Three private creditor banks have compiled their own out-of-court restructuring plan to turn around Japan Airlines Corp. in hopes of averting bankruptcy proceedings being mulled by a government-backed body, sources said Thursday.
The scheme proposed by Mizuho Corporate Bank, Bank of Tokyo-Mitsubishi UFJ and Sumitomo Mitsui Banking Corp. will hold shareholders accountable by seeking a capital reduction, which is rare for an out-of-court restructuring.
The banks have already submitted the plan to the transport ministry and the Enterprise Turnaround Initiative Corp. of Japan, which is tasked with JAL's rehabilitation. They also plan to extend over ¥300 billion in financial support through debt waivers and debt-to-equity conversions, the sources said.
ETIC, which is expected to unveil a bailout package later this month, is currently mulling a turnaround scheme that would entail JAL applying for court-led bankruptcy protection under the Corporate Rehabilitation Law after obtaining approval from its key creditor banks.
But the three private banks oppose the court-led bankruptcy option, citing credit turmoil the move may cause.
Under their plan, the banks envision winning support from ETIC and the government this month and holding an extraordinary shareholders meeting at the end of March to vote on a special resolution. ETIC would then follow suit with an investment into JAL, the sources said.