Rumours circulated in Thailand earlier this week that Thai Airways would file for bankruptcy.
This claim was denied by THAI which is preparing a rehabilitation plan for Government approval. More likely is that THAI may enter formal rehabilitation proceedings under the Thai Bankruptcy Act
Prior to 1998, liquidation was the only option under the Bankruptcy Act. Proceedings involving large companies were about as rare as a black kookaburra. In 1998, Chapter 3/1 was added providing a form of rehabilitation proceedings similar to US Chapter 11.
It was subsequently confirmed that THAI will enter formal rehabilitation proceedings under the Thai Bankruptcy Act following Cabinet approval.
This will be the highest profile case through the rehabilitation proceedings introduced in 1998 and certainly the largest case since the Asian Economic Crisis.
From the media reports, it seems that the Ministry of Finance will reduce its majority shareholding as part of the restructuring although this could just be shifted to another Government fund. THAI will no longer be a considered a State Owned Enterprise with the employees' union to be disbanded. It is not clear how THAI will be funded during the rehabilitation.
It also not clear how existing ticket holders will be treated.
Under the Thai Bankruptcy Act, all amounts owed at the date of the rehabilitation order, are normally quarantined and creditors must file claims for these amounts.
Don't discount authorities coming up with a solution which treats ticket holders fairly that doesn't strictly comply with the Bankruptcy Act.
THAI carried around 19.4m passengers in 2019 which is an indicator of the complexity of dealing with ticket holder creditor claims.
THAI - Cabinet gives nod to THAI rehab
https://lnkd.in/gsjk2EP
May 2020
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