An Australian Federal Court judge is expected to set a hearing date in 2024 for a class action suit against Virgin Australia (VA, Brisbane International) parent Virgin Australia Group and its former management team over allegations the company failed to disclose its actual financial position in a November 2019 prospectus to raise AUD325 million Australian dollars (USD208 million). The capital raise happened shortly before the Covid pandemic and Virgin's voluntary administration in April 2020 with debts over AUD 5billion (USD3.2 billion).
Following the resolution before him of interlocutory issues in the class action (case NSD 346 of 2022) brought by Matheson Property Group Pty Ltd (MPG) against Virgin Australia Holdings Limited, New South Wales Federal Court Judge Bryan Joshua Lee, on August 8, 2023, ordered the matter to be brought back before him in December 2023. At such time, he expects all outstanding issues concerning documentary evidence and pleadings to be resolved, and for MPG to have filed all of its lay affidavits and material-in-chief. "One hopes that, at that time, it will be possible to set a hearing date for the matter, subject to it becoming clear what my commitments are in 2024," he noted.
MPG represents a class comprising various holders of unsecured notes issued by Virgin Australia Holdings Limited (VAH), minority shareholders, and Blue Sky Alternative Investments insurers. MPG is represented by Australian law firm Corrs Chambers Westgarth, which also advised bondholders when Virgin Australia went into voluntary administration in April 2020. Corrs Chambers Westgarth declined to comment when approached by ch-aviation.
Apart from VAH, respondents include Virgin Australia Group former chairwoman Elizabeth Bryan AM and former CEO and Managing Director Paul Scurrah, now Managing Director and CEO at Australian rail freight company Pacific National. ch-aviation has reached out to the holding for comment.
In addition, according to the August 8 order, a slew of VAH's insurers have joined the suit as respondents, including Liberty Mutual Insurance Company, HDI Global Speciality SE, Beazley Lloyd's Syndicate, Endurance Worldwide Insurance Limited, Act Lloyd's Syndicate, Hiscox Lloyds Syndicate, CV Starr Lloyd's Syndicate, HCC International Insurance Company PLC, Aspen Lloyd's Syndicate, Assicurazioni Generali S.P.A. UK branch, Aviva Insurance Limited, Berkshire Hathaway Speciality Insurance Company, Travelers Lloyd's Syndicate, and RSG Underwriting Management Europe Limited trading as Startpoint Executive Risks.
The class action lawsuit against Virgin Australia and its former executives was first launched in March 2022, on the allegation that the company hyped up its finances when promoting the prospectus to buy out a minority shareholder of its Velocity frequent flyer loyalty programme.
Virgin Australia has downplayed the effects of the class action lawsuit and stated that it does not expect any financial consequences from the proceedings.
