MIAMI – Today, Thailand’s Central Bankruptcy Court has granted Nok Air (DD) its petition for bankruptcy protection.
The news comes on the heels of Thai Airways’ (TG) plans to submit a business scheme to the aforementioned bankruptcy court on August 17.
The Court has set October 27 as the first day of hearings regarding the rehabilitation process. For now, DD will receive a stay on debt worth in US$828m.
An automatic stay in bankruptcy is a temporary federal injunction that immediately suspends most collection efforts by creditors, collection agencies, and government entities against debtors and their property.
A Cloudy Picture for 2020
The airline has reported losses since 2014; however, due to the current crisis, other parts of its business have been affected.
In February, TG, one of DD owners, reduced its stakes in the airline from 16% to 13%. Around that time, the stakeholder waived the right to subscribe to US$142m DD shares.
Then, last month, the board of NokScoot Airlines (XW), a subsidiary of DD, decided to liquidate the company. The reason behind the move was that there was “no recovery from the negative impact of the COVID-19 pandemic.”
At the time, DD stated in a stock exchange filing that the XW liquidation would not impact it at all.
While passenger demand is lightly increasing, the Thai-based carrier keeps trying to up its balance sheet beyond these extraordinary circumstances.
Nok Air said on its Facebook page that it would operate regular services despite its bankruptcy protection status.
Featured image: NOK Air 737-800 Humanitarian Relief Delivery. Photo: NOK Air