Bilyonaryo Lucio Tan has asked the United States Bankruptcy Court of New York to keep in secret some details of Philippine Airlines’ (PAL) Chapter 11 deals with aircraft lessors, creditors and suppliers.
In its motion to seal filed by its lawyers on September 27, PAL said: “In light of the personalized nature of the agreements negotiated with the supporting creditors, the restructuring support agreements (RSAs) and certain of the exhibits thereto necessarily contain sensitive confidential information that were the result of extensive,hard-fought negotiations. Such confidential information should not be publicly disclosed, and if disclosed, would harm the debtor and the supporting creditors.”
Under a bailout plan submitted to the court, Tan — the controlling shareholder of PAL — is offering to sink another $505 million in loans and equity into the flag carrier, which lost a total of P100 billion since 2017.
The key items that PAL wants redacted in its public submission to the Bankruptcy Court are:
* Rent related provisions, specifically “commercially sensitive terms negotiated individually with each supporting creditor”;
* Finance related provisions or the interest rate PAL negotiated with each of its lessors;
* Power-by-the-hour (PBH) provisions or the terms for the operating lease aircraft it retained (PAL only pays the engine maker or lessor when the aircraft is flying);
* Revised default provisions that PAL said were crucial to its ability to address defaults during the Chapter 11 proceedings and the vastly changed airline landscape due to the lasting effects of the pandemic;
* Super-soft landing covering the consensual termination of aircraft leases, the storage and/or potential use of aircraft equipment pending termination and the return of such equipment upon termination of the lease; and
* Miscellaneous provisions on PAL’s obligations with respect to maintenance and aircraft leases.
PAL claimed the release of these “sensitive” details would put the airline at a disadvantage in its future negotiations with counterparties.
The flag carrier feared that if parties were able to review the rent and concessions it has agreed to with existing creditors, it would undermine its ability to haggle for better terms; and it could face negative repercussions from creditors who would be able to compare their respective terms with other creditors and potentially reconsidertheir positions or make new demands.
“In addition to the detrimental effects on the debtor’s restructuring efforts, the disclosure of the confidential information would likely cause further substantial harm to the debtor’s future economic interests by creating an unfair advantage for its competitors. The confidential information contained in the aforementioned agreements are rarely, if ever, disclosed to the public or made available to non-parties,” said PAL.