Philippine Airlines Inc. won approval yesterday from a New York bankruptcy judge to access financing for its chapter 11 proceedings, the first step in an effort to relieve the national carrier of roughly $2.1 billion in financial obligations, WSJ Pro Bankruptcy reported. Bankruptcy Judge Shelley Chapman granted approval to let Philippine Airlines draw up to $20 million from a $505 million loan facility led by the carrier’s controlling shareholder, Buona Sorte Holdings Inc. Buona Sorte, controlled by the Tan family, a prominent Filipino business clan, has also agreed to forgive several hundred million dollars in unsecured loans it provided to Philippine Airlines as emergency advances since the COVID-19 pandemic curbed air travel world-wide, according to court documents. Buona Sorte is expected to maintain majority ownership of Philippine Airlines after the restructuring. The company has said it aims to exit from bankruptcy by the end of the year. Before filing for bankruptcy, Philippine Airlines reached a restructuring agreement with almost all of its aircraft lenders, lessors and equipment suppliers that will cut roughly $2.1 billion of the carrier’s roughly $6 billion in total liabilities. Jasmine Ball, an attorney for the airline, said during the Thursday court hearing that there will be just one class of creditors deemed impaired under the bankruptcy plan, because they will receive less than full value, and are therefore entitled to vote on the plan. Ball said that more than 90% of the impaired creditors have signaled support.
