On September 14, 2020, Thailand’s Central Bankruptcy Court approved Thai Airways to enter into a court-supervised business rehabilitation (restructuring). The airline’s creditors will now be able to submit formal claims for debts owed, within one month from when the court’s appointment of the plan preparer is published in the Government Gazette. Publication is expected in early October.
To prepare the rehabilitation plan, the court approved EY Corporate Advisory Services in conjunction with six Thai Airways directors. The court’s decision to allow Thai Airways to rehabilitate makes this the largest business restructuring case in Thai history, as well as the largest Thai business casualty to date resulting from the COVID-19 crisis.
The Bankruptcy Court laid out three specific conclusions in its order approving Thai Airways’ petition for business rehabilitation:
- Thai Airways is insolvent and unable to repay debt
The court found that Thai Airways has liabilities exceeding total assets and shareholders’ equity, and is unable to repay outstanding debts, which exceed the threshold for insolvency under Thai law.
- Thai Airways has reasonable prospects of success in business rehabilitation
The court concluded that Thai Airways’ business structure has potential to generate income. Thai Airways has a strong reputation, extensive experience in the airline business, valuable resources, and skilled personnel for its operations. These assets give Thai Airways a reasonable prospect of success in the business rehabilitation process.
- Thai Airways filed the business rehabilitation petition in good faith
Thai Airways, as an insolvent company unable to repay debts, has the legal right to petition the court for business rehabilitation, has acted in good faith (without intention to delay its debt repayments), and is qualified under the Bankruptcy Act to proceed with business rehabilitation.
Creditors seeking assistance in preparing and submitting their debt repayment applications, or looking for more information on the Thai Airways rehabilitation proceedings, are encouraged to contact Tilleke & Gibbins at [email protected] or +66 2056 5555.