For the first time on record, a Philippines local court has recognized a foreign Chapter 11 proceeding under the country’s Financial Rehabilitation Act.
By order dated October 22, 2021, presiding Judge Wilhelmina B. Jorge-Wagan of the Pasay City Special Commercial Court granted Philippine Airlines Inc.’s (“PAL”) petition seeking recognition of its pending Chapter 11 case in the U.S. Bankruptcy Court for the Southern District of New York, giving effect to the orders entered in PAL’s Chapter 11 case. PAL’s Chapter 11 case was commenced on September 3, 2021 and is currently pending before Bankruptcy Judge Shelley C. Chapman.
PAL filed its Chapter 11 case and the Philippines ancillary proceeding in order to “successfully restructure and reorganize its finances to navigate the COVID-19 (coronavirus disease 2019) crisis and emerge as a leaner and better-capitalized airline.” The restructuring plan filed in PAL’s Chapter 11 case contemplates an infusion of $505 million in long-term equity and debt financing from PAL’s majority shareholder, alongside $150 million of additional debt financing from new investors.
Togut Firm Partner Kyle Ortiz testified as an expert witness for PAL in the Philippines proceeding and presented on the nature of Chapter 11 and the relationship between domestic bankruptcy cases under Title 11 of the U.S. Code and parallel insolvency proceedings abroad. Mr. Ortiz has broad international case experience and is a frequent lecturer and writer on cross-border issues. He is a recent inductee of the International Insolvency Institute’s NextGen Leadership Program and was also recently named as the co-chair of the American Bankruptcy Institute’s International Committee.