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Dominguez: We will wait for PAL’s bankruptcy proceedings first

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Following the recent filing for Chapter 11 bankruptcy of the Philippine Airlines or PAL, Finance Secretary Carlos Dominguez III said that they will have to wait for the results of its proceedings before state-run banks can help.

“(PAL) took a different path. They took a path of filing for bankruptcy first. So I told them, the conditions I said before are still on the table, however, if you will file for bankruptcy, we will have to wait for the resolve of the bankruptcy proceedings,” Dominguez told lawmakers during the Development Budget Coordination Committee’s virtual hearing for fiscal year 2022 budget on Thursday.

“I do not want the Land Bank (of the Philippines) and DBP (Development Bank of the Philippines) to go in and finance a company that is filing for bankruptcy and we don’t know how it will turn out yet,” he added.

According to him, bankruptcy courts do not necessarily follow what the government wants.

The Finance chief noted that they have started discussions with members of the airline industry in March 2020 and a team from the Department of Finance (DoF) and state-run banks were formed to provide assistance to such firms.

“I set out the principles of our participation from the very beginning…we do not want to end up owing any airline…and frankly, the history of PAL under the government administrations in the past has been dismal,” he explained.

“What we will require in any restructuring is that number one, the major shareholders put up adequate additional capital. Number two, that all the current creditors participate in relieving the financial problem of the airlines. Number three, that local banks participate in the financing,” he added.

Should such conditions be met and when the DoF is satisfied with the management of the company, will be the time for government financial institutions to participate.

To recall, PAL announced over the weekend its filing for bankruptcy in the United States to slash at least $2 billion in its obligations and boost its survival chances amid the health crisis.

 

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