The decision by the court, which handles bankruptcy and restructuring requests in Thailand, allows the airline to move ahead with drawing up plans to restructure 245 billion baht ($7.83 billion) worth of debt.
It comes as the coronavirus fallout has added to the woes of the airline, which has been struggling since 2012 and in which the government has a large stake.
Thai Airways shares rallied more than 7% after the news, bucking a fall in the wider stock market.
"The court has ordered the restructuring," Judge Kampol Roongrat said.
"If the debtor is not restructured, it could cause damage to the company, creditors, employees, investors, the public and impact the national economy," he said.
The court also approved a seven-member committee to draw up the restructuring plan. It includes veteran banker Boontuck Wungcharoen, Piyasvasti Amranand, the airline's former president and EY Corporate Advisory Services Co Ltd.
After three hearings and negotiations with the airline, some creditors withdrew their opposition to the restructuring.
"More than half of creditors supported restructuring," the airline's acting president, Chansin Treenuchagron, told reporters on Monday.
"We will be in negotiations with creditors this quarter and a plan will be ready by the first quarter of next year."
The airline previously said a second committee would be set up to execute the restructuring plan - a process that could take up to seven years - once it was agreed by creditors and the court.
Thai Airways was in difficulty well before the coronavirus grounded flights across the globe, booking losses nearly every year after 2012. It reported losses of 28.03 billion baht in the first half of this year.
The same court in May accepted the airline's request for bankruptcy protection, allowing debt payments to be suspended. Later that month, the government cut its stake in the carrier to 47.86%, ending its status as a state-enterprise.
Other Thai airlines have asked for $770 million in state support.
By Chayut Setboonsarng