Virgin Australia (VA, Brisbane International) bondholders who are owed AUD2 billion Australian dollars (USD1.39 billion) have confirmed they will put an alternative proposal on the insolvent carrier's future to creditors at a crucial meeting in August, Guardian Australia reported.

The bondholders lost a case at the Federal Court of Australia on the morning of July 10 in their efforts to obtain access to secret details of Bain Capital’s winning bid to acquire Virgin Australia parent Virgin Australia Holdings.

Since administrator Deloitte announced Bain as the winner on June 26, it has emerged that creditors, including the bondholders, are unlikely to be repaid in full and that shareholders will not receive anything from the deal.

At the federal court hearing, Judge John Middleton rejected a request to gain access to the Deloitte-Bain sale agreement, which the bondholders argued they needed in order to prepare a rival proposal in the form of a deed of company arrangement (DOCA) - a binding arrangement between a company and its creditors governing how the firm's affairs will be dealt with - to also be considered by the creditors.

But the judge did warn the administrators that failing to disclose enough information to creditors when they vote on the deal in the upcoming meeting risks litigation that could derail the sale.

“It is in everybody’s interests for as much communication [as possible] to alleviate people’s concerns,” he advised.

Middleton added that the bondholders could apply to the court once again for the secret documents if the government-run Australian Takeovers Panel decided to hear the case as a separate proceeding.

Ian Jackman, the lawyer acting for the bondholders, alleged that the administrators were planning to provide information about the deal to creditors only at “the 11th hour” before the August meeting.

Jackman indicated that the group would in any case still table a rival offer in August, saying, “My clients seek to bring an alternative DOCA at the creditors’ meeting. We have a right to do that.”