On May 26, 2020, Thai Airways International PCL submitted a petition for business rehabilitation, including a list of creditors, to the Central Bankruptcy Court. The court accepted the petition for consideration on the following day, and has scheduled a hearing for 9:00 a.m. on August 17, 2020, to determine whether Thai Airways should enter business rehabilitation. The court is now in the process of sending a copy of Thai Airways’ petition to the creditors whose names appear in the creditor list. In addition to announcing the hearing date by public notice, the court ordered that the hearing date be announced electronically.
Creditors can file objections to Thai Airways’ rehabilitation petition until August 14, 2020. If the August 17 hearing is postponed to a later date, the deadline to file objections will also be extended to at least three days before the actual hearing date takes place, in accordance with Thai bankruptcy law. If creditors fail to file an objection before the deadline, the court will assume that the creditors do not object to the petition.
An “automatic stay” came into effect when the court accepted the rehabilitation petition for consideration. The main purpose of the automatic stay is to protect the debtor’s assets from legal actions taken by the creditors. During this time, the following prohibitions (among others) are in effect:
- Creditors cannot file a civil action in connection with the debtor’s assets.
- Creditors cannot enforce a judgment against the debtor’s assets. However, if the assets seized or attached are perishable, the executing officer can sell them by public auction and set aside the proceeds.
- Owners cannot recover assets that are in the debtor’s possession under an unexpired contract (such as a lease) that are essential for the debtor’s business operations.
- The debtor cannot repay any debts, except if the payment of the debt is essential for the debtor’s normal business operations, unless the court orders otherwise.
- Providers of public utilities such as water, electricity, and telephone cannot suspend their services to the debtor.
Violation of the automatic stay can result in criminal liability for both debtor and creditor.
With the scheduling of the Bankruptcy Court hearing and the commencement of the automatic stay, Thai Airways’ creditors should monitor the situation closely and ensure they receive a copy of the petition. Meanwhile, all parties should endeavor to understand their rights and positions in order to determine the next steps to be taken.
Tilleke & Gibbins will continue to keep its clients updated on all developments surrounding the Thai Airways bankruptcy and restructuring matter. Creditors and other parties may direct questions on the issue to Tilleke & Gibbins’ restructuring and insolvency team by emailing [email protected].