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PAL seeks local recognition of Chapter 11 rulings

Philippine Airlines (PAL) planes are seen parked on tarmac in Manila International Airport in Pasay city, Sept. 9, 2014. — REUTERS/ROMEO RANOCO/FILE PHOTO

By Arjay L. Balinbin, Senior Reporter

PHILIPPINE Airlines, Inc. (PAL) said on Tuesday that it has filed a petition before a Pasay City court seeking recognition of the proceedings and decisions of a United States bankruptcy court hearing its Chapter 11 case.

“The recognition petition filed by PAL before a local court is a petition which aims to ensure that the Philippine legal system recognizes all proceedings and decisions rendered by the foreign court handling the Chapter 11 case,” PAL Spokesperson Cielo C. Villaluna said in a statement sent to BusinessWorld.

“This was filed before a Pasay City court yesterday, Sept. 20,” she added.

PAL filed a voluntary petition for relief under Chapter 11 of the US Bankruptcy Code in the US Bankruptcy Court for the Southern District of New York on Sept. 3.

The proceedings are supervised by Judge Shelley C. Chapman under Case No. 21-11569.

PAL has said that the bankruptcy protection filing will allow it to “successfully restructure and reorganize its finances to navigate the COVID-19 (coronavirus disease 2019) crisis and emerge as a leaner and better-capitalized airline.”

The “first day motions” hearing took place on Sept. 9. PAL won the court’s approval to access the first $20 million of its debtor-in-possession financing totaling $505 million.

The court also authorized the airline to pay “ongoing suppliers and trade creditors in the ordinary course for goods and services delivered throughout the Chapter 11 process,” PAL said.

It likewise received authorization to “continue to pay all employee wages, compensation and benefit obligations, subject to the continuation of any temporary work arrangements as necessary and maintain employee benefit programs in the ordinary course of business throughout the Chapter 11 process.”

The second hearing has been set for Sept. 30. Eight motions pertaining to its customer programs, insurance, taxes, derivative contracts, employee wages, cash management, critical and foreign vendors, and financing will be heard “on a final basis.”

PAL’s restructuring support agreements motions will also be heard on Sept. 30.

PAL Chief Financial Officer Nilo Thaddeus P. Rodriguez has said that the airline expects to exit its recovery phase by 2022, with operating activities seen to “generate more consistent positive monthly cash flow.”

PAL expects an operating income of $220 million next year and $364 million in 2023.

The airline plans to exit unprofitable markets and selectively increase regional capacity in targeted growth markets.

It intends to consolidate capacity in the West Coast gateways and cancel certain ultra-long-haul flights.

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