Philippine Airlines has formally filed for bankruptcy in a bid to restructure the company following the impact of the pandemic which has wreaked havoc with the companies finances (alike so many other airlines).
PAL which is a private company owned by a billionaire businessman from the Philippines has initiated the Chapter 11 bankruptcy in U.S. bankruptcy court a week ago and just won court approval to borrow $20 Million for the proceedings.
Yesterday the carrier won court approval to borrow money from its controlling shareholder to start its bankruptcy case in the U.S. (even a orderly bankruptcy process costs a lot of money).
As Bloomberg reports the $20 million for the bankruptcy proceedings are part of a $505 million financing package that is being provided by indirect equity owner Buona Sorte Holdings and the airline’s direct parent, PAL Holdings.
An unusual clause allows the airline to convert half of the loans to unsecured debt and half to equity once Philippine Airlines exits bankruptcy, according to court papers
U.S. Bankruptcy Judge Shelley Chapman, who is based in Manhattan, gave the company interim permission to draw $20 million from the financing package.
Last week the Wall Street Journal first reported that Philippine Airlines Inc. filed for bankruptcy in New York, hammered by prolonged travel restrictions and a decline in tourism to the airline’s home country due to the Covid-19 pandemic.
…. The national flag carrier of the Philippines reached an agreement with creditors ahead of its chapter 11 petition, filed Friday in the U.S. Bankruptcy Court in New York with backing from its controlling family, people familiar with the matter said. …