I'd like to hear from somebody who has some knowledge about Australian Bankruptcy/Administration processes: In the US Chapter 11 scenario, the debtor can abrogate leases or "executory contracts" (those are contracts performable over an extended time period) and use that threat as a way to renegotiate their terms. Right now, the last thing the creditors probably want is their airplanes back (who'll they place them with in the relatively near future, anywhere in the world). What part of Virgin Australia is salvageable? Does the royalty required by Branson make it possible (they could possibly abrogate that and, as discussed above, rebrand)? I have a feeling that the ULLC model (i.e., Indigo Partners) isn't the way to go when the reason for the problem is an external situation, like Corona.
First off lets be clear that the Australia does not have a Chapter 11 process in the way the US does. Virgin has opted for a "Voluntary Administration".
Under a Voluntary Administration scenario, the Company is protected from Creditors being able to take any action against the Company to recover debts. So a Lessor of an aircraft can't take the Company to Court, for example, unless the Administrator consents. Lets also be clear that under an Administration Scenario, the Administrator effectively becomes responsible for the payment of rent and other outgoings on the Company. So an Administrator would not keep on paying the aircraft leases unless they had to.
This is separate to a "Liquidation" process if the businesses is unrecoverable. If Virgin falls into Liquidation, a Liquidate has the power to disclaim agreements and obligations. So in that case the Liquidator of Virgin could get rid of the leases but we aren't in a Liquidation so that doesn't apply.
The key power that the Aircraft Lessors have is twofold:
1) They are secured Creditors of the Company so they are further ahead in the line for payment of their debt;
2) As a voting bloc in the Administration process. Any resolutions or Deeds of Company Arrangement negotiated by the Administrator with external parties requires approval by Creditors who will all look out for their own interests. So Administrators will need to keep the Aircraft Lessors on side.
Hope that helps.