that has what Bain has provided; to the tune of nearly $1Bn. The bondholders are not offering this. In fact, it is hard to see what the bondholders are offering adds anything of value to the company or its creditors. They are operating from a position of massive self-interest and trying to escalate their debt priority when it was always patently obvious that they had bought unsecured debt.. VA staff, by sheer weight of numbers, continue to hold the whip hand in voting on the Deed. They need to understand the bondholders have no real interest in looking after them.

[Colonel_Klink]

“The assets” let’s look at them.

- A brand recognised throughout Australia. I will call that Marketing capital.

- A business conglomerates of staff and operational processes and systems (including IT and HR) that ensure Virgin is a going concern, even if it is hibernating now.

- Supplier/creditor/customer channels that are mature and workable.

- An AOC and the systems and capability to maintain the same.

- Airport chech in facilities and infrastructure around Australia.

- A considerable market share of domestic travel.

- Motivated and attractive workforce (in the marketing sense)

Folks, non of this stuff came cheap. None of this stuff carries a book value, no matter what accounting principles Deloittes dreams up. There is the core of the argument between Bain, Deloittes and the bond holders in my opinion.

- Bain is naturally trying to get ownership by paying for the rusty filing cabinets and office chairs - with the rest thrown in for free.

- The Bond holders see the reverse - the huge value of the non financial assets compared to the financial debt - which after all is just money that can and will be supplied by anyone, any time and quickly.

- Deloittes, being a bunch of accountants, however you want to put it, cannot and will not appreciate the non financial assets. In addition, I have observed repeatedly that there is precisely ZERO forensic aviation accounting talent outside Qantas and Virgin, so Deloittes are in the dark about the value of much of Virgin.

My assumption is that Deloittes have been rolled by Bain. Deloittes don’t have the skills to work on this scale, Bain does this every day of the week.

‘’So here is my conclusion: The Bain deal is secret because it values the REAL assets of the business at virtually zero and if it saw the light of day, anyone with aviation experience would know it and realise that Deloittes have been comprehensively outplayed by Bain, who stand to make billions out of Deloittes stupidity. This in itself is no sin, but my concern is that the Bain deal will leave Australia worse off on many levels.

I saw a similar situation when Saint Margaret Jackson and Geoff Dixon presided over the attempted privatisation of Qantas. They characterised Qantas as a rusty old beat up Holden ready for the wreckers. The reality was that all Qantas needed was a bit of a tonic - which it got when the oil price collapsed.

So to be optimistic for once, if Virgin got some financial breathing space, courtesy of the bond holders, an enlightened Board who actually have relevant experience instead of being politically correct dummies and a tough but intelligent and fair management - again not steeped in politically correct bull****, then a restructured Virgin has a good future.

Some interesting points Sunfish, but I do have some questions.

I agree that the Virgin brand is categorically worth something, as is the fact it’s a current business, has the systems in place to continue operating as a significantly sized airline, has market share and has a motivated workforce. And you are also right in that Deloitte perhaps do not value that as you should - but how do you value those things in a company that has entered administration and whose core business has simply evaporated during the midst of a global pandemic? Even the question of market share is an interesting one, because whilst Virgin May have 35ish per cent of the market, no one knows what the market size and composition at the end of this will be.

You’ve been fairly critical of Deloitte so far, perhaps fairly so, but perhaps not.

One of your points above states the fact that Virgin is a going concern even if it’s hibernating. And this is the issue - Virgin was going to run out of cash during the administration (around 2-3 weeks ago if reports were accurate). And this was one of the main problems Deloitte had - they needed to source funds to continue operating (albeit in a hibernating state) because if it had to shut the doors on all operations, it would have been very difficult to restart for a number of reasons. So whilst Deloitte put the business up for sale to multiple different organisations, the one it chose was the one that was happy to tip in quite a lot of cash to keep the place running. Admittedly this information has come from Deloitte - but it seems credible to me. And they have been quite clear that the other bidders were not willing to put their hands in their pockets immediately to solve this fairly significant issue.

I don’t think any of the deal is secret - it will be outlined in the report to creditors prior to the second meeting of creditors due next month.

Why do you think the deal will leave Australians worse off? I think ultimately the Virgin that comes out of administration is going to be in more or less the same form regardless of who any of the other potential buyers throughout the process ended up being the final purchaser. If you’re talking about the unsecured bond holders (the mum and dad investors) then perhaps you are right - they obviously will be worse off. But their plan of essentially recapitalising Virgin by refloating it on the ASX seemed crazy to me - who in their right minds would be buying shares in Virgin 2.0 given their previous history, the fact they haven’t paid a dividend in over a decade, the fact the domestic market is absolutely buggered and will be until state governments in this country stop the pissing contest that they are all in. Qantas’ recent equity raising should give an idea of the markets stomach for investing in airlines at the moment.

You have far more business acumen than me, so genuinely interested in you expanding on your thoughts...

[MickG0105]

“The assets” let’s look at them.

- A brand recognised throughout Australia. I will call that Marketing capital.

- A business conglomerates of staff and operational processes and systems (including IT and HR) that ensure Virgin is a going concern, even if it is hibernating now.

- Supplier/creditor/customer channels that are mature and workable.

- An AOC and the systems and capability to maintain the same.

- Airport chech in facilities and infrastructure around Australia.

- A considerable market share of domestic travel.

- Motivated and attractive workforce (in the marketing sense)

Folks, non of this stuff came cheap. None of this stuff carries a book value, no matter what accounting principles Deloittes dreams up.
Exactly how familiar are you with basic business accounting practices?

Facilities, infrastructure, IT systems are all valued and carried as assets under Property, Plant and Equipment (or a similarly named line) on the balance sheet.

Further, the balance sheet will carry a line under Assets called Intangibles (or Intangible Assets) that assigns a value to things like market share, brand presence and the like.

And Deloitte doesn't have to dream any accounting practices up - Accounting Standard AASB 138 Intangible Assets has been around since 2004 to deal with just those items.


- Bain is naturally trying to get ownership by paying for the rusty filing cabinets and office chairs - with the rest thrown in for free.

And you know this how? Nobody at this stage knows how Bain have valued the business or what they've paid for it.


- The Bond holders see the reverse - the huge value of the non financial assets ...
Do they? The bondholders are trying to swap debt that is essentially worthless for the entire business. And nobody has any real understanding of how the rest of their bid is structured.

And what is the 'huge value' of the non financial assets? By any ordinary measure the value of a business as an ongoing concern is determined by either its earning capacity or its free cash flow yield. Just how much money do you expect that Virgin will clear as profits over the next few years? Or how about its free cash flow?


... compared to the financial debt - which after all is just money that can and will be supplied by anyone, any time and quickly.

Uh-huh. Just money. And funny, is it not, that when Virgin went looking for some of that 'just money' in the run up to administration, no one was supplying, not at all and most assuredly not quickly?


- Deloittes, being a bunch of accountants, however you want to put it, cannot and will not appreciate the non financial assets. In addition, I have observed repeatedly that there is precisely ZERO forensic aviation accounting talent outside Qantas and Virgin, so Deloittes are in the dark about the value of much of Virgin.

Do you know much about Deloitte? For instance, how Strawbridge would have access to the Deloitte Global Travel & Aviation consultancy group to the extent that he needed any advice. And I'm not sure about current arrangements but outside of consultancy, Deloitte used to audit Delta. And then, of course, Deloitte had direct and unfettered access to one of your nominated sources of 'forensic aviation accounting talent' - the entire Virgin finance team!

But sure, yes, let's just assume that they're just a bunch of dumb yokels making it up as they went along.


I saw a similar situation when Saint Margaret Jackson and Geoff Dixon presided over the attempted privatisation of Qantas. They characterised Qantas as a rusty old beat up Holden ready for the wreckers. The reality was that all Qantas needed was a bit of a tonic - which it got when the oil price collapsed.

Where to start with this?!

They characterised Qantas as a rusty old beat up Holden ready for the wreckers.
Did they? Qantas was trading at $4.20-odd when Dixon and Airline Partners Australia made their first bid at $5.45 in December 2006. That was a 30 percent premium to market right off the bat. Odd pricing for a rusty old beat up Holden! They eventually went to $5.60 in early 2007 before getting cold feet.

The reality was that all Qantas needed was a bit of a tonic - which it got when the oil price collapsed.

Uh-huh, a bit of tonic, you say?

After APA withdrew their bid Qantas had six or seven months trading above the $5.60 offer price and then down she came. And down she stayed. First oil sky-rocketed (the opposite of collapsing) from May 2007 - July 2008. And then the GFC. And then oil back up again.

The share price would not get back up to the APA offer price of $5.60 until July 2017, nearly a decade after the final offer.



So to be optimistic for once, if Virgin got some financial breathing space, courtesy of the bond holders, an enlightened Board who actually have relevant experience instead of being politically correct dummies and a tough but intelligent and fair management - again not steeped in politically correct bull****, then a restructured Virgin has a good future.
How exactly are the bondholders offering Virgin 'some financial breathing space'? For the bondholders to recoup their sixty-x cents in the dollar the airline needs to be refloated. What do you think the time frame will be for that? And what surgery do you think will need to be performed on the business to achieve the sort of share price they need to hit their return target?

Do you think that a pair of Singaporean investment fund managers are going to be more patient and gentle masters than Bain?

​​​​​​​

[Led Zeppelin]

Nobody at this stage knows how Bain have valued the business or what they've paid for it

That's my question as well.

Plus they have put $ 125 m to keep it afloat until the creditors decide how to proceed. I don't understand how anyone could put this amount of money into a project without a minimum guaranteed return - which implies that Deloittes have effectively committed to a Bain deal.

How could anyone possibly float an airline as a listed company in this economic environment - pie in the sky. The bondholders so called 60+ cent return is an unreachable pipe dream.

If this goes south at the creditors meeting, Bain will have first option on all assets as the liquidation begins.

Barring any realistic court action, either way, Bain wins.

[Ragnor]

Surely the vote will pass as the largest creditor are the staff! Why would they vote themself out of a job.

[non_state_actor]

Surely the vote will pass as the largest creditor are the staff! Why would they vote themself out of a job

It's a majority in number and value. Whilst the staff are the largest in number they don't have a majority of value.

[Boeingpilot738]

It's a majority in number and value. Whilst the staff are the largest in number they don't have a majority of value.

They don’t need the largest value do they? If the vote is split the deciding vote goes to Deloitte and we know which way they’ll vote.

[non_state_actor]

That is my understanding of it. If more than 50% of the first group vote for the proposal and more than 50% of the value group vote against it then it reverts to the chairman of the meeting. I don't understand how having a second option on the card actually matters, unless there are issues with dilution of the vote and how that may change the outcome. I guess if the populous vote for option 1 and those who hold the value vote for option 2 which option should the chairman pick and why? That might be a concern.

[Boeingpilot738]

That is my understanding of it. If more than 50% of the first group vote for the proposal and more than 50% of the value group vote against it then it reverts to the chairman of the meeting. I don't understand how having a second option on the card actually matters, unless there are issues with dilution of the vote and how that may change the outcome. I guess if the populous vote for option 1 and those who hold the value vote for option 2 which option should the chairman pick and why? That might be a concern.

Its got to come down to 2 things, surely, who can slash as much debt off the $6.8billion as possible and between $605 million in flight credits and a stuffed domestic market for the next however long, who can withstand next to no cashflow for a good long while.

[Boeingpilot738]

Depending on how many Employees are still able to vote, the figure could be -3000/4000 votes?

Still creditors I believe as the redundancy date is after the vote. Stand to be corrected

[Mr Google Head]

Still creditors I believe as the redundancy date is after the vote. Stand to be corrected

correct, vote in September and redundancies (flight crew at least) dated October. There’s bound to be a few no votes in spite but there’s no real benefit in voting no by the unfortunate guys who are on the cusp of redundancy.

[The Bullwinkle]

Im not sure if the ATR or Widebody group are still able to vote at the Second Creditors meeting? If so, Liquidation may be beneficial for them.
How exactly would liquidation be beneficial for them?!?

[Sunfish]

Sure Bain put in $125 million. It did this out of the goodness of its heart.

Mick, yes, there are standards for accounting valuations of intangibles and all sorts of other stuff. You missed my observation on the lack of forensic aviation accounting capabilities in Australia. As for Deloittes international connections, I used to play that tune when I worked at Coopers & Lybrand. The reality is that locals want to maximise billable hours, not feed them to New York.

Local Deloittes accountants wouldn’t know the difference between a $300,000 turbine disk and scrap metal. That is just the start of it, speaking as someone who has been both sides of the green pen.

The deal is secret because it’s legalised robbery, period.

[goodonyamate]

Sure Bain put in $125 million. It did this out of the goodness of its heart.

Mick, yes, there are standards for accounting valuations of intangibles and all sorts of other stuff. You missed my observation on the lack of forensic aviation accounting capabilities in Australia. As for Deloittes international connections, I used to play that tune when I worked at Coopers & Lybrand. The reality is that locals want to maximise billable hours, not feed them to New York.

Local Deloittes accountants wouldn’t know the difference between a $300,000 turbine disk and scrap metal. That is just the start of it, speaking as someone who has been both sides of the green pen.

The deal is secret because it’s legalised robbery, period.

coopers and Lybrand! You are old! 😂

[Sunfish]

goodonyamate, you are so cruel!

[Section28- BE]

Article link: https://www.smh.com.au/business/companies/virgin-workers-dispute-reignites-ahead-of-key-vote-hearing-20200816-p55m8j.htmlExtract:Virgin workers dispute reignites ahead of key vote hearingBy Patrick Hatch (https://www.smh.com.au/by/patrick-hatch-hvf90)August 17, 2020 — 12.00am

Virgin Australia's owner-in-waiting Bain Capital faces a fracturing relationship with one of the airline's key unions, which could threaten support for the sale at next month's creditors meeting and jeopardise $200 million in government assistance offered to get the airline flying again.

The spat emerged ahead of a hearing in the NSW Federal Court on Monday, in which two major Virgin bondholders will try to force administrator Deloitte to put their alternative proposal for Virgin to a vote of creditors on September 4.

Virgin bondholders will be in court on Monday pushing for their proposal for the airline to be put to a vote for creditors.

With Virgin and its unions starting negotiations over a restructure announced earlier this month which will see 3000 jobs go, or a quarter of its workforce, Transport Workers Union national secretary Michael Kaine said on Sunday that the union remained concerned about Bain's intention to appoint former Qantas executive and Jetstar boss Jayne Hrdlicka as a board member at Virgin.

He said the response the union had received on the make up of the board was unsatisfactory, which has the potential to threaten workers' support for the Bain deal at the second creditors meeting next month. Virgin's workers will be a crucial voting block at the meeting, accounting for around 9000 of its 12,000 creditors.

The board of the new Virgin must explicitly recognise that staff are critical to this mission and emphasise co-operation, rather than confrontation," Mr Kaine said.

"Our members are committed to rebuilding Virgin, but we will not expose them to a crude rip-off where jobs and conditions are decimated."

A spokesman for Bain said the firm was surprised by the TWU's comments given the "many hours" of constructive conversation it had with the union about Virgin's future. He reiterated Bain's commitment to treat workers fairly and honour all entitlements.

Unions, and the TWU in particular, have objected to the involvement of Ms Hrdlicka as an advisor to Bain over fears she would bring a budget airline mindset or a "Qantas culture" of industrial relations hard ball to Virgin.

Queensland treasurer Cameron Dick said on Sunday that the state's government pledged of $200 million in equity, working capital and financial incentives was to support Virgin's relaunch, and that he expected its new owners to share its vision to secure and maximise jobs in the state.

"Our expectation is that Virgin remains a full service airline, servicing a full network in Queensland, and with a good relationship with its workforce," Mr Dick said in a statement. "We expect board members to share that vision and governance to reflect it."

One Queensland government source said the government was concerned by the apparent deterioration of relations with workers and that the $200 million in support could be withdrawn.

"If Bain can’t get a deal with the workers, then it won’t get a deal with the Queensland government," said the source, who requested anonymity to discuss confidential matters.

On Monday major Virgin bondholders, Broad Peak Investment Advisors and Tor Investments, will push to have their alternative plan for Virgin put to a vote of creditors next month alongside the Bain deal.

They want the owners of $2 billion worth of Virgin bonds to swap their debt for shares in Virgin, which would remain listed on the ASX, and contribute to a $800 million capitalisation rather than see the airline sold to Bain.

However, Virgin's administrator Deloitte has dismissed their play for the airline, saying their previous offers have been "highly conditional" and without proven source of funding. In any event, Deloitte says it cannot entertain another offer for its signed a binding sale deed with Bain on June 26.

rgds
S28- BE

[MickG0105]

You missed my observation on the lack of forensic aviation accounting capabilities in Australia.
No, I most assuredly did not. In fact, I addressed that point quite specifically and directly.

You said,

In addition, I have observed repeatedly that there is precisely ZERO forensic aviation accounting talent outside Qantas and Virgin, so Deloittes are in the dark about the value of much of Virgin.

And I noted that,


... Deloitte had direct and unfettered access to one of your nominated sources of 'forensic aviation accounting talent' - the entire Virgin finance team!



None of this stuff carries a book value, no matter what accounting principles Deloittes dreams up.


... yes, there are standards for accounting valuations of intangibles and all sorts of other stuff.

How do you reconcile those two statements?!
​​​​​​​

[Boeingpilot738]

Today’s 2.15 hearing, can anyone shed any light on what it’s actually for? To allow the Bondholders access to creditors or to allow them to present their DOCA on 4th of September? I thought the judge had already ruled on the latter?

[MickG0105]

Today’s 2.15 hearing, can anyone shed any light on what it’s actually for? To allow the Bondholders access to creditors or to allow them to present their DOCA on 4th of September? I thought the judge had already ruled on the latter?
It's to get a ruling on whether the bondholders have a statutory right to put an alternative DOCA and, if they do, how that should be managed.

There has not been a specific ruling on that point yet. What Middleton J had previously noted was that section 439CA of the Corporations Act 2001 authorises creditors to approve a DOCA which is different from the one accompanying the notice of meeting.

The more significant point not yet addressed at all is whether an alternative DOCA can undo the administrator's decision to sell the business under section 437A. It will come down to duelling rights - does the creditors' right under 439CA to approve a DOCA that is different to the one proposed by the Administrator trump the Administrator's right under 437A to sell the company's business? It's not a trivial matter and goes to the Administrator's role and rights. 437A is pretty unambiguous.

CORPORATIONS ACT 2001 No. 50, 2001 - SECT 437ARole of administrator

(1) While a company (http://www5.austlii.edu.au/au/legis/cth/num_act/ca2001172/s9.html#company) is under administration (http://www5.austlii.edu.au/au/legis/cth/num_act/ca2001172/s9.html#administration), the administrator (http://www5.austlii.edu.au/au/legis/cth/num_act/ca2001172/s9.html#administrator):

(a) has control (http://www5.austlii.edu.au/au/legis/cth/num_act/ca2001172/s9.html#control) of the company (http://www5.austlii.edu.au/au/legis/cth/num_act/ca2001172/s9.html#company)'s business, property (http://www5.austlii.edu.au/au/legis/cth/num_act/ca2001172/s920.html#property) and affairs (http://www5.austlii.edu.au/au/legis/cth/num_act/ca2001172/s9.html#affairs); and
(b) may carry on (http://www5.austlii.edu.au/au/legis/cth/num_act/ca2001172/s9.html#carry_on) that business and manage that property (http://www5.austlii.edu.au/au/legis/cth/num_act/ca2001172/s920.html#property) and those affairs (http://www5.austlii.edu.au/au/legis/cth/num_act/ca2001172/s9.html#affairs); and
(c) may terminate or dispose (http://www5.austlii.edu.au/au/legis/cth/num_act/ca2001172/s9.html#dispose) of all or part of that business, and may dispose (http://www5.austlii.edu.au/au/legis/cth/num_act/ca2001172/s9.html#dispose) of any of that property (http://www5.austlii.edu.au/au/legis/cth/num_act/ca2001172/s920.html#property); and
(d) may perform any function (http://www5.austlii.edu.au/au/legis/cth/num_act/ca2001172/s9.html#function), and exercise any power (http://www5.austlii.edu.au/au/legis/cth/num_act/ca2001172/s9.html#power), that the company (http://www5.austlii.edu.au/au/legis/cth/num_act/ca2001172/s9.html#company) or any of its officers (http://www5.austlii.edu.au/au/legis/cth/num_act/ca2001172/s418.html#officer) could perform or exercise if the company (http://www5.austlii.edu.au/au/legis/cth/num_act/ca2001172/s9.html#company) were not under administration (http://www5.austlii.edu.au/au/legis/cth/num_act/ca2001172/s9.html#administration).

(2) Nothing in subsection (1) limits the generality of anything else in it.


There will be a lot of administrators paying very close attention to this hearing. If it doesn't go Deloitte's way there would have to be a very good chance that it will be appealed.

[Turnleft080]

Good info MickG0105 on today's proceedings and meanwhile across the border an interesting tussle is brewing between Anastasia's QIC and Jayne's Bain.
In the QLD corner we have the TWU. Roll up, If Jayne's in then Anastasia's out. If Jayne's out then Anastasia is in.
All about 200mil, jobs in QLD, headquarters in BNE. Well their's the promotion any guesses on how may rounds this will go.

[Boeingpilot738]

It's to get a ruling on whether the bondholders have a statutory right to put an alternative DOCA and, if they do, how that should be managed.

There has not been a specific ruling on that point yet. What Middleton J had previously noted was that section 439CA of the Corporations Act 2001 authorises creditors to approve a DOCA which is different from the one accompanying the notice of meeting.

The more significant point not yet addressed at all is whether an alternative DOCA can undo the administrator's decision to sell the business under section 437A. It will come down to dualling rights - does the creditors' right under 439CA to approve a DOCA that is different to the one proposed by the Administrator trump the Administrator's right under 437A to sell the company's business? It's not a trivial matter and goes to the Administrator's role and rights. 437A is pretty unambiguous.



There will be a lot of administrators paying very close attention to this hearing. If it doesn't go Deloitte's way there would have to be a very good chance that it will be appealed.

Thanks for taking the time Mick, appreciated.

[Turnleft080]

Today’s 2.15 hearing, can anyone shed any light on what it’s actually for? To allow the Bondholders access to creditors or to allow them to present their DOCA on 4th of September? I thought the judge had already ruled on the latter?

The Judge has spoken. First headline coming through The Aus.
Virgin bondholders ‘can’t beat Bain’Virgin Australia’s sale to Bain Capital is unable to be undone by bondholders, court told.

[Boeingpilot738]

The Judge has spoken. First headline coming through The Aus.
Virgin bondholders ‘can’t beat Bain’Virgin Australia’s sale to Bain Capital is unable to be undone by bondholders, court told.

Don’t think he’s spoken has he, that quote was from the Deloitte lawyer. Seems like it’s been adjourned.

[Turnleft080]

Don’t think he’s spoken has he, that quote was from the Deloitte lawyer. Seems like it’s been adjourned.

Good point. Now that you said that I'm not sure either. Though convincing headline. I suppose more will be revealed shortly.

[Section28- BE]

Looks like today's hearing has given (some???) access to the Sale Agreement, to the Bondholders Legal Representatives.....

Extract:

..... in the form provided to the legal representatives of Broad Peak Investment Advisers Pte Ltd and Tor Investment Management (Hong Kong) Ltd on 17 August 2020

Link to the complete Order here: https://www.fedcourt.gov.au/__data/assets/pdf_file/0005/78557/Order-1782020-142427250.pdf

As you both say, time will reveal....
rgds
S28- BE

[Turnleft080]

https://www.smh.com.au/business/companies/virgin-s-rebel-bondholders-suffer-major-setback-20200817-p55mj1.html

According to this article Justice Middleton has thrown out the application of the bond holders, though the bond holders will pursue further legal action.
Sept 4 can't come quick enough. Call it a tug of war that Bain needs that extra inch to win.

[Double_Clutch]

Dont we all need ...
that extra inch to win.

[Sunfish]

Mick, you raise a good point, I should have said independent aviation forensic accounting capability. I also suggest that it may be that Virgin doesn’t have much capability considering they went under but it may not be the accountants fault.

‘’The Virgin team will be producing the results based on the assumptions they have been given. We don’t know what they are.

The technical accounting side:

- how do you value an AOC?

- The fitout of a leased terminal?

- A refurbished set of turbine blades?

- An integrated drive generator - a rotable.?

-GSE including the workstands?

I know there are standards but I’m not sure there are many people who can apply them to airlines.

The winner in this contest knows the true vale which I contend is likely to be much more than Bains offer.

......Yes I know, the value of a thing is what it will.....

[MickG0105]

The technical accounting side:

- how do you value an AOC?
The depreciated value of the cost of establishing it plus the annual cost of maintaining it. Or its replacement cost. Dealer's choice.


- The fitout of a leased terminal?

The depreciated capitalised value of the fitout.


- A refurbished set of turbine blades?

In accordance with your Asset Spares Valuation policy, typically Current hours x [(New Replacement Cost less Scrap Value)/Life Hours] for an individual item or the aggregated annual average for the entire stock holding.


- An integrated drive generator - a rotable.?

Again, in accordance with your Asset Spares Valuation policy, calculated along the lines for the refurbished blades except that hours might be swapped out for the number of refurbishments between new and scrapped if that was a more realistic measure.


-GSE including the workstands?

The depreciated capitalised value.


I know there are standards but I’m not sure there are many people who can apply them to airlines.

That is all bread-and-butter stuff for a maintenance asset accountant. Hell, they manage this sort of stuff on oil rigs and at mines sites out the back of beyond, its application at an airline is not that difficult. These days the asset values are tracked and calculated by the maintenance inventory management system.
​​​​​​​


The winner in this contest knows the true vale which I contend is likely to be much more than Bains offer.

......Yes I know, the value of a thing is what it will.....
The asset valuations - book values - are frankly only meaningful if you're ​​​​​​​looking at winding a business up. Otherwise it's interesting but somewhat academic because for a going concern the determinant of the business's aggregate value is what it can make for you. And that is generally reflected in the business's market cap. That is one of the reasons that prior to the coronavirus crisis Virgin had a book value that was underwater but a market cap of $725-odd million.

But at the end of the day, as I drummed into anyone who'd listen, the market is the final arbiter of value. What's something worth? Only what someone else is willing to pay for it.

​​​​​​​
​​​​​​​
​​​​​​​

[Section28- BE]

Link: https://www.smh.com.au/business/companies/virgin-s-rebel-bondholders-suffer-major-setback-20200817-p55mj1.html

Extract (Bolding):Virgin's rebel bondholders suffer major setbackBy Sarah Danckert (https://www.smh.com.au/by/sarah-danckert-ghhbnm)August 17, 2020 — 6.00pm

Administrators to bankrupt airline Virgin plan to barrel ahead with a sale of the carrier to Bain Capital after a court threw out a request by bondholders for their alternative proposal to be put to creditors at an upcoming meeting.

The Federal Court stopped short of blocking any alternative proposal being circulated to creditors ahead of the meeting in September but threw out the specific request by bondholders to force Virgin's administrators from Deloitte to hold a vote on the two separate proposals.

Justice John Middleton threw out the application from hedge funds Broad Peak Investment and Tor Investments to have an independent party, known as a facilitator, to oversee the meeting.

The bondholders had also asked the court to order Deloitte to put a formal resolution to the meeting for creditors to consider its rescue proposal, known as a deed of company arrangement (DOCA).

But the fight might not be over yet with lawyers for the bondholders flagging during Monday's court hearing that they will pursue further legal action to push ahead with their proposal.

Bondholders took this step after Deloitte revealed it was planning to only present Bain's DOCA to creditors and then to ask creditors to vote to approve or knock back that offer. Under Bain's DOCA, bondholders are expected to only get 10 cents in the dollar.

But Justice Middleton threw out these requests in a blow for the bondholders, owed $2 billion in total, and were supported in their court bid (albeit through separate lawyers) by a range of Australian investment houses holding notes, including Escala Partners, Crestone Capital, Morgans, Alexander Funds and Yarra Funds Management.

Justice Middleton rejected the push by Broad Peak and Tor after hearing from the lawyer for Deloitte that under the specific sale agreement between Deloitte and Bain any vote by creditors against the Bain proposal would automatically mean the meeting adjourned, and that adjournment would trigger a clause to force the sale to Bain.

"We agree that an alternative DOCA can be put [to creditors ahead of the meeting]. It need not be recommended or endorsed by administrators and will not be," counsel of Deloitte, Ruth Higgins, SC, said.

"What our concern is that the alternative DOCA cannot succeed because the assets have been sold," Dr Higgins said.

"It is that circumstance that creates the futility and the difficulty of purporting to present it to creditors."

Justice Middleton reserved his reasons for dismissing Broad Peak and Tor's application until a later date. Bondholders were contacted for comment.

Bain has welcomed the decision by Justice Middleton.

"Bain Capital’s key focus is getting through administration to ensure Virgin Australia fights another day and has the chance to rebuild."

In a separate legal matter before the Federal Court on Monday, Virgin's administrators from Deloitte lost their bid to restrict the rights of leaseholders, represented through Wells Fargo, who have loaned the collapsed airline four jet engines.

Deloitte indicated to the court that it would appeal Justice Middleton's decision in terms of the leaseholders.

rgds
S28- BE

[Sunfish]

Mick, thank you for your reply. Yes, “depreciated book value”will be used. That is the greatest gift to Bain. The airline should be valued as a going concern, but it won’t be. That is why I mentioned the Ansett DC9s. They were sold by Peter and Rupert at something close to depreciated value. The reality was that they were still perfectly good serviceable aircraft and the new owners made $$$. I could go on but I risk defamation.

‘’Australian tax law allowed us to gold plate our aircraft by treating ADs and SBs as expense items, not capital expenditures (again lack of technical accounting skills in the auditors and ATO). The result was that these old aircraft were virtually as new as far as technical specs were concerned. They were worth a lot second hand.

Same with rotables - they are like grandfathers axe.

‘’Book value will be used. Replacement cost is more appropriate.

[MickG0105]

Mick, thank you for your reply. Yes, “depreciated book value”will be used. That is the greatest gift to Bain. The airline should be valued as a going concern, but it won’t be. That is why I mentioned the Ansett DC9s. They were sold by Peter and Rupert at something close to depreciated value. The reality was that they were still perfectly good serviceable aircraft and the new owners made $$$. I could go on but I risk defamation.

‘’Australian tax law allowed us to gold plate our aircraft by treating ADs and SBs as expense items, not capital expenditures (again lack of technical accounting skills in the auditors and ATO). The result was that these old aircraft were virtually as new as far as technical specs were concerned. They were worth a lot second hand.

Same with rotables - they are like grandfathers axe.

‘’Book value will be used. Replacement cost is more appropriate.
The example that most people can get their head around is sitting in their garage. What's your car worth? RedBook value? Replacement cost? Whatever it might be worth to you if you just drive it to work and back, it's probably worth something different to someone who is planning on using it as an Uber.

But at the end of the day, it's all largely academic. What your car is worth when you go to sell it is not one cent more than what someone else is prepared to pay you for it. The market is the final arbiter of value.

[Sunfish]

Yes Mick, the trouble is that Deloittes won't accept a market bid from the bondholders and the market doesn't know what bain bid because its a secret..

[Double_Clutch]

Sunny - don’t sweat petal.....
I know you want to know the details, but sweetheart, you can only control what you can control. Since you can’t, maybe move on?

[Section28- BE]

Hmmmm- given, the foregoing/above:

Ex the SMH 'reported' comments of 10 July, referenced toward- 'a' Middleton J:

"The administrators may have to make some rather hard decisions about how much they do disclose information for the purposes of the second creditors' meeting. If they take a particular approach the second creditors' meeting may become litigious," Justice Middleton said.

Interesting/or NOT.... should, 'it' all 'be' Good- done 'em (and the 6k Mum & Dad's) with a knife..... at 'a' gun fight??????

And, so it maybe- 12,000 talk to..... X, about what/and how they trashed 2x $Bill...., they then talk to.....????
Good Marketing/Experience.... & Brand Recognition!!!!!

Let, 'us' see- and really All the Best
rgds all/& be Well
S28- BE

[Sunfish]

Muh Feelz is that something interesting is being tried... Blackout and section28 are on to it. The Bain deal was like a flashy glittering fishing lure.......and Deloittes, like a big flathead, grabbed it.......without noticing the barbs.

BTW, ‘pre completion restructure” sounds like Deloittes gets covered in the blood and gore of retrenchment and restructure - with the Commonwealth picking up shortfalls in entitlements, before handing the gutted carcass to Bain.

[MickG0105]

https://www.fedcourt.gov.au/__data/assets/pdf_file/0011/78581/Transcript-17082020.pdf


5 MR JACKMAN: Your Honour, can I address the sale and implementation deed which you’ve been provided with.

HIS HONOUR: Yes.

20 MR JACKMAN: And we maintain our submission that any sale of assets is conditional upon the Bain DOCA being rejected by creditors, that there won’t be an asset sale unless and until the Bain DOCA is rejected, and having seen the agreement we also submit that there is no binding contract of the sale of assets at this stage.

25 MR JACKMAN: Now, the provisions that I want to draw your Honour’s attention to, first in the sale and implementation deed, if your Honour goes to page 12.

HIS HONOUR: Yes.

30 MR JACKMAN: On page 12 it has a definition for “target signing date”.

HIS HONOUR: Yes.

MR JACKMAN: And I ask your Honour to note the number of business days referred to there, which of course is one day short of the adjourned meeting.

HIS HONOUR: Yes.

MR JACKMAN: And there won’t be a signed agreement until then. Then your Honour was taken to clause 3.3, there’s some words that I should emphasise in the first line of 3.3, namely “subject to clause 3.4(a)”, and 3.4(a) does deal with the purchaser’s DOCA being approved. It then talks, in 3.4(a)(i), of “the entry into the asset sale agreement”, that’s something that happened in the future, and if signed, and of course it won’t be for a couple of months yet, the asset sale agreement will terminate. In other words, going back to 3.3(a), those words “subject to clause 3.4(a)” indicate expressly that there is not going to be a sale of the asset if the purchaser’s DOCA was approved. Indeed, it would be absurd for there to be a sale of assets if the purchasers DOCA was approved because the shares are going to be transferred, as Dr Higgins said, under 444GA.

Now, then if one goes to clause 7.2, Dr Higgins referred your Honour to clause 7.2, 5 but what she didn’t emphasise is that this is no more than an agreement to agree.

Your Honour will see that in the first two lines of 7.2(a), and this is of absolutely fundamental importance. Because if one goes ahead to the draft asset sale agreement, at page 11, there’s an important condition precedent in clause 2.1, the clause doesn’t become binding on the parties and is of no force and effect unless and until the following condition has been satisfied or waived, and then you’ve got the pre-completion restructure, or the minimum business critical ..... And going back to 7.2(a), the pre-completion restructure at this point is simply an agreement to agree, it may or may not culminate in an agreement, but at this stage one just doesn’t know.

------------

35 what the contract provides for is for an adjournment for 45 days which, of course, is one day longer than the target signing date. And they don’t want a vote on other alternatives until then as your Honour can see. So we submit on the basis of that there is no binding contract for sale as yet but to the extent that there might be any sale of the assets is entirely conditional on the Bain DOCA being rejected at the second creditors meeting and the creditors meeting being ..... So the argument that we began with today we maintain is correct having seen these extracts from the Bain contract.

45 HIS HONOUR: Yes. Thank you, Mr Jackman, on that.

You've only posted one side of the argument - the losing side as it turns out!

The seven pages (pp. 45-52) where Dr Higgins and Mr Peters for Deloitte and Bain respectively explain why the sale implementation deed and DOCA process represents a binding sale clearly won the day because Middleton J didn't even need to retire to consider arguments. He was sorting out who costs should be awarded against within a minute of Mr Jackman for Broad Peak and Tor finishing the argument you've outlined above.

If you were going to quote anything from the days proceedings in summary it might better have been:

THE COURT ORDERS THAT:

1. The Interlocutory Process filed 11 August 2020 (Interlocutory Process) by Broad Peak Investment Advisers Pte. Ltd (for and on behalf of Broad Peak Master Fund II Ltd and Broad Peak Asia Credit Opportunities Holdings Pte. Ltd) and Tor Investment Management (Hong Kong) Ltd (together, the Applicants) be dismissed.

2. The Applicants pay the Plaintiffs’ costs of the Interlocutory Process.

​​​​​​...

[MickG0105]

Upon briefly reading the transcript, this is far from finished as you seem to continuously suggest!!

Well, we'll see, won't we? Continuously labouring losing arguments won't miraculously turn them into winning ones.

[Joker89]

Well the lawyers always win even if the client doesn’t

[Sunfish]

Joker is right, I remember a senior law person pointing to a new block of apartments saying:”Alan Bond paid for that”.

[MickG0105]

I don't see how they have been losing?

Did you miss the bit right at the end where Middleton J dismissed their application and awarded costs against them? That, by any normal accounting, is a loss.

The administrator will continue to run the process as they intended; the notice of meeting and report to creditors will be issued on the 25th, the second creditors' meeting will be held on the 4th, the Bain DOCA will be presented, it will likely be voted up by a majority by both value (secured creditors) and number (employees) and then it's done. All over, Red Rover.

The bond holders might want to take a shot at challenging the administrator's sales process but that won't reverse the sale.

[MelbourneFlyer]

"Bain Capital has agreed to pay $750 million should it fail to buy Virgin Australia, an unusually high break fee that helped win over the collapsed airline’s administrator. The U.S. private equity firm made the pledge “to underpin its commitment to the transaction,” it said in a statement. Administrator Deloitte agreed to sell the struggling airline to Bain in June, though the deal’s terms weren’t made public." https://www.executivetraveller.com/news/bain-to-hand-over-750m-if-its-virgin-australia-takeover-bid-fails

[Inthestreet]

It looks like Deloitte’s are a whole lot smarter than the experts on here have given them credit for. They have secured a sale and given certainty to VA, which in turn gives uncertainty to QF. Could do worse than to use these guys for the upcoming QF administration.

[flyingfrenchman]

I assume there would be fine print attached to such a guarantee, eg they only pay it if it falls through for reasons under Bain’s control?


"Bain Capital has agreed to pay $750 million should it fail to buy Virgin Australia, an unusually high break fee that helped win over the collapsed airline’s administrator. The U.S. private equity firm made the pledge “to underpin its commitment to the transaction,” it said in a statement. Administrator Deloitte agreed to sell the struggling airline to Bain in June, though the deal’s terms weren’t made public." https://www.executivetraveller.com/news/bain-to-hand-over-750m-if-its-virgin-australia-takeover-bid-fails

[smiling monkey]

"Bain Capital has agreed to pay $750 million should it fail to buy Virgin Australia, an unusually high break fee that helped win over the collapsed airline’s administrator. The U.S. private equity firm made the pledge “to underpin its commitment to the transaction,” it said in a statement. Administrator Deloitte agreed to sell the struggling airline to Bain in June, though the deal’s terms weren’t made public." https://www.executivetraveller.com/news/bain-to-hand-over-750m-if-its-virgin-australia-takeover-bid-fails

That's a win-win for Deloitte's. No wonder they told all other bidders to p!ss off. LOL

[wheels_down]

They seem to have no limits on what they won’t do to get their hands on it.

Whats the big pull here? I thought the whole thing was/is a basket case.

Buy it for $4b?...injection...years of losses ahead...and somehow sell it for a profit late this decade?

[Section28- BE]

Well.....- 'your' welfare/ 'their' hands................

Link here: https://www.fedcourt.gov.au/__data/assets/pdf_file/0007/78685/NSD464of2020-Submission-1982020-855790.pdf

Would, this BE where the Minister/Deputy P.M. is at.....????, on the matter????

Hmmmmm- Now, 'you' ALL Good- 'Sharpie'........?????- just askin!!!! (need, any-single-thing?????, Mate).

rgds all
S28- BE

[SixDemonBag]

Well.....- 'your' welfare/ 'their' hands................

Link here: https://www.fedcourt.gov.au/__data/assets/pdf_file/0007/78685/NSD464of2020-Submission-1982020-855790.pdf

Would, this BE where the Minister/Deputy P.M. is at.....????, on the matter????

Hmmmmm- Now, 'you' ALL Good- 'Sharpie'........?????- just askin!!!! (need, any-single-thing?????, Mate).

rgds all
S28- BE

I’m still wondering if this is a snowtam. Surely there’s and app that can decipher it

[Section28- BE]

You don't need it.....

[Mr Google Head]

Yes Mick, the trouble is that Deloittes won't accept a market bid from the bondholders and the market doesn't know what bain bid because its a secret..

Ok I’ll bite....what’s the supposed humour in adding an ‘s’ at the end of Deloitte? (I presume it’s for supposed humour?) noticed it many times in this thread.

edit: possibly it’s just bad grammar? Either way it irks

[Mr Google Head]

Haha really?

Does it 'irk' you too when people say 'Finals' ??

I think humour is great and much needed in this industry...Especially right now!

Quote from the Joker:

"Why so serious"

ill take that as one vote for bad grammar since ‘finals’ is plural (that means more than one)

do you say the ‘grand finals’?

[Mr Google Head]

I was referring to some radio calls joining the Circuit. :)

do you say turning ‘finals’ in the circuit?....that’s even worse. How many ‘finals’ of the circuit are there? That irks me even more than ‘Deloittes’ 😂 What about turning bases....and downwinds...

thats up there with responding ‘climb to and maintain’ when the clearance was just ‘climb’

ok I’ll stop now

[Section28- BE]

Is not Annastacia, 'werkin' on All those Finals of which you blokes speak????- sorry, done now and gone.

rgds
S28

[Mr Google Head]

Is not Annastacia, 'werkin' on All those Finals of which you blokes speak????- sorry, done now and gone.

rgds
S28

that would be Annastacia of the QLD state governments I presume you’re referring to S28s? 🤪

[chookcooker]

do you say turning ‘finals’ in the circuit?....that’s even worse. How many ‘finals’ of the circuit are there? That irks me even more than ‘Deloittes’ 😂 What about turning bases....and downwinds...

thats up there with responding ‘climb to and maintain’ when the clearance was just ‘climb’

ok I’ll stop now
glad I’m not the only one. Certain non-pilots here pontificating about how they know about PE, there’s only one possible outcome, and “Delloittes have been hoodwinked”. They can’t even spell the name of the business, but they sure know boats.
Drives me spare

[Section28- BE]

that would be Annastacia of the QLD state governments I presume you’re referring to S28s? 🤪

Well- Yes, although there is only 1x Government in Queensland, at the moment.

rgds
S28

[Boeingpilot738]

So back on track from ‘finals’ and Deloitte’s’, what’s the bondholders next move? Have they got one? They don’t seem the type to go quietly into the night.

[Section28- BE]

So back on track from ‘finals’ and Deloitte’s’, what’s the bondholders next move? Have they got one? They don’t seem the type to go quietly into the night.

Well do concur, as such - without putting 'yourself' through 61x pages of that 'stuff (/was, going to say ****e)' for want of 'a' term....

It, ain't Done/nor squared-away....... In, a simple view- so yes, reckon 'more' and that is evidenced with what is being 'lodged'....

Good W/E and no onus in the above- could be ALL wrong
rgds/be Well
S28- BE

[MickG0105]

... what’s the bondholders next move? Have they got one?

If they legitimately believe that their initial application had legs, lodge an urgent interlocutory appeal against Monday's ruling.
Make a new and separate application challenging the administrator's decision to sell the business to Bain.
Circulate their DOCA to the creditors ahead of the second creditors' meeting with a view to at least securing a request from creditors to the administrator for more information, potentially delaying a vote on the Bain DOCA.
Any two or all three of the above.

[Sunfish]

Deloitteses sounds even better.

[1A_Please]

Bondholders have withdrawn their offer on the basis they couldn't make it unconditional. Claim they will be back if necessary but really they have little hope and never did. https://www.theaustralian.com.au/business/aviation/virgin-australia-bondholders-say-well-be-back/news-story/8a54e76e93c99a629d8981338b7f3a7e

[MelbourneFlyer]

"Virgin Australia's rebel bondholders bail out, leaving Bain Capital to take control" https://www.executivetraveller.com/news/virgin-australia-bondholders-bail-as-bain-takes-control

"Virgin Australia bondholders withdraw plans for proposal to rival Bain Capital deal" https://www.reuters.com/article/us-virgin-australia-debt/virgin-australia-bondholders-withdraw-plans-for-proposal-to-rival-bain-capital-deal-idUSKBN25H0N1

Story linked above is paywalled, these ones are free.

[Turnleft080]

So now come Aug 25 deloittes will reveal how much Bain has paid for the airline.

[Turnleft080]

Virgin standoff ‘bid for money’The stoush between Virgin Australia’s new owner and bondholders has taken an ugly twist as accusations fly.

This should make interesting reading in todays paper.

[Boeingpilot738]

Virgin standoff ‘bid for money’The stoush between Virgin Australia’s new owner and bondholders has taken an ugly twist as accusations fly.

This should make interesting reading in todays paper.

Basically reads like Broad Peak and Tor we’re prepared to hang the other bondholders out to dry as long as they got more for themselves.

[1A_Please]

Basically reads like Broad Peak and Tor we’re prepared to hang the other bondholders out to dry as long as they got more for themselves.
What a surprise!!! This further reaffirms that they had no interest in operating VA, just interested in finding a way that enriched them at the expense of the other creditors including staff.

[Boeingpilot738]

What a surprise!!! This further reaffirms that they had no interest in operating VA, just interested in finding a way that enriched them at the expense of the other creditors including staff.

True, but no doubt Bain’s proposal isn’t steeped in benevolence, perhaps we’re just getting the lesser of 2 evils. It’s not like we have a choice in the matter.

[Rashid Bacon]

....no doubt Bain’s proposal isn’t steeped in benevolence, perhaps we’re just getting the lesser of 2 evils

Fair comment mate - Carla can't wait, how many sleeps to go before she finally gets to pull some levers. :uhoh:

[Sunfish]

Now that’s a good read.....

[MickG0105]

This is not over yet: https://www.fedcourt.gov.au/__data/assets/pdf_file/0011/78842/Submission-2482020.pdf
No, it is over.

Yet again, you seem to think that re-presenting the losing side's two week old argument is somehow miraculously going to reverse the court's judgement. Watching a replay of last year's grand final, even if you just watch the bits when your side scores, doesn't change the result.

Now that’s a good read.....
The Federal Court didn't think so because it was ultimately a losing argument. Middleton J didn't even need to reserve judgement after considering that 'good read'. No sooner than Mr Jackman concluded his argument for Broad Peak and Tor, Middleton J was trying to figure out the exact party that the costs he was going to award should be paid to.

The only reading you need to attend to is this;

THE COURT ORDERS THAT:

1. The Interlocutory Process filed 11 August 2020 (Interlocutory Process) by Broad Peak Investment Advisers Pte. Ltd (for and on behalf of Broad Peak Master Fund II Ltd and Broad Peak Asia Credit Opportunities Holdings Pte. Ltd) and Tor Investment Management (Hong Kong) Ltd (together, the Applicants) be dismissed.

2. The Applicants pay the Plaintiffs' costs of the Interlocutory Process.

[Section28- BE]

Deloitte: 25/08/2020- Report to Creditors (link here): https://www2.deloitte.com/content/dam/Deloitte/au/Documents/finance/insolvency/virgin/au-fa-virgin-creditors-250820.pdf

rgds
S28- BE

[The Bullwinkle]

Yet again, you seem to think that re-presenting the losing side's two week old argument is somehow miraculously going to reverse the court's judgement. Watching a replay of last year's grand final, even if you just watch the bits when your side scores, doesn't change the result.
As Albert Einstein said, “The definition of insanity is doing the same thing over and over again and expecting different results.”

[Sunfish]

8.6Table 26, Bain gets it for $450 million.

Bondholders get maybe twelve cents in the dollar.

For all youse that think being a director or CEO is a diddle, read the report, as much as you can. The Directors could be on the hook for $17 - $35 million.

[Section28- BE]

Initial article and Summary ex the AFR (link): https://www.afr.com/companies/transport/bain-capital-offering-3-5b-for-virgin-20200825-p55p0k

Extract:BreakingBain Capital offering $3.5b for VirginLucas Baird (https://www.afr.com/by/lucas-baird-h18hts) Reporter
Aug 25, 2020 – 10.18am

US private equity firm Bain Capital is offering $3.5 billion for Virgin Australia, with the return to the failed airline's unsecured creditors put between 9¢ and 13¢ on the dollar.

These details have emerged as part of a report to creditors from Virgin's administrators from Deloitte. The report precedes a meeting of the carrier's 10,000 or so creditors where they will vote on how to formalise the sale to Bain – through a Deed of Company Arrangement or an asset sale.

Bain's offer includes the payment of all $450 million in worker entitlements and all $2.3 billion of debt Virgin owed to secured creditors.

The overall return to unsecured creditors, including the bondholders who had been trying to overthrow the prospective sale to Bain (https://www.afr.com/link/follow-20180101-p55o5e), will be between $462 million and $612 million.

Bain will honour all customer travel credits. They also noted some supply and finance arrangments will continue under their ownership.

Creditors will vote on the sale at a meeting on September 4.

More to come.

rgds
S28- BE

[Boeingpilot738]

8.6Table 26, Bain gets it for $450 million.

Bondholders get maybe twelve cents in the dollar.

For all youse that think being a director or CEO is a diddle, read the report, as much as you can. The Directors could be on the hook for $17 - $35 million.

Why shouldn’t they be on the hook? It was their decisions (or lack thereof) that led to this. Coronavirus finished it off but the problems started long before that.

[MickG0105]

Deloitte: 25/08/2020- Report to Creditors (link here): https://www2.deloitte.com/content/dam/Deloitte/au/Documents/finance/insolvency/virgin/au-fa-virgin-creditors-250820.pdf

rgds
S28- BE
Thanks for posting that.

One thing that we know for sure and certain now is that Paul Scurrah most assuredly misled the market when he claimed on 13 March that

The Group currently has a cash position in excess of $1 billion.

As illustrated on page 67 (Table 22) and page 68 (Figure 14) the Group's cash position has not been in excess of $1 billion since October 2019. When Scurrah was claiming that it was in excess of $1 billion it was in fact somewhere between $838.0 million and $796.1 million.

It will be interesting to see if either ASIC or the ASX elect to act on this.

[MickG0105]

Mick,

In case you did not realise, that submission was filed yesterday 24th.

In this argument, there appears to be more substantial information.

Im curios to know how you interpret the Law and Court? If you were found guilty of something you did not commit, is the process all done.. Thats it, it's all over -Case Closed???
It might have been filed yesterday but, as you can see from the back page, it was prepared on the 15th (two days before Middleton J dismissed their application).

And you'd be better served not to construct straw man arguments. This is not a criminal matter involving guilt or innocence. It is a civil matter relating to the application of the Corporations Act 2001. The court's interpretation of that Act is the law. Broad Peak and Tor can appeal Middleton's decision but they haven't sought leave to do so at this point. That application, written two days prior to when Mr Jackman made presented arguments before Middleton J, simply reruns the their losing proposition.

Save Broad Peak and Tor lodging an appeal, it is over - case closed.

[Lookleft]

So what is the date that Bain take total control of Virgin and Deloitte step away? Given the current state of domestic aviation I would think that they would want to delay that moment for as long as possible.

[Lead Balloon]

This is not over yet:

https://www.fedcourt.gov.au/__data/assets/pdf_file/0011/78842/Submission-2482020.pdf
It is a great read. A masterclass in the applicable provisions of the Corporations Law and the machinations of Bain and the administrators.

I wouldn’t share your dogmatic view, Mick. The bondholders aren’t still fighting just for ****s and giggles. They may lose, but I wouldn’t say they have lost already.

[Wizofoz]

As Albert Einstein said, “The definition of insanity is doing the same thing over and over again and expecting different results.”

He didn't, actually.

Do unsecured creditors get a vote at the creditors meeting?

[Boeingpilot738]

He didn't, actually.

Do unsecured creditors get a vote at the creditors meeting?

Yep, all creditors do.

[Section28- BE]

Gents- with regard to the Federal Court-

Was this not always coming back on.....???? (no they did not get a 'Facilitator etc. on the 17th) or did I read it wrong????- yes appreciate the way the media ran it all, at the time.

Extract #1 (ex pgs 57/58 of the transcript- formatting and notes on who is who), with regard to sourcing information:

Ex Mr Jackman (for the Bondholders)-
.......... Now we didn’t anticipate, sadly, that the administrators were going to respond favourably to that request and I do foreshadow that in the very near future, we will be making an application for orders from your Honour to grant us the applicant that we sought in that letter and consistently with what the colour was foreshadowed, the likely outcome of there being no facilitator, our instructions will be to make that application as soon as possible and we will hope that your Honour may be able to deal with it later this week. I don’t know if your Honour’s in a position to indicate what availabilities there may be but it is an urgent matter and we’re really left with little option other than your Honour.

HIS HONOUR: Well, I think the best way to deal with it, Mr Jackman, is formulate your application and get me the papers and then I can work out to fit it in –which I all – I will seat all applications as early as I can possibly deal with them but when I know what type of matter that we’re dealing with and I can work out how long we need

MR JACKMAN: May it please the Court.

And then a little further:

MR JACKMAN: There’s nothing further we wish to put. We look forward to reading your Honour’s reasonings and we will make such further applications we are advised to make.

HIS HONOUR: All right. Is there anyone else that wishes to say anything, I think we have given everybody the chance to reply or deal with matters that need to come up? All right, now, timetable-wise so the –I think you said to me, Dr Higgins, that 25 August is when the creditor’s report goes out?

DR HIGGINS (for the Administrator): That’s correct, your Honour.

Anyway let us see.....
tks/& rgds all
S28- BE

[TBM-Legend]

This is fun....Virgin Australia may have traded while insolvent, administrator Deloitte says (https://www.abc.net.au/news/2020-08-25/bain-capital-offer-3.5-billion-virgin-australia-creditors-vote/12592742)

[Section28- BE]

ABC article link here: https://www.abc.net.au/news/2020-08-25/bain-capital-offer-3.5-billion-virgin-australia-creditors-vote/12592742

Given the 'Solvency' issue is starting to get a run in 'some' media outlets- some 'brief' extracts ex the appropriate area/s of today's Report to Creditors, 'should' it be of interest- if Not, that is cool... as well.

rgds all
S28- BE


Extract (Bolding/and underline) ex the Report to Creditors: Section 6.4- Insolvent trading (section588G) /

Extract #1:Amended section 588G (page 58)

On 25 March 2020,the Coronavirus Economic Response Package Omnibus Bill 2020 received Royal Assent, which inserted section588GAAA into the Act. section588GAAA provides relief for directors from potential insolvent trading during a six month period from 25 March 2020. To be able to rely on these measures, the debt incurred must be incurred:
•In the ordinary course of business; and
•During the six-month period commencing 25 March 2020.
The Explanatory memorandum to the above bill explains that a director is taken to have incurred a debt in the ordinary course of business if it is necessary to facilitate the.continuation of the business.

Extract #2: 6.4.1 - Administrators’ conclusions regarding solvency: (pages 59 & 60):

Government support may be considered as a ‘lender of last resort’ and as this funding was not committed, the Virgin Group could not rely upon it as an available source of capital to maintain solvency. Furthermore, when combined together with the following indicators of insolvency, we have formed the view that the Virgin Group was insolvent from 22 March 2020 and possibly as early as 18 March 2020 when the imposed travel restrictions caused the Virgin Group to no longer be a sustainable going concern:
•Continuing losses–as detailed at section 6.4.3 the Virgin Group made losses before tax of $763.5m for 2HFYTD20, $902m for the period 1 July 2019 to 30 April 2020 and $424.5m for FY19.
•Working capital–as detailed at section 6.4.5 the Virgin Group’s current ratio and adjusted current ratio declined from January 2020 up until administration.
•Trade creditors–as detailed at section 6.4.6 the Virgin Group trade creditor aging and overall trade creditors increased from January 2020 up until the start of the voluntary administration. •Access to funding–by seeking government support, the Virgin Group was acknowledging its existing cash, receivables and loan facilities were insufficient.
•Ability to raise capital–as detailed above, Virgin Group had acknowledged that traditional forms of debt and/or equity were likely to be unavailable when it sought government support. Morgan Stanley had advised the Board that conventional debt and equity funding was unavailable. The Major Shareholders had also indicated their inability to assist.

The possibility of government support, whilst it cannot be treated as an available funding source for the purposes of assessing solvency, is relevant to the availability of defences to Directors and this is discussed at section 6.4.8. As section 588GAAA came into effect on 25 March 2020, it provided effective relief to the directors from insolvent trading from this date. We have not seen anything to suggest the debts incurred after section 588GAAA came into operation do not fall within the requirements of that section.There are therefore possibly only three days from 22 March to 24 March 2020 when the Virgin Group was potentially trading whilst insolvent. This is discussed further at section 6.5.3.1.

There exist potential defences available to the Directors as discussed at section 6.5.3. On the assumption that defences were not available, our preliminary analysis is that the potential loss to creditors is approximately $17m to $35m, depending upon whether the date of insolvency is 22 March 2020 or 18 March 2020 respectively, representing our estimate of new trading liabilities incurred up to 25 March 2020, being the commencement date of section588GAAA and the protection it provided to directors from prosecution from trading a company while insolvent. .......................

[Boeingpilot738]

So the company was insolvent from the 18th or 22nd of March....correct? And if so who takes responsibility and how can they slither out of it?

[MickG0105]

Mick,

Are you even a Commercial Pilot?
​​​​​​No, never claimed to be. Have they added corporations law to the CPL?

Have you ever worked for Virgin>?
No.

What is your agenda??

My agenda? Simply sharing what I know on the matter, looking to correct some of the arrant nonsense that gets trotted out here and being part of the conversation. Problemo?


I believe your a clone of some of the other personalities on here.
And we're off and racing! Gee, if I was a clone, would I know it?

It's a sure sign of a weak hand when someone looks to turn the argument to 'agendas' and identities rather than the facts of the matter.

[The Bullwinkle]

Gee, if I was a clone, would I know it?
Do you have a belly button? If not, you're probably a clone! :ok:

[MickG0105]

It is a great read. A masterclass in the applicable provisions of the Corporations Law and the machinations of Bain and the administrators.

A 'masterclass' that was rejected by the Federal Court.


I wouldn’t share your dogmatic view, Mick.
That'd be your prerogative. You say dogmatic, I say pragmatic, dogmatic, pragmatic, let's call the whole thing off.

The bondholders aren’t still fighting just for ****s and giggles. They may lose, but I wouldn’t say they have lost already.
Their application to the Federal Court was dismissed and they wore a costs order to boot. That's a loss.

They haven't sought leave to lodge an appeal. There's no sign that they will circulate an alternative DOCA to creditors ahead of the second creditors' meeting. In fact, they made the public statement,

"Unfortunately for now, we are left with no choice after the Federal Court decision but to withdraw our proposal as it is not possible to complete due diligence and present a substantially unconditional deed of company arrangement to the second meeting of creditors."

So, where are they still fighting?

They did say that,

After the release of the administrator’s report, we reserve our rights to take whatever action is necessary to protect our interests as creditors.

Said Administrator's report is now in their hands so I guess we'll see if they elect to get back in the fight.
​​​​​​
​​​​​​​
​​​​​​​

[MickG0105]

Do you have a belly button? If not, you're probably a clone! :ok:
Good point. I've been checking the inside of my bottom lip for tattooed numbers and all good there too.

[MickG0105]

... them to force creditors to agree to new terms and support the Bain DOCA in the absence of any alternative (Clifton Affidavit at [28] – [33], Affidavit of Cameron John Cheetham affirmed 16 August 2020



Am I missing something here? 15th but referenced the 16th? Mick??



Typos on dates are not unheard of. These submissions and affidavits are typically being put together at the speed of heat and cross-referenced by a small army, often times well into the early hours of the morning. The documents in question were being assembled over the weekend. I suspect that the submission had been drafted on the 15th likely with place holders where the details of affidavits to be referenced could be dropped in. It looks like one of those affidavits wasn't sworn until the 16th and nobody picked up that they needed to fix the date on the last page to match.

[Section28- BE]

So the company was insolvent from the 18th or 22nd of March....correct? And if so who takes responsibility and how can they slither out of it?
G'Day Mr 'Boeing'- given your question.....

The Answer to your 'said' question (which, 'I' believe to be unaddressed, yet....???)- Is 'The Directors', as at That point in Time...... being, 18 March, ref: below- that responsibility rested with the Directors of VAH.

Link ex Deloitte (and trust it'll work.., for you) here: https://www2.deloitte.com/au/en/pages/finance/articles/virgin-australia-holdings-limited-subsidiaries.html

Extract here (Bolding):

Vaughan Strawbridge, John Greig, Sal Algeri and Richard Hughes were appointed Joint and Several Administrators (Administrators) of Virgin on 20 April 2020, pursuant to the provisions of Section 436A of the Corporations Act 2001 (Act).

So 'Apparently'....- the 'said' Directors were exposed from 'at least'- the 18th of March......???- and hence, 'they' (the Administrators) are shipping 'onus/& responsibility' in spades!!!!, but- took the Gig forward, if that- makes sense.....??? (only 'a' read- Without Prejudice)

rgds/& be Well
S28- BE

[Jimsaviation]

Wow - ‘You’ really, cleared...! That/up

[wheels_down]

They had debt restructuring underway last year so the discussions with all these people was certainly underway before this year appeared.

I reckon Bain was on the Christmas Card list last year.

[Turnleft080]

“20 Buyers”? Most of them will be tire kickers and idiotic “entrepreneurs” who have no money. If I was Deloittes, I would spend a few days right now on weeding out this group or prepare to waste months in discussions of gorgeous possibilities that eventually go nowhere.

The BS normally starts with : ”I represent a Saudi Prince / Chinese Billionaire / Asian Company / American venture capital group that wishes to buy your airline but the name must be kept secret and everything must be in strictest confidence”.

I hope there is at least one genuine buyer for the whole airline.

Definitely give you that Sunfish what you said on May 1, strictest confidence and one buyer.

[Sunfish]

I guess Bain has won. I don’t think the bond holders have the capability to do the hard work of restructuring. They are “just” financiers.

I’m not sure what Bain is paying over and above written down asset value, I think its about $450 million.

My guess would be the exit strategy is a float with a price of more than seven billion in about four years. In other words Bain gets to double their money for what’s going to be four years of very hard and risky work by the Bain team.

As I said earlier, the principals of this deal - the Bain guys, are each going to walk away with inter generational fortunes from this project. I therefore warn all Virgin staff now that if you have any dealings with the Bain folk, which you probably won’t, be very very careful to do exactly what they want you to do because they have a great deal of money riding on the outcome. They will destroy you in a heartbeat if you impede them.

Best of luck.

[Ragnor]

I have not read the report, just The Australian column in todays paper. It suggest Virgin was free falling from January before Covid-19 hit our shores and would of gone into administration anyway.Price battle, high debt and killer virus: why Virgin fell to earthROBYN IRONSIDE
https://theaustralian.smedia.com.au/HTML5/get/NCAUS-2020-08-26/image.ashx?kind=block&href=NCAUS%2F2020%2F08%2F26&id=Pc0151600&ext=.jpg&ts=20200825151319https://theaustralian.smedia.com.au/HTML5/get/NCAUS-2020-08-26/image.ashx?kind=block&href=NCAUS%2F2020%2F08%2F26&id=Pc0150600&ext=.jpg&ts=20200825151319It was the transformation of Virgin Australia from budget carrier to premium airline over a period of years that set the company on a path to financial ruin.

A 192-page report to creditors by Deloitte’s Vaughan Strawbridge, John Greig, Salvatore Algeri and Richard Hughes has outlined the reasons for the business’s failure that led to their appointment to the airline on April 20.

Ultimately, it was “the inability of the airline’s balance sheet to withstand the immense financial impact caused by COVID-19” that led to its downfall, but the report also examined how Virgin Australia reached that point of collapse.

First, there was a “misconceived business strategy to change (the airline’s) business model from a low-cost carrier to full-service airline”, the report said.

As a result of that strategy, Virgin Australia triggered a damaging capacity war with Qantas, which was determined to protect its territory and had the advantage of a lower cost base to do so.

“Virgin did not have the size and financial strength to sustain this capacity increase without suffering significant losses,” the report noted.

The findings came as it emerged that US private equity firm Bain Capital will pay $3.5bn for Virgin Australia, in a deal that will cover employees’ entitlements but leave bondholders with between 9c and 13c in the dollar.

Other factors that contributed to the airline’s near demise included the “continued operation of loss-making services, routes and business segments; operational inefficiencies and a history of underdelivering on turnaround strategies”.

It all amounted to year after year of losses totalling about $2.2bn, which left the business with a significantly weakened balance sheet.

The report noted that, during the period between 2009 and 2020, revenue had continued to grow, “however it was not profitable growth”.

“This period encompassed the change in the Virgin Group’s business from a budget to full-service airline. As evident by the year-onyear losses, the Virgin Group was unable to derive sustainable profits from this change in strategy,” the report said.

In March 2019, Paul Scurrah took over as CEO from John Borghetti and set about “turning a great airline into a great business,” Mr Scurrah said at the time.

But in the year that followed, Virgin Australia sank deeper into the red, posting an $88.6m loss in the first half of the 2020 financial year. “This was a significant deterioration relative to the prior year period of $87.7m net profit before tax,” the report noted.

A range of measures were implemented to try to turn the airline around, including 750 job cuts and a fleet, network and capacity review, but then COVID-19 struck.

It did not help that shortly before the crisis, Virgin Australia raised an additional $325m in debt from bondholders to help fund the buyback of the Velocity Group.

“This added further debt to the balance sheet just prior to the time when the business would be severely impacted by COVID-19,” said the report.

Revenue and earnings went into free fall from February onwards, resulting in a loss of $763.5m “in just the four months from January to April”.

It was revealed the increasingly desperate board of directors stepped up the frequency of their meetings, sought to exit key contracts and terminated term deposits early to release funds.

With major shareholders unable to provide any assistance, Virgin Australia lobbied the Victorian, NSW, Queensland and federal governments for help, but were again knocked back.

“Given the economic environment created by the response to COVID-19, and without a pathway to secure a source of sufficient new funding, the directors reached the conclusion that the companies were likely to become insolvent if they continued trading, notwithstanding efforts to reduce their expenditure,” the report said. “The directors considered that the appointment of the administrators was the only remaining path available to them to restructure the companies’ liabilities and preserve the business of the companies.”

Despite the dire situation in which they found themselves, directors answered “no” when asked by administrators “did the business fail?” When Deloitte asked the directors to explain why they gave that response, they said the outcome of the administration

— a sale to Bain Capital — had preserved the business.

It was unclear if directors were even aware Virgin Australia was trading insolvent for a short period in March, before a federal law change to protect bankrupt companies in the pandemic.

[Boeingpilot738]

I have not read the report, just The Australian column in todays paper. It suggest Virgin was free falling from January before Covid-19 hit our shores and would of gone into administration anyway.Price battle, high debt and killer virus: why Virgin fell to earthROBYN IRONSIDE
https://theaustralian.smedia.com.au/HTML5/get/NCAUS-2020-08-26/image.ashx?kind=block&href=NCAUS%2F2020%2F08%2F26&id=Pc0151600&ext=.jpg&ts=20200825151319https://theaustralian.smedia.com.au/HTML5/get/NCAUS-2020-08-26/image.ashx?kind=block&href=NCAUS%2F2020%2F08%2F26&id=Pc0150600&ext=.jpg&ts=20200825151319It was the transformation of Virgin Australia from budget carrier to premium airline over a period of years that set the company on a path to financial ruin.

A 192-page report to creditors by Deloitte’s Vaughan Strawbridge, John Greig, Salvatore Algeri and Richard Hughes has outlined the reasons for the business’s failure that led to their appointment to the airline on April 20.

Ultimately, it was “the inability of the airline’s balance sheet to withstand the immense financial impact caused by COVID-19” that led to its downfall, but the report also examined how Virgin Australia reached that point of collapse.

First, there was a “misconceived business strategy to change (the airline’s) business model from a low-cost carrier to full-service airline”, the report said.

As a result of that strategy, Virgin Australia triggered a damaging capacity war with Qantas, which was determined to protect its territory and had the advantage of a lower cost base to do so.

“Virgin did not have the size and financial strength to sustain this capacity increase without suffering significant losses,” the report noted.

The findings came as it emerged that US private equity firm Bain Capital will pay $3.5bn for Virgin Australia, in a deal that will cover employees’ entitlements but leave bondholders with between 9c and 13c in the dollar.

Other factors that contributed to the airline’s near demise included the “continued operation of loss-making services, routes and business segments; operational inefficiencies and a history of underdelivering on turnaround strategies”.

It all amounted to year after year of losses totalling about $2.2bn, which left the business with a significantly weakened balance sheet.

The report noted that, during the period between 2009 and 2020, revenue had continued to grow, “however it was not profitable growth”.

“This period encompassed the change in the Virgin Group’s business from a budget to full-service airline. As evident by the year-onyear losses, the Virgin Group was unable to derive sustainable profits from this change in strategy,” the report said.

In March 2019, Paul Scurrah took over as CEO from John Borghetti and set about “turning a great airline into a great business,” Mr Scurrah said at the time.

But in the year that followed, Virgin Australia sank deeper into the red, posting an $88.6m loss in the first half of the 2020 financial year. “This was a significant deterioration relative to the prior year period of $87.7m net profit before tax,” the report noted.

A range of measures were implemented to try to turn the airline around, including 750 job cuts and a fleet, network and capacity review, but then COVID-19 struck.

It did not help that shortly before the crisis, Virgin Australia raised an additional $325m in debt from bondholders to help fund the buyback of the Velocity Group.

“This added further debt to the balance sheet just prior to the time when the business would be severely impacted by COVID-19,” said the report.

Revenue and earnings went into free fall from February onwards, resulting in a loss of $763.5m “in just the four months from January to April”.

It was revealed the increasingly desperate board of directors stepped up the frequency of their meetings, sought to exit key contracts and terminated term deposits early to release funds.

With major shareholders unable to provide any assistance, Virgin Australia lobbied the Victorian, NSW, Queensland and federal governments for help, but were again knocked back.

“Given the economic environment created by the response to COVID-19, and without a pathway to secure a source of sufficient new funding, the directors reached the conclusion that the companies were likely to become insolvent if they continued trading, notwithstanding efforts to reduce their expenditure,” the report said. “The directors considered that the appointment of the administrators was the only remaining path available to them to restructure the companies’ liabilities and preserve the business of the companies.”

Despite the dire situation in which they found themselves, directors answered “no” when asked by administrators “did the business fail?” When Deloitte asked the directors to explain why they gave that response, they said the outcome of the administration

— a sale to Bain Capital — had preserved the business.

It was unclear if directors were even aware Virgin Australia was trading insolvent for a short period in March, before a federal law change to protect bankrupt companies in the pandemic.

So the directors consider that the business hasn’t failed because it’s been purchased by Bain??? While technically correct I guess, what are these people smoking?

[Tommy Bahama]

So the directors consider that the business hasn’t failed because it’s been purchased by Bain??? While technically correct I guess, what are these people smoking?

The demise of Virgin over many years was obvious on the front line. Virgin management and those true believers who had their snouts entrenched in the Virgin trough thought the party would last forever....Day in day out you could see the damage that was being done. Problem was when you raised issues you were quickly given excuses why it was so, sometimes to the point of questioning your own sanity. Everyone will remember that "big picture" garbage that was spruiked so often. One thing for sure out of this mess is there is now a laser beam focus on excuses in the 737 operation. People are going to be needing to watch their backs cause Bain are going to ensure they get a return on their investment.

[wheels_down]

CEO had resigned.

......Chief Experience Offer I mean. :yuk:

WTF does this person actually do?

[Servo]

CEO had resigned.

......Chief Experience Offer I mean. :yuk:

WTF does this person actually do?

Nothing and has done so for 10 years, getting nicely paid as well. Systemic in exec management at VA. Not just HR either. Look no further than FLT OPS as well.

[Section28- BE]

AFR article link: https://www.afr.com/chanticleer/virgin-lucky-to-have-bain-on-board-20200825-p55p5q

an Extract:

-- ChanticleerVirgin lucky to have Bain on boardAug 26, 2020 – 12.00am

Virgin Australia is about a week away from moving into the hands of its new owner, Bain Capital. Employees and creditors are lucky the firm has made its $3.5 billion commitment.

The numbers contained in the Virgin Australia report to creditors give very little indication of how Bain Capital (https://www.afr.com/topic/bain---company-1mxe) has positioned itself to make money out of buying Australia's second major airline. (https://www.afr.com/street-talk/bain-capital-prepares-to-ink-virgin-australia-deal-20200626-p556di) Analysis of how much Bain can cream out of the business requires an understanding of the amount of equity tipped in, the level of debt and some forecasts of earnings.

In a typical private equity transaction, the business will be rebooted on a lower cost base and then readied for sale to the market in about three years. This particular deal might involve a five-year turnaround simply because of the uncertainty caused by the coronavirus and its impact on aviation.

But it is safe to say that one of the world's largest and smartest PE groups is not buying Virgin to earn goodwill among the aviation unions or get brownie points from a federal government desperate to have competition in domestic aviation.

The report is short on detail as to how much costs will be cut by Bain as a result of renegotiating about nine enterprise bargaining agreements. Another missing piece is the amount of aircraft leasing debt that will be taken on by Bain as part of operating a fleet of about 70 Boeing 737s.

There are several references to $1 billion in earnings before interest, tax, depreciation and amortisation before aircraft rent in fiscal 2022 and 2023. But these are contingent numbers that require Bain to make further payments to creditors and not forecasts.

Bain is playing its cards close to its chest and so is Vaughan Strawbridge, Virgin's joint voluntary administrator and Deloitte partner, (https://www.afr.com/companies/tourism/the-man-leading-the-fight-for-australia-s-second-airline-20200526-p54wlw) who has released a holistic number with little transparency attached to it.

Strawbridge says the "total commitment from Bain Capital is valued around $3.5 billion, which includes all employee entitlements paid in full, all customer travel credits honoured in full, assumption of a significant portion of secured debts and aircraft lease liabilities, and a return to unsecured creditors".

From Strawbridge's point of view the most important aspects of the report to creditors are that it confirms Bain will cover about $400 million in employee entitlements in full, the continuation of more than $1 billion supply and finance arrangements, about $600 million in customer credit for flights taken forward, and a distribution to unsecured creditors of an estimated $462 million to $612 million.

Close observers of the Virgin sale process reckon the creditors are getting a great deal from Bain and the airline's unions are in a commanding position because Bain is on the hook for new enterprise bargaining agreements.

Chanticleer's conclusion after reading the 192-page report is that Virgin's employees and its creditors are lucky to have a company of Bain's financial strength on board. Unlike the bond holders who have played a guerilla warfare game (https://www.afr.com/companies/transport/there-should-be-no-side-deals-bain-capital-outs-note-holders-20200811-p55kix) for the past two months, Bain actually stumped up $125 million (https://www.afr.com/companies/transport/bain-pumps-125m-into-virgin-as-key-details-reach-creditors-20200713-p55bkh) in cash to keep the airline afloat.

While it is true its mix of debt and equity is a mystery, the creditors' report shows it is buying a company that has not been well run over the past decade. Virgin's previous management cop a pasting for their poor strategic decision to begin a capacity war with Qantas.

If creditors and unions needed to be reminded of how fortunate they are to have Bain in the box seat to buy Virgin, they only needed to read the Qantas announcement yesterday in which it will slash 2500 ground staff (https://www.afr.com/companies/transport/qantas-says-2500-more-jobs-are-at-risk-20200825-p55p3o) in order to save $100 million in annual costs and slash capital expenditure by $100 million over the next few years.

Strawbridge says it is in the interests of creditors to approve a deed of company arrangement at the creditors' meeting on September 4.

"Where we are today is a testimony to the commitment of the staff and all stakeholders of the business who have made this possible and so strongly supported the administration process," he says.

rgds
S28- BE

[Turnleft080]

What do any of them do? Virgin is a revolutionary management team.

She introduced 'The Experience' we all know affectionally as 'Wiggy'

https://www.dailymail.co.uk/news/article-7671633/Virgin-latest-advertising-ditches-young-air-hostesses-flying-toupee-called-Wiggy.html

That would be the most disgusting atrocious wast of money I have ever seen in any business. Zero inspiration to fly that airline. In fact
it was that embarrassing I switched channel very quickly.
After all this crap is over, if airlines want passengers on their seats, then inspire them with proper commercials, no friggen wigs, no friggen choirs
just brute force T/Os, gopro on tails yeah baby 70s baby, remember TAA/Ansett baby. I wanna catch that plane baby. Get those junior jet clubs going baby.
Just friggen inspire me to go flying you drongos.

[On eyre]

The demise of Virgin over many years was obvious on the front line. Virgin management and those true believers who had their snouts entrenched in the Virgin trough thought the party would last forever....Day in day out you could see the damage that was being done. Problem was when you raised issues you were quickly given excuses why it was so, sometimes to the point of questioning your own sanity. Everyone will remember that "big picture" garbage that was spruiked so often. One thing for sure out of this mess is there is now a laser beam focus on excuses in the 737 operation. People are going to be needing to watch their backs cause Bain are going to ensure they get a return on their investment.

The result is the high cost of testosterone ingestion in the CEO dick measuring contest 😳😳

[MelbourneFlyer]

"Virgin Australia's Danielle Keighery takes off for BoQ", so Virgin is about to lose an over-paid position created for a PR exec who wanted parity with Olivia Wirth back when Livvy was doing marketing and 'customer experience'. This is the sort of nonsense which Bain can and should be cutting through. Danielle Keighery no doubt saw the writing on the wall and jumped before she was pushed. Scurrah is wise to be rid of her too, apparently although JB hired her early on, they ended up massively falling out, not sure if that is a reflection of a similar pattern which played out with John Thomas or if it's because DK saw that JB's days were numbered and wanted to make sure everyone knew she was not part of his 'squad' in order to survive any post-JB cull in case Scurrah did the same as JB when he came on and axed a lot of high-level people. Anyway here is the story.

https://www.afr.com/rear-window/virgin-australia-s-danielle-keighery-takes-off-for-boq-20200826-p55pd4

As Bain prepares to take the keys to Virgin Australia, chief experience officer Danielle Keighery has resigned from the airline to take on the role of chief customer officer at Bank of Queensland.
BoQ’s new chief executive George Frazis – Westpac’s former retail boss – is in the early stages of a corporate transformation and has lured Keighery to the lender.
Keighery was one of John Borghetti’s first hires at Virgin Blue in 2010, and joined from Richard Branson’s Virgin Group. What a decade it’s been, with Borghetti’s expansion and complete (but sadly unprofitable) reimagination of the budget carrier, a capacity war with Qantas, the entry (and rancorous exit) of several foreign airlines from the shareholder register and ultimately Virgin’s COVID collapse into administration.
In new CEO Paul Scurrah’s first management reshuffle last year Keighery was handed responsibility for product and service in addition to marketing and public relations. Her replacement is yet to be identified, though perhaps Bain is already banking the headcount reduction…

[MelbourneFlyer]

That would be the most disgusting atrocious wast of money I have ever seen in any business. Zero inspiration to fly that airline. In fact
it was that embarrassing I switched channel very quickly.
After all this crap is over, if airlines want passengers on their seats, then inspire them with proper commercials, no friggen wigs, no friggen choirs
just brute force T/Os, gopro on tails yeah baby 70s baby, remember TAA/Ansett baby. I wanna catch that plane baby. Get those junior jet clubs going baby.
Just friggen inspire me to go flying you drongos.

I never even saw that TV advert, maybe it came and went very fast, what a stupid commercial. Nothing about it makes me want to fly with Virgin or even tells me about Virgin and why it's different to Qantas. Oh well, good riddance to bad rubbish!

[The Bullwinkle]

CEO had resigned.

......Chief Experience Offer I mean. :yuk:

WTF does this person actually do?

Takes political correctness to the extreme.
”Hello Everyone!” instead of “Good morning Ladies and Gentlemen” on the P.A.’s.

[Turnleft080]

Takes political correctness to the extreme.
”Hello Everyone!” instead of “Good morning Ladies and Gentlemen” on the P.A.’s.

Get Chopper to do PAs. At least he will get everyones F@#$%$ attention.

[MickG0105]

Mick,

Its not a 'typo' buddy.

Well, buddy, if it's not an error, what is your explanation for how a document dated the 15th includes a reference to another document dated the 16th? Time travel?

[TBM-Legend]

On the news today that Deloitte has pocketed $26.8M thus far...[more to come I'd imagine]

I guess the tea lady was billed out at $400/hr and will get a Xmas bonus of a voucher for a free trip on VA.

[Boeingpilot738]

On the news today that Deloitte has pocketed $26.8M thus far...[more to come I'd imagine]

I guess the tea lady was billed out at $400/hr and will get a Xmas bonus of a voucher for a free trip on VA.

We really are in the wrong business aren’t we

[Turnleft080]

On the news today that Deloitte has pocketed $26.8M thus far...[more to come I'd imagine]

I guess the tea lady was billed out at $400/hr and will get a Xmas bonus of a voucher for a free trip on VA.

Out of that 26.8 like to know how much 5 months of work on that bridge made of straw was worth.

[Section28- BE]

Now 'this'- is what it is (no onus/view)...., it is the ABC's article.

Link here: https://www.abc.net.au/news/programs/the-business/2020-08-26/bain-capital-and-virgin-airlines/12599552?nw=0

rgds all
S28- BE

[Sunfish]

Deloitteses will have earned every cent of that 26 million. No bull.

And I say again to all youse pilots who think a Directors job or a CEO position is money for jam, read the Deloitte report and think again.

My own opinion is that Virgins fatal error was appointing an MD instead of a CEO.

‘’A CEO is an employee. She is not privy to the Boards deliberations. An MD is.

To put that another way, a Board can ask WTF is this CEO doing? Where is she taking us? Do we want to go?
’
With an MD, she has her hands on the steering wheel and the other directors are just along for the ride.

You do not want to be a director unless you understand both the business and corporate governance. The Virgin Board didn’t understand either of the two.

[MelbourneFlyer]

My own opinion is that Virgins fatal error was appointing an MD instead of a CEO.

Virgin has a CEO, not an MD?

[non_state_actor]

The CEO is a Managing Director

[Boeingpilot738]

Deloitteses will have earned every cent of that 26 million. No bull.

And I say again to all youse pilots who think a Directors job or a CEO position is money for jam, read the Deloitte report and think again.

My own opinion is that Virgins fatal error was appointing an MD instead of a CEO.

‘’A CEO is an employee. She is not privy to the Boards deliberations. An MD is.

To put that another way, a Board can ask WTF is this CEO doing? Where is she taking us? Do we want to go?
’
With an MD, she has her hands on the steering wheel and the other directors are just along for the ride.

You do not want to be a director unless you understand both the business and corporate governance. The Virgin Board didn’t understand either of the two.

It was money for jam for this lot, they weren’t doing anything except sending the company broke

[Ken Borough]

Bullwinkle,

if you don't like the title ' Chief Experience Officer', what do you think.of 'General Manager Customer Journey'? Believe it or not, such a position existed at Tiger before it was wound up. :yuk:

[Climb150]

Don't forget "Manager, digital experience". That is a fave of mine.

[Servo]

https://amp-abc-net-au.cdn.ampproject.org/v/s/amp.abc.net.au/article/12575776?amp_js_v=a3&amp_gsa=1&usqp=mq331AQFKAGwASA%3D#referrer=https%3A%2F%2Fwww.google.co m&amp_tf=From%20%251%24s&ampshare=https%3A%2F%2Fwww.abc.net.au%2Fnews%2F2020-08-27%2Fvirgin-australia-buyer-bain-may-saddle-airline-in-new-debts%2F12575776

I wonder how much JH made as an advisor or consultant...... (https://amp-abc-net-au.cdn.ampproject.org/v/s/amp.abc.net.au/article/12575776?amp_js_v=a3&amp_gsa=1&usqp=mq331AQFKAGwASA%3D#refer rer=https%3A%2F%2Fwww.google.com&amp_tf=From%20%251%24s&amps hare=https%3A%2F%2Fwww.abc.net.au%2Fnews%2F2020-08-27%2Fvirgin-australia-buyer-bain-may-saddle-airline-in-new-debts%2F12575776)

[Sunfish]

Servo, you beat me to it. This behaviour is the source of my warning.

[So what does a failed US toy chain have in common with a collapsed Australian airline?

The Bain which took part in the private equity buyout of Toys R Us is the same Bain Capital that is about to take ownership of Virgin Australia.

So it is possible Toys R Us may give some clues as to what Virgin's future under Bain might look like.

Starting with Virgin's aeroplanes, of which it owns half.

Even the planes it does own have been fully borrowed against, but Eileen Appelbaum believes Bain will be looking for an opportunity to extract value from them as those loans are paid down.

"If things begin to recover, you can imagine that Bain would sell the aeroplanes to a leasing company and then Virgin Australia will have to rent the aeroplanes back and Bain will walk off with whatever they sold it for," Professor Appelbaum postulated.

Another common money-making strategy of private equity is what is known as the "Management Services Agreement", which Eileen Appelbaum said will be signed the day Bain takes control of Virgin.

She believes the airline will be paying hefty fees for advice and services it may, or may not, need.

"A lot depends on how the negotiation, or how that management services agreement is structured, whether Virgin Australia has a chance to come out of this in good shape," Professor Appelbaum argued.

Also affecting what shape Virgin will be in is how its takeover will be paid for.

It was revealed this week in the creditors' report Bain was offering $3.5 billion for the stricken airline.[url=https://www.abc.net.au/news/2020-06-18/qantas-international-flights-coronavirus-airlines-survival/12366300]Airlines are in deep trouble (https://www.abc.net.au/news/2020-08-25/bain-capital-offer-3.5-billion-virgin-australia-creditors-vote/12592742)https://www-abc-net-au.cdn.ampproject.org/i/s/www.abc.net.au/cm/lb/5142968/data/qantas-virgin-custom-image-data.jpg (https://www.abc.net.au/news/2020-06-18/qantas-international-flights-coronavirus-airlines-survival/12366300)Governments have pumped $130 billion into keeping airlines afloat, but many have already collapsed and more will follow with big consequences for the cheap overseas travel we've become used to. (https://www.abc.net.au/news/2020-06-18/qantas-international-flights-coronavirus-airlines-survival/12366300)
Read more (https://www.abc.net.au/news/2020-06-18/qantas-international-flights-coronavirus-airlines-survival/12366300)If, like Toys R Us, most of that gets loaded onto Virgin's balance sheet as debt, the interest payments will be a big drain on the airline's finances as it tries to reinvent itself to become viable.

According to Professor Appelbaum, regulators in the United States have concluded that if a company has debt of more than six times annual earnings, it is at high risk of going under.

That was exactly the situation Virgin Australia had got itself into before its collapse, with $7 billion of debt combined with heavy losses, which saw coronavirus send it spiralling into administration.

When asked by the ABC if Virgin would end up footing the bill for its own takeover, Bain Capital refused to comment, instead directing the ABC towards the creditors' report.Look at who is running the showThen there is current Virgin boss, Paul Scurrah.

Bain has publicly stated, and reaffirmed to the ABC, that Mr Scurrah will continue to run the airline under its ownership.
https://www-abc-net-au.cdn.ampproject.org/i/s/www.abc.net.au/cm/rimage/12170662-3x2-xlarge.jpg?v=2Bain Capital says current Virgin CEO Paul Scurrah, who enjoys widespread staff support, will remain in charge.(AAP: Joel Carrett)Although Bain Capital is currently backing Mr Scurrah, Eileen Appelbaum is not sure how long that will last.

She said the reason she fears Mr Scurrah will not last much longer in the job is because CEOs often feel loyalty to their staff and customers that can clash with private equity's common desire to make quick money before it sells.

"The first thing to look out for is, do they replace the CEO?" she cautioned.

"That would be a warning sign, and who do they replace the CEO with?

"Is it somebody who knows anything about running an airline? That would be very unusual."

Eileen Appelbaum points to Toys R Us, where the CEO installed by Bain and its partners had no experience of the toy industry, which made a bad situation worse.

[Servo]

Sunfish, I know you have been saying it for a while and I agree. Have the whole time.

It is a big game of monopoly for these people, with a bypass of the go right to jail place on the board. The amount of "fees" is staggering. Little solace for the 3000+ employees that have lost their job to see $38 million siphoned off in a few months. It will pale into significance the amount Bain will siphon off over the next few years, I expect.

[Global Aviator]

Said it once, will say it a million times again until something changes.

The only winner in an administration or liquidation is the................

Hiddeous fees, go back to the big A and look how much the bro’s got.

Accountant & Lawyers, always get the gorillas.

The rest lucky to get the dimes!

[wheels_down]

Sounds like you lot are saying the market probably would have been better off if they collapsed completely?

Would be in the market and everyone’s interest if Virgin just collapsed, Indigo would be the replacement with a local investor. Franke has been loitering for years. At least we don’t need to rinse and repeat in 5 years.

We can’t go through all this BS mid this decade again.

[non_state_actor]

Good to see the good ol' ABC declaring the political bias of their "experts".

Eileen Appelbaum is a left leaning economist who is on a 'progressive, left leaning think tank' who happens to be highly critical of a fund started by a former conservative Republican presidential candidate. No real surprises there.

[MelbourneFlyer]

Looks like Bain has created a loophole in the promise to 'fully honour' all flight credits for cancelled Virgin Australia flights. Once Bain takes control, all credits will be converted into a new 'Future Flight' credit voucher but there will be strict restrictions on how those Future Flight credits can be used, they will be locked down to a particular fare category or 'bucket'. So if you hold $500 in flight credit you won't be able to just buy any ticket and put that $500 towards it, there will need to be an available seat of that fare type on the flight you want.

https://www.executivetraveller.com/virgin-australia-future-flight-credits

[Sunfish]

I am a conservative, definitely not a socialist and I think Anne Appelbaum’s opinion is correct.

[Progress Wanchai]

Looks like Bain has created a loophole in the promise to 'fully honour' all flight credits for cancelled Virgin Australia flights. Once Bain takes control, all credits will be converted into a new 'Future Flight' credit voucher but there will be strict restrictions on how those Future Flight credits can be used, they will be locked down to a particular fare category or 'bucket'. So if you hold $500 in flight credit you won't be able to just buy any ticket and put that $500 towards it, there will need to be an available seat of that fare type on the flight you want.

https://www.executivetraveller.com/virgin-australia-future-flight-credits

We’ll see more of this. In this case ticket holders are essentially being offered ID0 standby tickets as a one for one replacement for a full fare confirmed ticket. With very little cost to the company hundreds of millions of dollars of debt will be wiped off the books.

Lots more of these smoke and mirrors magic tricks to come.

[wheels_down]

Hold on.

So Virgin will come out of this with 3.5b in debt? 700m on the balance sheet?

[slice]

wheels_down, no as I understand it the unsecured debt gets 9 ~ 13 cents on the dollar, the secured debt is paid down releasing the 40 or so 'owned' 737s for sale and leaseback, the redundant employees payed out, trade creditors payed and off we go into the glorious sunny uplands of milk and honey with Unicorns farting Rainbows and Fairies sprinkling happy dust far and wide.:}

[galdian]

wheels_down, no as I understand it the unsecured debt gets 9 ~ 13 cents on the dollar, the secured debt is paid down releasing the 40 or so 'owned' 737s for sale and leaseback, the redundant employees payed out, trade creditors payed and off we go into the glorious sunny uplands of milk and honey with Unicorns farting Rainbows and Fairies sprinkling happy dust far and wide.:}

As long as there's a pot of gold at the end of the farted rainbow who cares! :ok:
Apparently there will be for Bain - if no-one else.

Gotta say one of the most eloquent posts for a long time - pissed myself laughing, many thanks. :D:D:D

[non_state_actor]

I am a conservative, definitely not a socialist and I think Anne Appelbaum’s opinion is correct.

So what if they sell it in 7 years time? They're taking a massive risk right now and I would suggest they are probably interested in actually running an airline in the near term. Something that hasn't happened for a long time at VA it's always been about everything else. The concern for staff would be downward pressure on terms and conditions but that's just how it is unfortunately in this market.

At the end of the day Branson started an airline then sold out in a float and has been paid royalty fees for 20 years. What's the difference here really?

[Chadzat]

You forgot to add in there ‘and none of the deadwood management gets given the arse. They just miraculously become good managers, efficiently putting into action a sound airline business plan to make money.’

🙄🙄

[Boeingpilot738]

So has private equity ever done anything good? Bain Capital specifically? All we hear about here is doom and gloom.

[TBM-Legend]

So what if they sell it in 7 years time? They're taking a massive risk right now and I would suggest they are probably interested in actually running an airline in the near term. Something that hasn't happened for a long time at VA it's always been about everything else. The concern for staff would be downward pressure on terms and conditions but that's just how it is unfortunately in this market.

At the end of the day Branson started an airline then sold out in a float and has been paid royalty fees for 20 years. What's the difference here really?



Branson will still collect handsomely as they will be using the Virgin name...remember the fee was around $15-20M per annum I believe!

[Sunfish]

The problem Boeing, is that Virgin then fails a second time.

Its a bit like trading in a broken down car. The dealer does the minimum to get it running again, puts Bananas in the gearbox, etc. and then sells it again without fixing anything. The new buyer is ripped off. Bain may not do this but that is the criticism levelled at them.

As for the Virgin staff, I’m not sure it will be a pleasant experience. Watch what happens to Scurragh.

[MickG0105]

I am a conservative, definitely not a socialist and I think Anne Appelbaum’s opinion is correct.
So what exactly is Eileen Appelbaum’s opinion? It seems to just boil down to 'Bain bad'. And to form that opinion she draws on what, her extensive experience in executive management, corporate finance and banking? No, she has none of that. While I have no doubt that Ms Appelbaum is intelligent near as I can tell she has never been employed outside of academia. She has no first hand business experience, certainly none in the last 45 years anyway.

That aside, on this particular deal, she opines that,

"If things begin to recover, you can imagine that Bain would sell the aeroplanes to a leasing company and then Virgin Australia will have to rent the aeroplanes back and Bain will walk off with whatever they sold it for,"

Just how much does she think 40 second hand B738s are going to fetch in a post-COVID market? In case she's missed the news there's a glut of commercial aircraft sitting around at the moment. Boeing are sitting on at least 200 cancelled MAX orders right now so the second hand narrow body market isn't going to be shooting the lights out any time soon.

If you get down to the bottom of the ABC article Appelbaum admits that Bain’s Virgin deal is different from Toys R Us. Toys R Us was a leveraged buyout of a business with a reasonable balance sheet and Bain were just one of the players in that buyout. The business itself was being squeezed in the traditional shop front retail market by Walmart and the likes and were also coming under pressure from every bricks-and-mortar retailer's worst nightmare, Amazon.

Toys R Us may not have been destined to fail but it certainly wasn't a lay down misere that it would be an ongoing success story. Of course, Ms Appelbaum doesn't mention the fact that after the Bain, KKR, Vornado buy-out, Toys R Us remained profitable for another 8 years. It was only in 2014 that it started to run into trouble. That was around the time that toy sales in the US started to flatten and decline while Amazon's share of that market started to take-off.

In any event, the Virgin deal is about as different as you can get.

Are Bain going to make money out of this deal? That is most assuredly their plan. But we need look no further than the Cyrus-Flybe deal to understand that sometimes those plans don't come to fruition.

In the meantime though they are keeping a business with around 6,000 employees afloat.

[Turnleft080]

Reading all the above, just imagine what sort of dialogue would of come about on this thread, if Indigo, Brookfield, GBH, Cyrus, were given the keys.
It would be 10 fold gloom and doom. Two of those companies wanted a fleet of 15 to 20 737s aircraft total. That would of meant another 3000 chopped.
Wouldn't get any worse than that besides liquidation.

[DanV2]

The other alternative is that EAG (Etihad Aviation Group) or the "so-called" saviour SIA got their hands on VAH, despite the well documented failures of Etihad and Singapore Airlines overseas investments.

The former presided over a number of bankruptcies including Jet Airways, Air Berlin, VAH, etc and the later lost money on their VS investment when they sold out to DL, plus SIA also presided over the Tiger Airways Australia failure and the NokScoot, Ansett/Air New Zealand group and VAH bankruptcies.

[MelbourneFlyer]

In the end I think Bain is the least-worst of a bad lot. Not that I am saying they are bad per se but there's the risk of them doing to Virgin Australia what they've done to other companies. I hope that isn't the case and that the Bain bid being led by a local team will actually want to get Virgin Australia back into the air and into profitability as a solid competitor to Qantas, basically embracing Scurrah's own well developed plan. Let's face it, we could have ended up with a lot worse, this could have been a super-cheap LCC or more like "Virgin Blue 2.0" than "Virgin Australia 2.0".

[Ragnor]

I guess we could find ourself in the same position in 2-4yrs when Bain do what everyone deep down knows they will do.

[chookcooker]

I guess we could find ourself in the same position in 2-4yrs when Bain do what everyone deep down knows they will do.
you can only hope hey

[hoss58]

I guess we could find ourself in the same position in 2-4yrs when Bain do what everyone deep down knows they will do.

That is a possibility however if VA had not gone into voluntary administration we probably wouldn't have lasted another 2-4 months much less 2-4 years.

There are a number of possible mid to long term outcomes but was has happened is administration has brought VA some time to see what can be achieved.

The situation we have at the moment has to be far better than liquidation where there would be no jobs. At least at the moment there is a chance that between 3000-6000 jobs may
be saved.

Stay safe.

Cheers Hoss

[Turnleft080]

That is a possibility however if VA had not gone into voluntary administration we probably wouldn't have lasted another 2-4 months much less 2-4 years.

There are a number of possible mid to long term outcomes but was has happened is administration has brought VA some time to see what can be achieved.

The situation we have at the moment has to be far better than liquidation where there would be no jobs. At least at the moment there is a chance that between 3000-6000 jobs may
be saved.

Stay safe.

Cheers Hoss
If VA was liquidated then looking into the crystal ball we may have seen something like an Aeroflot situation when the Soviet Union broke up. All their TU-154/IL-62 went into 10 different colour schemes.
In this case, 75 737s split up into a number of airlines. All funded all obtaining AOCs all crews/engineers/ground/gate staff all ready trained. As it is Rex want a couple now. Just my left field hypothetical.
Or that Singapore mob would of collected the whole lot.

[ad-astra]

Being embroiled in this ongoing saga I am very sympathetic to all those who have lost their jobs, and those who may lose their jobs, including me.
But Paul Keating comes to mind........

"..........The most important thing about that is, is that this is the Voluntary Administration that Virgin Australia had to have."

[Turnleft080]

I just thinking something similar

Paul Keating comes to mind........

"..........The most important thing is, this is the deregulation aviation market Australia had to have."

If I remember the next week the headlines were 5 entrants. Compass, Southern Cross, Hibiscus, AAA, I think their was one or two more.
This all after the 89. Aviation it's a rollercoaster hang in their ad- and all others.

[Sunfish]

The staff “lent” the cash that was provisioned to pay their FULL entitlements to the Virgin Administrators to keep the airline trading. If Virgin had then gone under. the staff would have received partial entitlements under the FEG Scheme.........and once the staff had woken up to what had been done, it would have been off to the Supreme Court to sue Deloitte.

It was jolly decent of you staff to keep the airline going so Bain could buy it.

No wonder Deloitte was adamant that Bain was to be the buyer. Deloitte stood to end up in deep crap if Virgin was liquidated AFTER they had spent the employee entitlement cash!

Full employee entitlements plus lsl and redundancy was estimated at 440 million. Virgin had 1.4 billion in cash and receivables at that point.

‘’But we told the Government and they let us do it! Deloitte said this was in the interest of the creditors, but not necessarily the employees if it had gone under.

Watch all the cash disappear when Bain takes over. It will all be replaced by debt. Anyone remember “Catch 22”? The scene where Yossarian goes to the medical kit for morphine to ease the wounded Snowden’s pain but there is nothing - Milo Minderbender had sold all the morphine and left an IOU in the kit.

[non_state_actor]

I wonder how close they actually got to pulling the trigger on a windup?

Apparently, it was 'in the best interest to creditors as a whole'. ??

In that they would get something in a sale but zero in a bankruptcy

[MickG0105]

Full employee entitlements plus lsl and redundancy was estimated at 440 million. Virgin had 1.4 billion in cash and receivables at that point.

What 'point' are you talking about, Sunfish? At the point that the business entered voluntary administration Virgin had $541.4 million in cash and term deposit​​​​​​s but those funds were frozen by financiers. Deloitte had to borrow money to pay wages during the first two weeks of the administration.

If you want to point the finger at someone for blowing through the reserves you would hope marked the threshold for entering voluntary administration (namely, sufficient unrestricted cash to pay staff wages and entitlements), then take aim at management. They determined when the administrator would be called in.

It is now apparent that management was essentially flying blind when it came to the business's actual finances and financial performance. On the day that the administrator has determined the business probably slipped into insolvency, Virgin's CEO was telling the market that 'We are well positioned to weather this storm.' Clueless would be one way to describe that.

The administrator was placed in the invidious position of having to quickly make a determination whether to continue trading - which meant using whatever cash they could free up to continue running the business cognisant that doing so would mean less to nothing in the kitty for employee entitlements in the event of liquidation - or cease trading and liquidate the business then and there. The reason that Deloitte found themselves in that position was not of their making, it was because management had left it a month too late before biting the bullet and entering voluntary administration. And I seem to recall that belated decision being called 'courageous' by someone at the time.

[34R]

I cant wait to see what the new EA will be with Bain, and how much a Redundancy package is worth working on a 20% 'flexible' roster.

I guess that will depend on how many of your colleagues the pilot body as a whole would like to keep on the books. One number will be inversely proportional to the other.

[Sunfish]

Mick, what is your background? I’m not disagreeing with your posts. I understand the invidious position, etc. However once Bain understood what Deloitteses had done, well, they could screw them down to nothing because Deloitte made an irrevocable decision to sell the business as a going concern and Bain was the only buyer who I think could have covered Deloittes backside. I’m sure you are right about the cash position.

To put that another way, Deloitte made a breathtaking irrevocable decision once it decided to burn through the provisions for employee entitlements. I would have to ask, if the Directors were trading while insolvent if they did this? The answer would be yes. But when the Administrator does it? I would have thought the answer is also “yes”. However on a technicality, the Administrator gets away with something that would have seen the Directors perhaps jailed.

Deloitte seems to have made “one last throw of the dice” using money that should have been used to cover employee entitlements in a liquidation. You can argue that this was in the best interests of the creditors - probably. However was it in the best interest of the employees? If Bain didn’t buy, then no.

What Deloitte may have done is loosely the equivalent to the crooked bank manager who has stolen a million from his employer and lost it gambling. He steals another million, bets double or nothing, and wins. He puts the money back. Has a crime still been committed if he is discovered? Not that Deloitte is crooked of course.

However I am not a lawyer and I’m not alleging Deloitte did anything illegal.

[chookcooker]

If the company was Liquidated when legally, it probably should of been, the Employees would have received their entitlements.

Under Bain , you get 100% of your entitlements (only if it gets voted up), but you can (in all probability) minus 80% from that with the new diminished EA they will be so hot to push through.

So anyone made redundant after the new EA, has effectively been sold out.

Being made redundant or liquidation, (and Jobkeeper is keeping/forcing people from being made redundant), the question is, will FEG and your current EA entitlements be better off in the Liquidation scenario, or, would you be better off voting on this new DOCA with no FEG, and no guarantees for that matter, in the future of your employment?
A) when exactly should it have “legally” been liquidated?
B) Employees get 100% in both the DOCA and, failing that, the Asset Sale Agreement.
C) Why would they lose 80% under a new EA? Are you suggesting new terms would be 20% the current terms? So $60k a year for a 737 captain??
D) Why didn’t you answer Mick above, when he said “Well, buddy, if it's not an error, what is your explanation for how a document dated the 15th includes a reference to another document dated the 16th? Time travel?”
not convenient? Or was it too convenient?

[slice]

I don’t think the plan is in the near term to make anyone redundant after the new EA, IF it gets voted up. And that will be some time away. The current VR for the Narrowbody (737) crew is under the current conditions, with the same exit date as the 330/777 (Oct 3rd). However announced today Is that Jobkeeper will no longer be recredited as annual leave from the end of August. Thus it’s either Jobkeeper or burning Annual leave at 50% not both as is currently available. As expected for this that are left it’s going to be a fight from here on in.

[MickG0105]

Mick, what is your background?
Contract law, supply chain management, program/project management and now in retirement, training for a not-for-profit.

To put that another way, Deloitte made a breathtaking irrevocable decision once it decided to burn through the provisions for employee entitlements.
That had already been done before Vaughan Strawbridge set foot in the door. Management had already ran the business's cash position down below the employee entitlement threshold before they called in the administrators. The reason that the cash that the business had left had been frozen was almost invariably because of financial covenants in their secured financing. Scurrah, Bryan and Co had already taken the business into insolvency before Deloitte was called in.

And let's be clear on the fact that employee entitlements are not 'provisioned'; they need to be 'accounted' for at the value that would accrue to the business in the event of a winding up but they do not have to be provisioned (as in, monies set aside for a specific purpose).


What Deloitte may have done is loosely the equivalent to the crooked bank manager who has stolen a million from his employer and lost it gambling. He steals another million, bets double or nothing, and wins. He puts the money back. Has a crime still been committed if he is discovered?
Not even vaguely close to loosely the equivalent, that's just hyperbolic nonsense. Stealing is a crime, nothing in Deloitte's administration was criminal.

And let's just draw a line under this 'it was the employees' money' nonsense. It wasn't. To the extent that the business's remaining cash was anyone's it was the secured creditors. The employees' claim on the business's money is always subordinated to the secured creditors.

You can cue the opening track off Pet Sounds and go through all the rainbow and unicorns hypotheticals until the cows come home but it does not change the fact that the best outcome for employees, both in aggregate and individually, was for the business to be sustained as a going concern and sold. The fact that the administrator needed to borrow money to pay the first fortnight's wages after they took over tells you all you need to know about the position the business was in when they took it over.

[non_state_actor]

The fact that the administrator needed to borrow money to pay the first fortnight's wages after they took over tells you all you need to know about the position the business was in when they took it over.

So why are Deloitte defensive of the Board in the creditor's report? I would have thought if it was that bad then the Board should have the book thrown at them. It reads a bit like Deloitte think they got a bit unlucky. The real financial situation would have been well known at the high levels for years and once Covid turned up surely the first question as a Board Member would be "are we insolvent"? Sure it came undone quickly but they have had many years of losses it wasn't like the financial situation came out of nowhere. Don't they run "stress tests" on the financials in these large operations?

[Sunfish]

Mick, thank you for your comment:
And let's just draw a line under this 'it was the employees' money' nonsense. It wasn't. To the extent that the business's remaining cash was anyone's it was the secured creditors. The employees' claim on the business's money is always subordinated to the secured creditors.

I refer you toDeloittes own words:

"Cash at bank on appointment and pre-appointment debtors are classified as circulating assets, and as discussed in section 3.4.4, employees have a priority to be paid out of realisations of circulating assets ahead of secured and unsecured creditors.

Deloittes made a decision.

Furthermore and with respect, I never said Deloittes did anything criminal. However whether what they did was in the best interests of employees, as opposed to other creditors, is another matter.

I also note that as reported this morning, Deloitte is threatening staff with the loss of jobkeeper payments if they don’t approve DOCA.

https://www.theage.com.au/business/companies/virgin-staff-told-jobkeeper-at-risk-if-bain-deal-voted-down-20200828-p55qd6.html

‘’You are going to see more of this crap - brutal and ruthless and I suspect you are going to see much more of the same to a level that I don’t even want to talk about.

‘’What comes next? The demise of Scurragh as the new Board focuses exclusively on “exit day” a few years from now, hence there will be no long term planning past that date.

[MickG0105]

I also note that as reported this morning, Deloitte is threatening staff with the loss of jobkeeper payments if they don’t approve DOCA.

Sunfish, how is it 'threatening staff' to point out the very simple practicalities of the choices ahead of them?

Sale of the business to Bain via a DOCA preserves the existing business and therefore preserves associations with it, such as the AOCs and, importantly for stood down employees, the employee's entitlement to JobKeeper. Those preservations are the reason for preferring a DOCA as the transfer mechanism over a straight asset sale.

You may recall that when JobKeeper was established one of the safeguards to prevent rorting was that businesses registering for it had to have been in existence and employing staff as of 1 March 2020 in order to be eligible. They also had to demonstrate a decline in revenue due to the coronavirus restrictions.

The administrator was pointing out that if the transfer of the business to Bain is not effected under the DOCA then it will occur via an asset sale. An asset sale would mean that a new business entity is created and employment would transfer to that new entity. That would immediately cause an issue for employee entitlements to JobKeeper.

Would you prefer that the staff just be kept in the dark about that sort of stuff?

’What comes next? The demise of Scurragh ...His name is Scurrah, no 'g'. And frankly how would his departure be a bad thing?

The bloke had virtually zero airline experience when he came into the job and he then demonstrated an abject inability to get anything meaningfully positive accomplished once he was there. His much talked about 750 headcount 'rightsizing' is as good an example as any of the bloke's inability to get things done. Announced in August last year, and meant to have been completed by last Christmas, come February this year only 140 people had gone. That rightsizing was the business's most significant cost control measure so you'd think that it might have warranted management's attention.

More recently we had his 13 March 'The Group currently has a cash position in excess of $1 billion' pronouncement that turns out to have been a case of providing materially false or misleading information to the ASX in breach of Listing Rule 3.1 and in breach of Section 1309 of the Corporations Act 2001. And we now know that on the day that the administrator has determined the business probably slipped into insolvency, Scurrah was telling the market that 'We are well positioned to weather this storm.' The bloke ran a business that was insolvent for a month without realising it.

Yesterday he was opining that one of the business's big problems is a lack of consistency in partner airline offerings! From yesterday's The Australian article,

One thing that’s been made very clear to us is we need a more consistent level of service across us and our partners so that people know what to expect when they get on a partner airline,” said Mr Scurrah.“It’s been pretty good but it would be different what you got on Singapore Airlines as opposed to what you got on Delta. We want to make sure that’s more consistent

Seriously?! This is what is occupying this bloke's attention at this time?

Frankly, if he's not 'spending more time with his family' by Christmas I'd be very surprised.

[Sunfish]

Mick, thank you for your reply.

I label this a threat because Deloitte allegedly used the word “May” in the video.

Under an asset sale... the employment of staff will transfer to a new entity or company, and that new entity may not be eligible for JobKeeper," Mr Strawbridge said in the video.

To me, that is a direct threat. I note the Commonwealth is silent on this ATM, however we already know Deloitte has been talking to Canberra. Such an issue would depend on how an asset sale was structured. I don’t think Bain and Deloitte would like to see their potential workforce evaporate just yet.

[chookcooker]

What are you getting at Chook>?
basically your entire post is rubbish.

[The Bullwinkle]

Mick, thank you for your reply.

I label this a threat because Deloitte allegedly used the word “May” in the video.



To me, that is a direct threat. I note the Commonwealth is silent on this ATM, however we already know Deloitte has been talking to Canberra. Such an issue would depend on how an asset sale was structured. I don’t think Bain and Deloitte would like to see their potential workforce evaporate just yet.
I still don’t see how it’s a threat.
Isn’t he just being honest about the potential consequences if the DOCA doesn’t get approved?

[Boeingpilot738]

Yes, Strawbridge said ‘may not be eligible for Jobkeeper’ I took it as finally getting some accurate information from the source rather than seeing it written in the paper first.

[MickG0105]

So why are Deloitte defensive of the Board in the creditor's report? I would have thought if it was that bad then the Board should have the book thrown at them. It reads a bit like Deloitte think they got a bit unlucky. The real financial situation would have been well known at the high levels for years and once Covid turned up surely the first question as a Board Member would be "are we insolvent"? Sure it came undone quickly but they have had many years of losses it wasn't like the financial situation came out of nowhere. Don't they run "stress tests" on the financials in these large operations?
I suspect that Deloitte are taking the view that it's not their job to prosecute the Board (it might be seen as a negative in getting further VA work).

But it is a fairly telling indictment of the management of that joint that they blithely traded insolvent for a month before the Board made the 'courageous' decision to go into voluntary administration. There appears to have been just an appalling lack of financial analysis and reporting. But, in typical Virgin fashion, none of that basic business stuff seemed to matter so long as they 'significantly outperform on culture'.

It would be interesting to re-run that Four Corners story knowing what we know now.