PAL Receiver Wants Creditors’ Claims Segregated

The Manila Times
Thursday, September 10, 1998

PHILIPPINE Airlines(PAL) wants to segregate the claims of all its creditors into sub-classes to ensure that creditors of the airline will be fairly treated.

This was proposed by the PAL interim receivership committee in order to implement a viable rehabilitation plan for the ailing national flag carrier that will be mutually agreed upon by all parties involved.

The PAL interim receivership committee has proposed that creditor’s claims should be segregated into two different classes – secured claims and unsecured claims to ensure that all creditors will be treated accordingly.

The committee said that secured claims may be distinguished between senior secured and junior secured 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.

It also proposed that the rehabilitation plan be voted by all classes of secured and unsecured claims and that if approved by the appropriate percentage of creditors in each class, the plan would then become binding on all creditors in such class.

To be confirmed, the rehabilitation plan would need to be approved by a majority of each class of claims.

After the creditors’ vote, the SEC would then make final determination as to whether the plan is fair to all creditors. If approved, the rehabilitation plan would be binding on all creditors and would be immediately implemented.

The receivership committee also underscored the need to ensure that claims within a particular class be treated the same irrespective of whether a claimant is a Philippine or non-Philippine creditor.

It is also proposed that creditors should be allowed to file evidence of their claims with the committee at any time up to a date yet to be determined. Only creditors identified in PAL’s filing shall be eligible to vote in any creditors meeting.

If any creditor has unliquidated claim or contests the amount that PAL has claimed due to the creditor, it may petition the committee at any time before the cut-off date to determine the value of its claims in consultation with the SEC for purposes of determining the voting rights of such claim in the rehabilitation plan proceedings.

The ultimate decision of the value of any undisputed claim shall be made by the SEC in connection with the rehabilitation plan.

Following the submission of the rehabilitation plan to the PSE on Sept. 21, PAL has proposed to hold a preliminary creditor’s meeting on Sept. 30. Creditors could then provide their comments on the plan any time prior to the end of the agreed comment period. – Zinnia dela Peña