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Virgin Australia investors owed $2bn try to block sale to Bain Capital

Ben Butler
Photograph: Darren England/AAP

Bondholders owed $2bn by Virgin Australia have asked the Takeovers Panel to stop Bain Capital taking full control of the stricken airline.

A group of bondholders, represented by Singapore fund manager Broad Peak Investment Advisers, has asked the panel to declare that the sale process run by administrators Deloitte was unacceptable because it will stop them from voting on an alternative deal at a meeting of creditors next month.

The move bypasses a series of rulings in the federal court, which has blessed Deloitte’s conduct of the administration so far.

Bondholders told the panel they wanted to put their own proposal to rescue Virgin to the meeting.

They have previously proposed tipping an additional $1bn into the airline and refloating it on the stock exchange.

Related: Virgin Australia administrators agree to sell airline to American private equity firm Bain Capital

Bain won control of Virgin Australia a fortnight ago, beating out rival Cyrus Capital Partners.

There are about 30 institutional investors and about 6,000 retail investors in bonds issued by Virgin Australia.

The bondholders did not participate in the bidding process but lodged their proposal to recapitalise the airline late.

In a statement to the ASX, the Takeovers Panel said that in addition to wanting the Bain deal unwound, the bondholders were also seeking details of the sale contract, which have been kept confidential by the federal court.

The Takeovers Panel, which is made up of lawyers and business figures, is a peer-review body that has sweeping powers to intervene in takeovers.

It rules on cases quickly, usually within days or weeks, and its decisions usually cannot be appealed against in a court. However, a second panel can review the work of the first.

A Deloitte spokesman said the administrators “strongly believe this action is without merit, and they will present information to the panel as required to refute all claims made by the applicants”.

“The administrators have undertaken a process which has resulted in a sale to Bain Capital, and which provides certainty for the future of the airline and delivers the best outcome for all creditor groups that could be achieved in the circumstances,” he said.

“The administrators said further details of the sale will be made available in the administrators’ report to creditors before the next meeting of creditors, currently expected to be held by the end of August 2020.”

Virgin Australia collapsed into administration in late April after the Morrison government rebuffed repeated requests by its management for a bailout.

It owes close to $7bn to creditors including the bondholders, aircraft financiers, banks and about 10,000 staff.

A Bain spokesman declined to comment.