Thai Airways International Plc (“Thai”) will seek an extension to submit a bankruptcy rehabilitation plan from the end of this year until February of 2021. This could change. To recap Thai’s own history of the bankruptcy reorganization proceedings filed on behalf of or by Thai thus far:
- 26 May 2020 – Thai submitted a petition to enter bankruptcy rehabilitation proceedings and propose rehabilitation plan preparers
- 27 May 2020 – Thai Central Bankruptcy Court issued an order accepting the petition and sets a hearing date of 17 August 202o on the petition.
- 14 September 2020 – Thai Central Bankruptcy Court issued an order permitting Thai to “process” the rehabilitation plan and appoints the plan preparers nominated by the Thai. That plan was supposed to be submitted by the end of this year.
But, as of 29 December 2020, it appears that Thai will miss this end of the year deadline to submit a proposed rehabilitation plan so that it has more time to negotiate with creditors. The plan preparers intend to seek permission extend the current deadline until February of 2021.
Thai bankruptcy reorganization has been controversial, and Thai itself has a controversial history. According to a detailed report by the Nekkei Asia, the Covid pandemic did harm Thai, but “mismanagement and graft brought down” Thai. The Nekkei Asia reports:
The financial troubles at Thai Airways International, which were so deep it needed court-supervised rehabilitation, were caused by the national flag carrier’s own management and workers ripping the company off, an investigation panel commissioned by Thailand’s Ministry of Transport has found
Press reports suggest these problems go back at least two decades. The Guardian reported that Rolls Royce had apologized after it was revealed it had paid more than $36m between 1991 and 2005 to agents to help it secure three separate contracts to supply Trent aero engines to Thai Airways. According to the Bangkok Post, “The case involved admitted bribery in Thailand, but authorities said no Thai complaint was filed, and no details were forthcoming.” In other words, no information was available on the recipients of these purported bribes.
A more recent procurement probe stated that: “An investigation by the Transport Ministry has revealed that some employees of Thai Airways got quite rich from a major plane procurement deal struck in 2003-2004.” The Bangkok Post reports that: “According to Mr Khomkrit, alleged major irregularities were found in various items, including air ticket sales, overtime payments to technicians and the purchase of Airbus A340 planes in 2003-2004.”
More recently, Thai was also criticized for giving its senior executives a 75,000 Baht a month allowance for travel expenses while the company after the bankruptcy rehabilitation was submitted. Democrat Party deputy leader Samart Ratchapolsitte wrote in June this year – after the filing of a bankruptcy rehabilitation proceeding: “‘Wow! Transportation allowance for Thai Airways executives is 75,000 [over USD 2,000] per month… on top of their 700,000 [over USD 20,0000] salary,’ Samart wrote online.” This same article says: “Many comments on Samart’s post criticize the airline’s for its perceived incompetence and the military role in the state enterprise.”
The military management of Thai has been criticized for alleged business incompetence for years. The Nikkei Asia reports:
Unprofessional boards also did not help. After a military coup in 2014, a trend emerged when Air Chief Marshal Prajin Juntong, who later became a deputy prime minister in the junta, was appointed chairman. Five civilian members were purged and replaced with five Royal Thai Air Force officers.
According to the Bangkok Post, to prepare its bankruptcy plan of reorganization, “THAI was [and is] represented by three people — THAI’s acting president, Chansin Treenuchagron, the airline’s independent director Piyasvasti Amranand and Chutima Panjapokakij, director of EY Corporate Advisory Services Co”. EY Corporate Advisory Services Company has also come under criticism.