LONDON — Virgin Group employees claimed the corporation was facing a “brand catastrophe” and “a reputation nightmare” according to emails introduced by Brightline in a lawsuit over its split with Virgin over the branding of the U.S. rail passenger service, the Financial Times reports.
A trial began Monday in London over Brightline’s exit from its 20-year agreement with Virgin Group over the rebranding of its service as Virgin Trains USA, a deal announced in November 2018 but rescinded by Brightline in August 2020 [see “Digest: Brightline ends marketing agreement …,” Trains News Wire, Aug. 8, 2020]. The MiamiCentral station was the only part of Brightline’s operation ever rebranded under the agreement.
Virgin is suing for $250 million in damages, saying Brightline is in breach of its trademark licensing agreement. Brightline argued it triggered the exit clause because the brand established by Sir Richard Branson had lost its “international high repute” as a result of issues during the pandemic, while Virgin claims Brightline had second thoughts about the agreement and was “looking for an opportunistic pretxt to extricate itself.”
The trial is expected to last about three weeks.
I am paraphrasing from other press, but in the run up to the pandemic, Virgin’s various entities were scrambling to re-arrange their capital. Because of this certain Virgin entities were in arrears or below on some of their capital retention requirements for their lenders. This reshuffling of the deck had several in the finance community frowning on Virgin as a stable entity and had some negative responses on how they were handling.
Brightline, being connected to Fortress was not hearing good things on the street on Virgin’s approach to rob Paul to pay Peter, to put it in simple terms and chose to separate themselves.
This is a paraphrase from memory of several press articles I read way back when, so don’t ask me for absolute references or links.
What, other than name recognition, did virgin bring? It looks like not much.
“Virgin is suing for $250 million in damages…” But how much did Virgin invest in Brightline?
Per the Trains link to “Brightline ends marketing agreement…” from 08/08/2020, ‘Branson told Forbes earlier this year that Virgin had not invested in Brightline but was interested in doing so’. I suspect they never did.