The Central Bankruptcy Court has accepted the documents filed by Thai Airways International Plc on Tuesday, May 26th, and set a court date for August 17th.
The acceptance of the bankruptcy filing now means that creditors will be unable to collect debts from the airline until after the case has been heard.
This signals the beginning of the long process to rehabilitate the national airline that has seen huge changes over the past week.
It is expected that Thai Airways will also file for protection under Chapter 11 in the United States as almost half of the 200 billion baht debt from the airline is owed to foreign creditors primarily from the US, UK, and Germany.
A planner will now be appointed to draft up a rehabilitation plan for the airline, however, this is not a straightforward task.
Firstly, the appointed planner must be agreed upon by all creditors before court approval. Secondly, the planner must draft a plan within the three-month deadline set by the court.
Once the plan has been created, both creditors and the bankruptcy court must approve it again. This process could be repeated many times if there is no agreement among creditors or the court does not accept the plan.
There is also the scenario where a rehabilitation plan is not accepted at all, forcing Thai Airways International Plc to file for bankruptcy without rehabilitation.
Last week, the airline lost its state enterprise status when the Finance Ministry sold part of its stake to the Vayupak 1 Fund. The sale was made at below the market rate.
As it stands, the Ministry of Finance still holds 47.86 percent of the shares in Thai Airways with two percent owned by the Government Savings Bank, and 15 percent now owned by the Vayupak 1 Fund.
Share prices for Thai Airways suffered a significant drop last week before slightly recovering today after the court’s acceptance of the bankruptcy reconstruction documents.
Source: Thai Enquirer