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Virgin Australia hit with class action

By Miklos Bolza
Investors who lost money in Virgin Australia's COVID-related administration have filed court action. (AAP)

Virgin Australia has been hit with a class action by irate investors who claim they sank money into the airline and suffered loss when it entered administration due to the COVID-19 pandemic in 2020.

In the lawsuit, investors accuse Virgin of hyping up its finances when promoting a November 2019 prospectus to buy out a minority shareholder of its Velocity frequent flyer loyalty program.

The acquisition was estimated to cost $700 million, with Virgin offering around $325 million in unsecured notes to Australian investors and a further $US425 million in unsecured notes to investors in the United States. These notes were said to provide buyers with an eight per cent yearly interest rate.

The class action accuses Virgin of lying about the cash it would have after the acquisition, the debt it had available for the transaction and its ability to meet its loan obligations.

Following the completion of the acquisition in December 2019, Virgin experienced financial difficulties in 2020 due to the COVID-19 pandemic. Meetings were held throughout the health crisis where the firm is alleged to have assured investors about its future.

Dr Daniel Fleming, director of the firm heading the class action, Matheson Property Group, says he sank $400,000 into the Virgin notes in November 2019 and a further $49,500 in February 2020.

The airline entered administration in April 2020 and was eventually sold to Bain Capital in September that year.

Investors claim Virgin left out crucial financial information and made misleading remarks when publicising its 2019 prospectus, and that they would not have acquired the notes if they had known the airline's true position.

The investors are seeking compensation for their losses, claiming they sold their notes after the airline's administration at a price that was lower than the actual value.

Chairman Elizabeth Bryan and former CEO Paul Scurrah are also sued in the lawsuit for their alleged involvement in the company's contraventions.

Comment has been sought from Virgin.

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Dive Deeper:
Virgin Australia hit with class action
Investors who lost money in Virgin’s COVID-19 related administration are now suing the airline alleging it lied about its financial…
Virgin downplays effects of class action
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Reuters
One subscription that gives you access to news from hundreds of sites
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400 million COVID-19 vaccine doses dumped by Baltimore plant, congressional report finds
BALTIMORE — The Maryland-based vaccine maker Emergent BioSolutions was forced to destroy nearly 400 million doses of COVID-19 vaccine because…
Get all your news in one place