Flag carrier Philippine Airlines (PAL) moved one step forward in its bankruptcy protection plea, as a court in the United States allowed it to access an initial $20 million in debtor-in-possession (DIP) financing.

The US Bankruptcy Court for the Southern District of New York on Thursday, September 9, allowed PAL to operate business as usual and borrow money for its Chapter 11 proceedings.

The total DIP financing is set at $505 million.

The Wall Street Journal reported the DIP would be provided by Lucio Tan-led Buona Sorte Holdings, which had been pumping billions into PAL to keep it afloat.

PAL said in a statement on Friday, September 10, that the approval of first day motions is an “important step” in its recovery plan.

“The combination of our substantial creditor support and the court’s approvals enables us to progress toward an expedited emergence and full recovery,” said PAL president Gilbert Santa Maria.

Earlier, PAL said it is expecting to exit Chapter 11 proceedings before 2021 ends, cutting its debt by $2 billion.

PAL is also expected to file for restructuring in the Philippines under Republic Act No. 10142 or the Financial Rehabilitation and Insolvency Act.

PAL parent PAL Holdings and Air Philippines Corporation or PAL Express are not included in the Chapter 11 filing. – Rappler.com