Virgin Australia has suffered a class action lawsuit from angry investors who claim to have invested in the airline and suffered losses when it joined the administration due to the COVID-19 pandemic in 2020.
In the lawsuit, investors accuse Virgin of untwisting its finances by promoting the November 2019 issue prospectus to buy out a minority shareholder of its Velocity loyalty program.
The acquisition was valued at $ 700 million, with Virgin offering Australian investors about $ 325 million in unsecured bills and another $ 425 million in unsecured bills to investors in the United States. These bills are said to provide buyers with eight percent annual interest.
The class action lawsuit accuses Virgin of lying about the cash she will have after the acquisition, about the debt she had for the deal, and her ability to meet her credit obligations.
Following the completion of the acquisition in December 2019, Virgin faced financial difficulties in 2020 due to the COVID-19 pandemic. Throughout the health crisis, meetings were held at which the firm allegedly assured investors of its future.
Dr Daniel Fleming, director of the firm that heads the class action lawsuit, Matheson Property Group, says that in November 2019, he put $ 400,000 on Virgin bills and another $ 49,500 in February 2020.
The airline entered the administration in April 2020 and was eventually sold to Bain Capital in September of that year.
Investors claim that Virgin missed important financial information and made erroneous remarks when publishing its prospectus for 2019, and that they would not have purchased the notes if they had known the airline’s true position.
Investors are seeking compensation for the claim, claiming they sold the bills after the airline administration at a price below the real price.
Chairman Elizabeth Brian and former CEO Paul Scar will also sue for their alleged involvement in the company’s violations.
Request for comment from Virgin.