The investment company Bain's plans to buy up Virgin Australia has not gone down well with the airline's bondholders. They have now come up with an alternative. Image Credit: Bloomberg

Sydney: Virgin Australia Holdings bondholders have asked the country's deals regulator to let them pitch a plan to rescue the airline in an effort to derail a sale to Bain Capital LP.

Singapore-based Broad Peak Investment Advisers and other bondholders told the Takeovers Panel that some elements of the Deloitte-run auction of the airline were "unacceptable" and effectively barred a different plan from being put to creditors.

Bain agreed to buy Virgin Australia last month in one of the biggest bets on the industry since it was hammered by the coronavirus epidemic. Unsecured bondholders were owed A$1.99 billion ($1.4 billion) when the airline collapsed in April under A$6.8 billion in debt. Deloitte said it's not possible yet to determine how much of that debt can be recovered.

The bondholders' plans threaten to prolong a rescue that was driven through by Deloitte before Virgin Australia ran out of cash. The bondholders asked the panel to let them make "an alternative proposal".

The Takeovers Panel hasn't decided whether to conduct proceedings on the matter.

In June, Virgin Australia noteholders submitted to Deloitte a recapitalization proposal for the airline that they said would create "a sustainable capital structure underpinned by public ownership."