Virgin Atlantic Airways won U.K. court approval today for a 1.2-billion-pound ($1.6 billion) recapitalization plan, financed in part via Richard Branson selling down part of his stake in Virgin Galactic Holdings (NYSE:SPCE).

The British airline, which is owned by Branson's Virgin Group and Delta Air Lines (NYSE:DAL), is trying to restructure after being hit hard by a travel slump caused by the coronavirus. The company is reorganizing in the U.K. but also filed for Chapter 15 bankruptcy protection in the U.S. to make sure none of its creditors tried to file claims against it outside of U.K. jurisdiction.

A Virgin Atlantic A330neo in flight.

Image source: Virgin Atlantic.

Virgin Atlantic's recapitalization includes debt funding from Davidson Kempner Capital Management and Branson's Virgin Group. Branson, after initially trying to mortgage his private Caribbean island, raised his portion of the funds via a sale of Virgin Galactic stock.

The deal also includes about $532 million in fee deferrals from shareholders of Virgin and Delta, as well as the reworking of about $600 million in payments by creditors. In May, Branson sold 25 million shares of Virgin Galactic, his space tourism venture, and about a $260 million share of the proceeds from that sale will be used in the Virgin Atlantic rescue.

U.K. High Court approval was the biggest remaining hurdle for Virgin Atlantic, but the airline still has to return to the U.S. Bankruptcy Court for the Southern District of New York to get its restructuring finalized there. That could happen as soon as Thursday, clearing the way for Virgin Atlantic to resume normal operations as soon as the end of this week.

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