Norton Rose Fulbright represents Philippine Airlines on Chapter 11 cross-border restructuring

Norton Rose Fulbright's Singapore and New York offices represented Philippine Airlines Inc. (PAL) as special aircraft counsel in its consensual restructuring, which was implemented in PAL's Chapter 11 plan. The plan was confirmed by the US Bankruptcy Court for the Southern District of New York last month.

The pre-negotiated Chapter 11 plan, which went into effect on December 31, was the culmination of many months of complex negotiations prior to the Chapter 11 filing. Negotiations involved PAL and substantially all of its lenders, aircraft lessors, aircraft and engine suppliers and maintenance providers, as well as its majority shareholder, allowing PAL to avoid a potentially costly, time consuming and damaging "free-fall" formal restructuring proceeding without a clear exit strategy. The Chapter 11 case, completed in less than four months, resulted in a US$2 billion reduction in debt, a streamlined fleet and a strengthened balance sheet. 

This is the first-ever pre-negotiated Chapter 11 restructuring by an airline and, at less than four months in total duration, possibly the fastest Chapter 11 in aviation industry history. It has been awarded Airfinance Journal’s 2021 Asia-Pacific Deal of the Year and Airline Economics’ 2021 Asia Pacific Restructuring Deal of the Year. 

PAL's parallel proceeding in the Philippines granted recognition of the US Chapter 11 proceeding under the Financial Rehabilitation and Insolvency Act of 2010 – the first time on record a Philippines court had recognized a Chapter 11 proceeding under the country's Financial Rehabilitation and Insolvency Act.

PAL, the national flag carrier of the Philippines, was founded in 1941 and has approximately 4,500 employees and over US$3 billion in annual gross revenue prior to the COVID-19 pandemic. It is the leading airline in the Philippines airline market. The reorganized company's network currently provides passenger and cargo service to approximately 60 points within the Philippines and around the globe.

Norton Rose Fulbright's cross-border aviation and financial restructuring team representing PAL was led by Keith Sandilands (Singapore) and David Rosenzweig and includes Fiona Henderson, Francisco Vazquez, Matthew Foos, Derek Cash (New York), Katherine Fleming, Selene Tan, Chloe Goodwin and Sophie Polisena (Singapore).