A Thai bankruptcy court has today accepted Thai Airways International’s application for business rehabilitation, and a hearing will be held in under three months as to whether the company should be permitted to enter that process, according to two sources.

“Today, the court has accepted the request for business rehabilitation already, and for that, [the airline] will get the appropriate automatic stay from now on,” a judge at the country’s Central Bankruptcy Court tells Cirium, declining to be named due to not having permission to speak to the media.

Once the bankruptcy court approves the application for Thai’s rehabilitation, an automatic “stay” comes into effect, according to a briefing document by law firm Chandler MHM and legal experts to whom Cirium spoke.

That stay will restrict the ability of creditors to enforce any security or start any other litigation proceedings against Thai Airways. It also imposes a moratorium on creditors’ rights, including – crucially for lessors – the right to pursue action to repossess property that is the subject of lease or hire-purchase arrangements.

The acceptance follows the news yesterday, reported by Reuters, that the airline had submitted a request to the court for rehabilitation of its debt.

An Asia-based law firm partner, who asked not to be named, tells Cirium that the local Thai counsel he is working with has confirmed to him that Thai’s filing has been accepted.

A hearing to decide whether Thai Airways may enter business rehabilitation has been set for 09:00 on 17 August, according to a statement from the country’s Court of Justice.

The more than two-month gap between filing and the hearing is because Thai Airways needs to provide a list of creditors, and all those creditors, both domestic and overseas, need to be informed in writing of the hearing, says the lawyer. He adds that this will take the form of air mailed letters with notices of the meeting attached.

The court judge adds: “During this time, we have to inform all the creditors within our country and abroad, so we need some time to inform them.”

This article has been updated to include additional information from the Court of Justice.