Thai Airways formally enters business reorganisation

Thailand’s Central Bankruptcy Court has allowed flag carrier Thai Airways International (TG, Bangkok Suvarnabhumi) to enter into a business reorganisation while dismissing objections from 15 minor creditors. The airline said in a stock exchange filing that the court had appointed a seven-member planners’ committee, comprising six individuals and EY Corporate Advisory Services. The committee expects to present a detailed restructuring plan to the court in the fourth quarter of this year. Thereafter, a meeting of creditors will be called to approve the plan in early 2021. Thai Airways hopes to secure both creditor and court consent and start restructuring its business by the end of the first quarter of 2021. In its ruling granting Thai Airways’ petition, the court recognised that the carrier’s debts exceeded its assets and that it was not able to meet its commitments to creditors. However, it also pointed out that the airline’s situation had been exacerbated by various external factors, namely the COVID-19 pandemic, and not by bad faith or mismanagement. The court also recognised that the airline had the potential to generate enough revenue to successfully reorganise once the pandemic subsides and the restructuring plan is in place. Minor creditors’ objections, which focused primarily on the ability of the airline to successfully restructure as well as the choice of EY as planners, were swiftly dismissed by the court. The carrier’s total liabilities amounted to THB332.2 billion bahts (USD10.6 billion) as of the end of June 2020. By July 22, it had defaulted on a total of THB85 billion (USD2.7 billion) worth of loans and bonds. The total extent of claims will be revealed shortly. Once the appointment of the reorganisation planners is completed, the airline’s legal department will issue a call for all creditors to register their claims within 30 days.