PAL Receiver Seeks SEC Nod on Rehab Plan

The Philippine Journal
Thursday, September 10, 1998
BUSINESS

THE INTERIM rehabilitation receiver for beleaguered Philippine Airlines has proposed to the Securities and Exchange Commission the approval of several procedures in resolving issues affecting the rehabilitation plan for PAL.

The SEC has given PAL until Sept. 21 to submit a viable rehabilitation plan.

“Given the international character of PAL’s business and the large amount of creditors’ claims that will need to be administered, the rehabilitation receiver believes it is important to clarify in advance procedures and principles to govern the administration and approval of the rehabilitation plan for PAL,” the receiver said.

Under the proposal, PAL’s receiver said rehab plan should be voted upon by all classes of secured and unsecured claims, and if approved by appropriate percentage of creditors in each class, the plan would become binding on all creditors in such class.

Even in the absence of approval by a class, the plan should still be binding if the SEC finds the rehabilitation plan fair to such class. The rehab plan should bind all classes of claims, both secured and unsecured, and no class should be permitted to opt out of the plan.

The receiver also proposed to the SEC the creditors’ claims should be segregated into different classes, which is consistent with international practices and reflects the separation in Philippine law between secured and unsecured claims.

If a secure claim is under-collateralized, the claim may be split between a secured claim equal to the value of the collaterals and an unsecured claim for the balance of such claim.

In filing of claims, creditors should be allowed to file evidence of their claims with the interim receiver (if not otherwise admitted by PAL) at any time up to date to be determined by the interim receiver.

Only creditors identified in PAL’s filings or otherwise filing timely claims should be eligible to vote in any creditor’s meeting. Any creditor that fails to file claim before the cut-off date will have its claim barred from a participation in distributions under the plan.

Following the submission of the rehab plan to the SEC on Sept. 21, the interim receiver shall distribute the plan to the creditors, who shall have an agreed period of not less than 30 days to comment upon the plan. ERB