Thailand's Central Bankruptcy Court ruled on debt restructuring of THAI

Report by : Gan Yung Chyan, KUCINTA SETIA

On 14 September 2020, the Central Bankruptcy Court of Thailand approved the application for debt restructuring of the country's largest airline, Thai Airways International Pcl, as part of the bankruptcy proceedings.

According to reports, the court's decision will allow Thai Airways to formulate a restructuring plan for its huge debts, a process that will take three to five months.

Chansin Treenuchagron, Acting President of Thai Airways, told reporters, "More than half of the creditors support the reorganization. We will negotiate with the creditors this quarter and plan to make plans before the first quarter of next year."

Thai Airways previously stated that once the creditors and the court reached an agreement on the reorganization plan, another committee would be set up to implement the plan. The process may take up to 7 years.

It is understood that except for 2016, Thai Airways has suffered losses from 2013 to 2019. The pandemic has exacerbated this situation. As of May this year, THAI’s outstanding debt totaled 244.8 billion Baht, of which domestic debt accounted for about 30%.

In view of the heavy debts of Thai Airways, the Thai government hopes to carry out debt restructuring and internal reforms for the company through bankruptcy protection, so that it can move forward "lightly".

On 27 May, the Central Court of Thailand accepted Thai Airways’ request for bankruptcy protection to keep the debt.

Before filing for bankruptcy in the court, in order to solve the liquidity problem, Thai Airways’ largest shareholder, the Thai Ministry of Finance, sold 3.17% of the company’s shares. This action reduced the Thai Airways shares held by the Thai Ministry of Finance to 47.86%, thus ending the status of Thai Airways as a state-owned enterprise.

According to Bloomberg News, as of the end of June this year, the total liabilities of Thai Airways have climbed to 332.2 billion Baht.

PwC Thailand’s chief executive officer Chanchai Chaiprasit said before the court’s ruling, “The court’s approval of debt repayment is just a small step towards debt restructuring. It is necessary to formulate a policy that will allow banks and aircraft leasing parties to debt repayment arrangements that are satisfactory to suppliers, suppliers and other lenders will be a very difficult task."

Reuters quoted the International Air Transport Association as predicting that until 2024, global passenger traffic will return to pre-pandemic levels.