The Central Bankruptcy Court Approved THAI's Amendment of Business Reorganization Plan

On 1 July 2022, the Plan Administrator of Thai Airways International Public Company Limited submitted the petition to amend the Business Reorganization Plan (the "Plan") to the Official Receiver. On 1 July 2022, the Official Receiver convened the creditors’ meeting via electronic means (e-Meeting). The creditors with the aggregated sum of their debt amount equivalent to 78.59% of the debt amount of all creditors that attended the creditors' meeting and casted their vote, accepted the proposal for the Plan amendment. Later on, during the Central Bankruptcy Court's hearing stage, some creditors submitted an objection to the Central Bankruptcy Court. On 20 October 2022, the Central Bankruptcy Court issued an order approving the proposal for the Plan amendment of the Company. The summary of the Court's order are as follows:

(1) The Plan amendment on the debt repayment, by conversion of the existing debt to a newly issued ordinary share to the Ministry of Finance, Financial Institution Creditors, and Debentures Creditor, has a timeframe for paying the debts to each creditor in the same class equally by 31 December 2024. Additionally, the Plan Administrator must study and determine an appropriate price of newly issues ordinary share for the existing shareholders, THAI's employees, and new investors. Furthermore, such timeframe was always discussed with the creditors' committee which Bangkok Bank, the 4th Objector, is also one of the creditors' committee. Additionally, under the law, each creditor in the same class must be treated equally. The Plan Administrator also confirmed that the resolution on conversion of the existing debt of every class and creditors at the same time, so that the repayment made to the same class is done equally. The proposal to amend this part, therefore, have the complete detail, procedure, and condition. Neither part is considered as a discrimination. Besides, the creditors who are in the same group with the Bangkok Bank, which are the main financial institution in Thailand, did not object to this amended part. Moreover, 78.59% of the creditors who attended the meeting and casted their vote accepted the proposal for the Plan amendment. This shows that the majority of creditors, including the creditors who receive the debt repayment by debt-to-equity conversion, accepted and support such amendment. It is deemed that such amendment will assist the debtor to have better financial statement, and that the creditors will receive the debt repayment faster. The debt-to-equity conversion is, therefore, not contrary to the Bankruptcy Act.

(2) The Plan amendment in part of adding conditions to debt repayment of the Ticket Refund Creditors, i.e., repay the ticket value that was recorded and the repayment can be made from the date that the Court approve the amendment of Plan and such repayment shall be complete by 31 March 2024, may result in the difference of repayment amount from the final debt repayment order of the Official Receiver or Court. The amendment of debt repayment mean is not a deduction of debt amount. It is a debt repayment according to the actual ticket price that the debtors receive and the right and obligation of relevant parties in normal business and ticket agent. Moreover, the passenger may receive the debt repayment faster, without a necessity to wait for the final debt repayment order. Besides, there were no creditors objecting this proposal for Plan amendment. 

(3) The Plan amendment on debt repayment to the creditors having the dispute with the Company in the foreign court and it is necessary for the Plan Administrator to negotiate and to settle the disputes with such creditor. If debtor does not repay the debt to such creditors, the debtor's assets located abroad may be seized, including an aircraft while it is landed. This may be hurdle to business operation that may cause damage to revenue and reputation, including financial status and capacity to make a debt repayment to the creditor according to the Plan. Furthermore, it does not appear that the Objectors receive any effect from such amendment. The Objectors do not propose other better alternative or a solution which allow the Plan Administrator to operate flight business in the country where the disputes arisen without any difficulties and hurdles provided that the amendment on this part would not be made. Thus, the Plan amendment on this part is essential.

(4) The Plan amendment on debt repayment to the creditor that is highly important to THAI's business operation. The creditor who is the provider of the airport services, ground handling services, and other services that important to business operation as specified in the name list together with details of the outstanding debt amount, shall be considered as the creditors that highly important to THAI's normal business operation. If the Plan was not amended, the debtor would not be able to continue to operate its normal business. It is not deemed that the creditors who submitted the debt repayment are affected. Moreover, such amendment is for the benefit of generating revenues in order to repay the creditors. It is, therefore, necessary and not considered as contrary to the Bankruptcy Act. Nevertheless, a condition that allows the debtor to propose additional creditors, outstanding amount, and necessity for making the repayment to the creditors' committee results in that the creditors' meeting and the court could not reviewed such details. Therefore, such condition shall be removed. However, such removal is not a significant part of the Plan. The remaining parts of the Plan are still effective.

(5) The Plan amendment on the business transformation plan, the new-facility commission and condition to minimize the risk of creditor who is forced to convert debt to equity, including the condition for the Plan completion are not the condition under the law. Removal of a new-facility committee will reduce the procedure. Since the creditor committee who will monitor the Plan Administrator. Therefore, the Plan amendment is considered lawful. Regarding business transformation plan, the Plan Administrator's power is to manage the debtor's assets in accordance with the Plan including the business plan. The conditions (i) to minimize the risk of the creditor who is forced to convert debt to equity and (ii) to have sufficient financial facility as the condition for Plan completion concerned by the Bangkok Bank, the 4th Objector would bind the Plan Administrator to seek for high amount of facility in order to repay the debt by debt-to-equity conversion and exit the business reorganization. However, it is not easy to seek for high amount of facility while the debtor's business is insolvent. Besides, it depends on the terms or negotiation of the organization or financial institution that may provide the financial support, which is an external factor and uncontrollable. Such condition is, therefore, a burden to the debtor, i.e., the debtor is obliged to repay huge amount of debt in the future. The Plan only needs to clearly mention about the new facility, but it is not necessary to specific as the condition for Plan completion. The proposal for Plan amendment therefore has complete requirement pursuant to the law.

The Plan Administrator, executives, and every employee are confident that the business reorganization under the Plan that the Court approved will be implemented smoothly until completion for the utmost benefit of all creditors. We ensure to creditors, customer, and THAI's business partner that THAI will resume its business operation and service as the flag carrier and the pride of Thailand and Thai people, and will generate profits and continue to grow sustainably in the near future.

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