A PASAY City court had granted Philippine Airlines, Inc.’s (PAL) petition for recognition of the proceedings and decisions of a United States bankruptcy court currently hearing its Chapter 11 case.
“Pasay court recognizes Chapter 11 filing before foreign court,” PAL said in a statement on Wednesday.
In a decision penned by Presiding Judge Wilhelmina B. Jorge-Wagan dated Oct. 22, 2021, the Pasay City Special Commercial Court said the recognition of the Chapter 11 proceedings “does not affect the right of Philippine creditors to commence or continue a rehabilitation or liquidation proceeding under the FR (financial rehabilitation) Rules or the right to file or continue claims proceedings.”
PAL filed the petition in September “to ensure that the Philippine legal system recognizes all proceedings and decisions rendered by the foreign court handling the Chapter 11 case.”
The airline 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.
PAL Holdings, Inc. (not included in the Chapter 11 filing) has said that billionaire Lucio C. Tan’s private firm Buona Sorte Holdings, Inc. (BSHI) would inject “fresh and additional capital” amounting to P12.75 billion ($255 million) into the listed parent company of PAL.
“The fresh capital to be received from BSHI will be downstreamed” by PAL Holdings to the embattled airline, the listed company said in a disclosure to the stock exchange on Wednesday.
“BSHI’s role in [PAL’s plan of reorganization] cannot be overemphasized, being responsible for the $505-million working capital requirement of PAL during the Chapter 11 filing,” PAL Holdings said.
Aside from the $255-million equity infusion, BSHI will also provide a five-year loan to PAL of $250 million.
PAL Holdings said it expects to receive the $255 million in cash from BSHI before the end of 2021, “which, as soon as received, will be applied by (PAL Holdings) in full payment for 10.2 billion new shares to BSHI, subject to approval of shareholders and of the SEC (Securities and Exchange Commission).”
“The 10.2 billion new shares to be received by BSHI from [PAL Holdings] will be issued at a subscription price of P1.25 per share,” it added. — Arjay L. Balinbin