20 buyers now circling Virgin Australia
Section28 -BE Just want to say thanks for posting the articles. Unfortunately I cant afford an AFR sub at the moment and I always come here to read the article. Thank you.
Oz wrote
I have previously invested a little in Bonds as part of my SMSF. Over the last couple of years, I have been offered Bonds in Bristow Group and Virgin. Luckily, I know Bristow Group well and I wouldn't have dreamed of putting my money into their Bond offering. When I was offered Bonds in Virgin, a little research into their financials scared me.
Sadly, these financial companies who offer Bonds always talk them up as being relatively "secure" in that Bond holders are reasonably assured of being paid. Their patter can be convincing for Mum and Dad investors. When I declined both Bristow Group and Virgin Bonds, the financial adviser told me what an opportunity I was missing and almost looked at me as if I was being a bit stupid. Of course, I would have done my dough in both cases, Bristow through CH11 and Virgin through administration. Institutional investors should have been more informed. Even without Covid, would VA have survived?
My point still stands If they were dumb enough to invest 2 billion in a ‘sham’ company. It’s like putting it all on red, losing it all and then having a cry.
Sadly, these financial companies who offer Bonds always talk them up as being relatively "secure" in that Bond holders are reasonably assured of being paid. Their patter can be convincing for Mum and Dad investors. When I declined both Bristow Group and Virgin Bonds, the financial adviser told me what an opportunity I was missing and almost looked at me as if I was being a bit stupid. Of course, I would have done my dough in both cases, Bristow through CH11 and Virgin through administration. Institutional investors should have been more informed. Even without Covid, would VA have survived?
Join Date: Jul 2007
Location: BAO
Posts: 0
Likes: 0
Received 0 Likes
on
0 Posts
https://www.smh.com.au/business/comp...10-p55auo.html
Interesting comments from Judge Middleton. I'd imagine that two DOCA's will be served up to the creditors in August. Proper process I would think. Someone will hopefully be accepted and let the process begin. Good luck all...
Interesting comments from Judge Middleton. I'd imagine that two DOCA's will be served up to the creditors in August. Proper process I would think. Someone will hopefully be accepted and let the process begin. Good luck all...
Quote #1 (bolding):
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.
"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.
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.
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.
rgds all- be well
S28- BE
Ozbiggles is the dumb bastard. There is a whole industry that exists to buy up ‘’worthless” bonds in default and then taking the issuer to court. I already told you what the operative legal doctrine is/; “Pari Passu”. Virgin doesn’t get to (a) default on its bonds, then (b) borrow money from the Federal Government, Bain or anyone else and eventually pay those creditors back without paying out the original bond holders first.
‘’To put that another way, Virgin doesn’t get to select which unsecured creditors it pays out by $#$%ing over some and then paying others. They must all rank equally while Virgin exists.
To put that yet another way, if Virgin defaults on its bonds, then borrows two billion from Bain and then pays interest on those monies out of its revenues that is potentially technically illegal under Pari Passu..
‘They bond holders are within their rights to demand to discover the details of the deal and based on my limited knowledge, I wouldn’t be surprised if it was discovered to stink to high heaven, in that Virgin DOES have the capacity to repay bond holders over time and remain a viable airline WITHOUT screwing over the bond holders and other unsecured creditors. As a general rule, to extinguish the bond holders rights, the company must be liquidated and the bond holders paid out what little remains.
To put that another way, just because Bain and Deloittes act as if there are no bickies in the jar doesn’t make it true. Deloittes are probably just stupid. Bain???
I’m sorry for the staff, they are blameless in this mess.
‘’To put that another way, Virgin doesn’t get to select which unsecured creditors it pays out by $#$%ing over some and then paying others. They must all rank equally while Virgin exists.
To put that yet another way, if Virgin defaults on its bonds, then borrows two billion from Bain and then pays interest on those monies out of its revenues that is potentially technically illegal under Pari Passu..
‘They bond holders are within their rights to demand to discover the details of the deal and based on my limited knowledge, I wouldn’t be surprised if it was discovered to stink to high heaven, in that Virgin DOES have the capacity to repay bond holders over time and remain a viable airline WITHOUT screwing over the bond holders and other unsecured creditors. As a general rule, to extinguish the bond holders rights, the company must be liquidated and the bond holders paid out what little remains.
To put that another way, just because Bain and Deloittes act as if there are no bickies in the jar doesn’t make it true. Deloittes are probably just stupid. Bain???
I’m sorry for the staff, they are blameless in this mess.
This is not Bains first rodeo. Big business is not my area of expertise however i can't imagine Bain would not know the value of VA in a liquidation scenario which would be bugger all. What assets would there be to sell. Maybe some residual value on some of the used 737's, no real estate that i know of and that's about it.
Correct me if I'm wrong but I suspect Bain will have crunched the numbers on this and given that they still seem very interested in the deal going ahead, will have a sale figure in mind that will be just marginally better than what the creditors will get in a liquidation scenario.
Cheers Hoss58
Join Date: Jul 2007
Location: BAO
Posts: 0
Likes: 0
Received 0 Likes
on
0 Posts
all the best
rgds
S28- BE
p.s.- check your messages
Join Date: May 2020
Location: Village
Posts: 26
Likes: 0
Received 0 Likes
on
0 Posts
I get the stress and anxiety you may have about Bain etc, but remember the place hasn't had this caliber of consultants though before. Remember, the current mob couldn't really run it for a profit so any change would have to be a good change. There's parallel PMO's, weekly steer co's, and probing interviews from the consultants already well underway. After years of spinning money at Bevington producing results and findings only to find the steer co. preso's the SLT/ELT tossed in the bin, you'll find these consultants will finally be able to enact change (given their parent company is the owner). Few corporations can afford the rates of Bain Consultants, so if you're in for the long haul you're in pretty safe hands.
Despite all the hoopla the bond holders are in weak position. They are unsecured creditors who only have neither sufficient numbers nor value to either block a DOCA nor have one of their own approved. They represent about 37 percent of the creditors by number and less than 30 percent by value. At least one of those numbers needs to be greater than 50 percent to influence the outcome of a creditors' vote.
All Bain require is for the secured creditors as a block to vote in favour of their DOCA. Even if every other creditor votes against the Bain DOCA, as the secured creditors represent a majority by value, the vote would be split between value and number. In that case the Administrator casts the deciding vote. That will be in favour of the DOCA. All over, red rover.
Join Date: Apr 2008
Location: Sydney
Posts: 265
Likes: 0
Received 0 Likes
on
0 Posts
I'm sure VA has had more than an army of management consultants around over the years.
Join Date: Jul 2007
Location: BAO
Posts: 0
Likes: 0
Received 0 Likes
on
0 Posts
'Respect' to all of you, above!!!- 'it' ain't a "DOCA" at this point in time..............
ex 'MickG'...... (bolding)-
Would appreciate, being educated vis- 'Middleton' and 'his', "reported" comments, (ex the SMH Article: https://www.smh.com.au/business/comp...10-p55auo.html ) below.
Many thanks- ta
rgds
S28- BE
ex 'MickG'...... (bolding)-
unequivocally resolved by Justice Middleton on Friday when he dismissed the bondholders' application to be given access to the details of the Bain proposal, with costs awarded against them.
Quote #1:
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.
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.
rgds
S28- BE
Yes, I think Mick overstated the effect of Middleton J's decision.
Mick, with respect, NO. You can’t extinguish the bond holders rights without liquidating the entity that issued the bonds.
‘’To put that another way, Virgin doesn’t get to say “bondholders, you have done your dough” and then enters into an agreement to borrow and repay money to Bain or the Federal government, or Queensland for that matter.
If the bond holders go under then EVERYONE has to go under and that usually means liquidation.
I don’t give a flying #$%^ what deloittes, Bain, Virgin, GT says, this is the stuff of multi year court cases because each situation is different. Of course Bain wants to screw the unsecured creditors. Deloittes is supposed to have the interests of ALL the creditors at heart. What the bond holders are concerned about is that this does not seem to be happening as far as they are concerned.
Pari Passu means that all members of the same class of creditor have to be treated EQUALLY. That also extends through time. If that were not the case, companies could finance themselves forever by defaulting on their current debt and then taking on new debt, then defaulting, rinse and repeat.
The practical market for defaulted bonds revolves around buying worthless national bonds and then, when the country tries to borrow more from the IMF, world bank, etc. sticking it to them to pay out their existing bonds before they can borrow again. Patient traders make lots of money this way.
I wouldn’t even be surprised if a predator wasn’t offering to buy the Virgin bonds at a deep discount right now. This is heavy legal stuff above my pay grade, but saying “the bond holders have no rights” is bull****.
And to put it yet another way, the idea that 51% of creditors get to screw the other 49% is bull**** for the same reason. This is the stuff of long court cases, there is nothing sacred about a ‘’deed of company arrangement” - it’s just like a union ambit claim.
‘’To put that another way, Virgin doesn’t get to say “bondholders, you have done your dough” and then enters into an agreement to borrow and repay money to Bain or the Federal government, or Queensland for that matter.
If the bond holders go under then EVERYONE has to go under and that usually means liquidation.
I don’t give a flying #$%^ what deloittes, Bain, Virgin, GT says, this is the stuff of multi year court cases because each situation is different. Of course Bain wants to screw the unsecured creditors. Deloittes is supposed to have the interests of ALL the creditors at heart. What the bond holders are concerned about is that this does not seem to be happening as far as they are concerned.
Pari Passu means that all members of the same class of creditor have to be treated EQUALLY. That also extends through time. If that were not the case, companies could finance themselves forever by defaulting on their current debt and then taking on new debt, then defaulting, rinse and repeat.
The practical market for defaulted bonds revolves around buying worthless national bonds and then, when the country tries to borrow more from the IMF, world bank, etc. sticking it to them to pay out their existing bonds before they can borrow again. Patient traders make lots of money this way.
I wouldn’t even be surprised if a predator wasn’t offering to buy the Virgin bonds at a deep discount right now. This is heavy legal stuff above my pay grade, but saying “the bond holders have no rights” is bull****.
And to put it yet another way, the idea that 51% of creditors get to screw the other 49% is bull**** for the same reason. This is the stuff of long court cases, there is nothing sacred about a ‘’deed of company arrangement” - it’s just like a union ambit claim.
It's interesting to read an authoritative explanation of who's who in the zoo:
2. On 26 June 2020, the Administrators executed a binding Implementation and Sale Deed (‘Sale Deed’), in which the business and assets of the Virgin Companies were sold to BC Hart Aggregator, L.P. and BC Hart Aggregator (Australia) Pty Ltd (the ‘Purchasers’), which are subsidiaries of Bain Capital Private Equity LP, Bain Capital Credit LP and their related entities (‘Bain Capital’).
Join Date: Jul 2007
Location: BAO
Posts: 0
Likes: 0
Received 0 Likes
on
0 Posts
Media Release- Aus Gvt Takeovers Panel: Friday, 10 July2020
There is 'stuff/trading' going on......., no doubt about it......!!!!
Link here: https://www.asx.com.au/asxpdf/202007...p5w55l3sjn.pdf
rgds all
S28- BE
Virgin Australia Holdings Limited (Administrators Appointed) 02–Panel Application Withdrawn
The Panel has consented to a request by Broad Peak Investment Advisers Pte. Ltd. (for and on behalf of BroadPeak Master Fund II Limited and Broad Peak Asia Credit Opportunities Holdings Pte. Ltd) and Tor Investment Management (Hong Kong) Ltd to withdraw their application to the Panel dated 3 July 2020 in relation to the affairs of Virgin Australia Holdings Limited (Administrators Appointed)(VAH).
The Panel has consented to a request by Broad Peak Investment Advisers Pte. Ltd. (for and on behalf of BroadPeak Master Fund II Limited and Broad Peak Asia Credit Opportunities Holdings Pte. Ltd) and Tor Investment Management (Hong Kong) Ltd to withdraw their application to the Panel dated 3 July 2020 in relation to the affairs of Virgin Australia Holdings Limited (Administrators Appointed)(VAH).
rgds all
S28- BE
I'm not going to get into yes it is, no it isn't to and fro. Let's just see where this lands in six weeks time.
Mick, with respect, the corporations law is almost as opaque as CASA regulations. You are assuming a clarity that does not exist. If the law was as you say it is, the bond holders would not be investing hundreds of thousands of dollars (and potentially millions) in court action. The bond holders are not noted for being stupid, nor are they noted for throwing good money after bad. Section and Blackout have both noticed this.
I know they are unsecured, that is not the point. They are entitled to their share of the value realised. The question they are asking is has this value been maximised? Bain and Deloittes won’t tell. Furthermore, there is the question of some unsecured creditors being more equal than others.
I have perhaps $100 million experience in dealing with Macquarie, BT and major “venture” players in this country and I still have the mental scars from it. These people will sell their own grandmothers.There is no dirty trick too low for them to use. The public school accents and nice suits have obviously fooled you.
‘’Regarding “of the same class”, DOCA, etc, you didn’t understand what I wrote. What I am trying to explain is that it is not as simple as signing a DOCA and starting again.
For example if Virgin defaults, 2 billion in bonds go up in smoke, it gets sold for peanuts to Bain, Bain or the Federal Government loan Virgin money to continue and Virgin pays interest on that money. That means that virgin could have made a deed of arrangement with its creditors and thus the bonds didn’t need to be extinguished.
The bond holders do have rights, they have a right to go through the proposed deal with a fine tooth comb and the FACT THAT BAIN AND DELOITTES WONT LET THEM, Tells me all I need to know.
‘Get it through your head that this is a wrestling match with no rules, not a simple yes/no transaction.
That's a load of tosh. You seem to be completely ignorant to the notion of classes of creditors. The bondholders are unsecured creditors; save shareholders the bondholders are at the bottom of the pile.
Of course you are better informed than two global entities.
‘’Regarding “of the same class”, DOCA, etc, you didn’t understand what I wrote. What I am trying to explain is that it is not as simple as signing a DOCA and starting again.
For example if Virgin defaults, 2 billion in bonds go up in smoke, it gets sold for peanuts to Bain, Bain or the Federal Government loan Virgin money to continue and Virgin pays interest on that money. That means that virgin could have made a deed of arrangement with its creditors and thus the bonds didn’t need to be extinguished.
The bond holders do have rights, they have a right to go through the proposed deal with a fine tooth comb and the FACT THAT BAIN AND DELOITTES WONT LET THEM, Tells me all I need to know.
‘Get it through your head that this is a wrestling match with no rules, not a simple yes/no transaction.
The mechanics of the second creditors' meeting, in particular a vote on a DOCA, are fairly straightforward. If Bain has the secured creditors and the unions on side, the DOCA will be approved. If Bain has only the secured creditors on side but everyone else votes against the DOCA, the vote will be split between value and number; in this case the administrator casts the deciding vote. No prizes for guessing how that vote will be cast.
Where the outcome relating to a DOCA is determined by the exercise of the administrator’s casting vote, any creditor may apply to the court for a review of the outcome and appropriate order. Thus it is best to have the DOCA approved by a majority by value (secured creditors) and number (employees). Deloitte and Bain understand this - where do you think their efforts will be focussed over the next month?
With respect to legal action, yes, that's always a recourse - whether the action has any merit or not is an entirely different matter (see rejection of recent Broad Peak/Tor application to the Federal Court).
In terms of sharing information, the administrator needs to ensure that the creditors have sufficient information regarding the state of the business and a recommendation on a DOCA to cast a considered vote at the second creditors' meeting. That information is typically circulated a week or so ahead of the meeting.
Mick, with respect, the corporations law is almost as opaque as CASA regulations. You are assuming a clarity that does not exist. If the law was as you say it is, the bond holders would not be investing hundreds of thousands of dollars (and potentially millions) in court action. The bond holders are not noted for being stupid, nor are they noted for throwing good money after bad. Section and Blackout have both noticed this.
I know they are unsecured, that is not the point. They are entitled to their share of the value realised. The question they are asking is has this value been maximised? Bain and Deloittes won’t tell. Furthermore, there is the question of some unsecured creditors being more equal than others.
I have perhaps $100 million experience in dealing with Macquarie, BT and major “venture” players in this country and I still have the mental scars from it. These people will sell their own grandmothers.There is no dirty trick too low for them to use. The public school accents and nice suits have obviously fooled you.
‘’Regarding “of the same class”, DOCA, etc, you didn’t understand what I wrote. What I am trying to explain is that it is not as simple as signing a DOCA and starting again.
For example if Virgin defaults, 2 billion in bonds go up in smoke, it gets sold for peanuts to Bain, Bain or the Federal Government loan Virgin money to continue and Virgin pays interest on that money. That means that virgin could have made a deed of arrangement with its creditors and thus the bonds didn’t need to be extinguished.
The bond holders do have rights, they have a right to go through the proposed deal with a fine tooth comb and the FACT THAT BAIN AND DELOITTES WONT LET THEM, Tells me all I need to know.
‘Get it through your head that this is a wrestling match with no rules, not a simple yes/no transaction.
I know they are unsecured, that is not the point. They are entitled to their share of the value realised. The question they are asking is has this value been maximised? Bain and Deloittes won’t tell. Furthermore, there is the question of some unsecured creditors being more equal than others.
I have perhaps $100 million experience in dealing with Macquarie, BT and major “venture” players in this country and I still have the mental scars from it. These people will sell their own grandmothers.There is no dirty trick too low for them to use. The public school accents and nice suits have obviously fooled you.
‘’Regarding “of the same class”, DOCA, etc, you didn’t understand what I wrote. What I am trying to explain is that it is not as simple as signing a DOCA and starting again.
For example if Virgin defaults, 2 billion in bonds go up in smoke, it gets sold for peanuts to Bain, Bain or the Federal Government loan Virgin money to continue and Virgin pays interest on that money. That means that virgin could have made a deed of arrangement with its creditors and thus the bonds didn’t need to be extinguished.
The bond holders do have rights, they have a right to go through the proposed deal with a fine tooth comb and the FACT THAT BAIN AND DELOITTES WONT LET THEM, Tells me all I need to know.
‘Get it through your head that this is a wrestling match with no rules, not a simple yes/no transaction.