The Central Bankruptcy Court decided yesterday that the airline can proceed with its plan to rehabilitate its debt.
The plan is expected to be drawn up by early next year for approval by the court and Thai Airways’ creditors. It needs the endorsement of holders of at least 50% of the airline’s debt.
The company, which had total liabilities of 332.2 billion baht at the end of June, faces one of the biggest challenges in its 60-year history as the Central Bankruptcy Court in Bangkok will investigate further in the airline’s accounts.
The airline had defaulted on loans and bonds totalling 85 billion baht, or 33.1% of its total assets, according to its latest statement on July 22. It reported a net loss of 28 billion baht in the first half of this year, a more-than-fourfold jump from 6.44 billion baht during the same time a year ago.
Thai Airways International’s bankruptcy was mainly caused by the national flag carrier’s own mismanagement, graft, widespread corruption and workers ripping the company off, an investigation panel commissioned by Thailand’s Ministry of Transport found earlier this month.
In addition, some disturbing discrepancies have also been pointed out by the Ministry of Transport, like the two billion baht registered in the 2019 financial results as overtime for repair and maintenance employees. One employee claimed 2.95 million baht ($94,000) for working 3,354 hours, or 419 days, of overtime. This is more than twice Thai Airways’ overtime cap of 1,500 hours. There were 567 repair and maintenance employees who exceeded this cap in 2019 according to a Nikkei report.
The rehabilitation plan will be primarily conducted by EY Corporate Advisory Services, a global financial advisory services company, and six Thai Airways Directors including Air Chief Marshal Chaiyapruk Didyasarin, Chakkrit Parapuntakul, Piraphan Salirathavibhaga, Boontuck Wungcharoen, Piyasvasti Amranand, and Chansin Treenuchagron.
As Reuters reported last month , the national airline company appointed auditors, firm Deloitte Touche Tohmatsu Jaiyos Co Ltd, said it could not reach a conclusion on the statements due to issues including a lack of liquidity and debt defaults and declined to sign off on the accounts.
Kudun and Partners has been officially appointed to represent a total of 87 savings co-operatives in their capacity as creditors of Thai Airways International Public Company Limited in Thailand’s largest-ever business rehabilitation proceeding to date.
THAI is carrying a total debt burden of approximately THB 350 billion, in which the debenture debt consists of approximately THB 74 billion (21% of the total debt). Together, the 87 savings co-operatives sum up to a total debenture debt of approximately THB 46 billion (62% of whole debenture debt), making it the largest group of creditors of Thai Airways’ rehabilitation, which could potentially give them the power to set the guidelines for Thai Airways’ rehabilitation.