Debevoise & Plimpton LLP is advising Philippine Airlines Inc. (PAL) in connection with its chapter 11 restructuring, which has the support of substantially all of PAL’s lenders, lessors, and aircraft and engine suppliers, as well as its majority shareholder. This restructuring will enable the company to successfully reorganize its finances and fleet to navigate the COVID-19 crisis and emerge as a leaner and better-capitalized airline.

As part of the agreements with key stakeholders, on September 3, 2021, PAL filed a voluntary bankruptcy petition in the U.S. Bankruptcy Court for the Southern District of New York to implement the consensual restructuring plan.  PAL plans to file a parallel proceeding in the Philippines under the Financial Rehabilitation and Insolvency Act (FRIA) of 2010 in short order. 

The restructuring plan, which is subject to court approval, would eliminate over $2 billion of liabilities from PAL’s balance sheet, would allow the airline to contract fleet capacity by 25% and would provide $505 million in long-term equity and debt financing from PAL’s majority shareholder and $150 million of additional debt financing from new third-party investors.

PAL will continue to operate flights in the normal course of business during the chapter 11 case, and the proposed plan would leave the company’s employees, customers, suppliers and other trade creditors unimpaired.

PAL and its affiliates are the largest airline group in the Philippines.  PAL is the national flag carrier of the Philippines and is among the oldest airlines in the Asia Pacific region, with approximately 4,500 employees and over $3 billion in annual gross revenue prior to the COVID-19 pandemic.

The Debevoise team is led by partner Jasmine Ball and includes counsel Nick Kaluk, associate Elie Worenklein and law clerks Mitchell Carlson and Tzerina Dizon.