Business Rehabilitation and Bankruptcy Law in Thailand

In Thailand, Bankruptcy Laws form part of the Commercial Law. Thai bankruptcy law is devised in such a way not only to help debtors to distribute their property but also to help them in rehabilitating via several reorganization provisions.

In other words, the Bankruptcy Law includes the Bankruptcy Act for Business Rehabilitation. The Business Rehabilitation Law was introduced in 1999 as Chapter 90 of the Thai Bankruptcy Law BE 2483. The main purpose of the Business Rehabilitation law is to assist a debtor facing liquidity problem by giving him an opportunity for rehabilitation before being insolvent.

The procedures in connection with rehabilitation are usually commenced by an eligible petitioner by filing a petition with a provincial or a civil court as per the domicile of the debtor. However, petition for business rehabilitation could be filed only if the debtor's overall debt comes to an amount that exceed Baht ten million. Likewise, In order to file a petition for business rehabilitation, certain legal and perquisites must be complied with such as:

- The names and addresses of creditors must be specified to whom the debtor owes in total at least an amount of Baht ten million
- Specify reasonable methods in order to rehabilitate business functions
- Proposed planner's name as well as qualification
- Planner's consent
- In case the petitioner is debtor, then details regarding assets and liabilities must be given
- Consent of authorities which is applicable as mentioned below :
1.In case the debtor is commercial bank or finance company, then the consent of the Bank of Thailand
2.In case the debtor is a securities company, then the consent of the Office of the Securities and Exchange Commission
3.In case the debtor is a file insurance company or a casualty insurance company, then the consent must be of the Insurance Department

On filing the petition as per the above grounds, the liquidator will start the case once when he confirms and proves that the debtor's assets could not pay off liabilities. The court's concern with regard to the business rehabilitation is mostly on the basis of debtor's balance sheet as well as accounting documents and liquidator's power of arguments. Discussed further in detail in this article are procedures with regard to business rehabilitation.

According to the Article 90 of the Bankruptcy Act, once the petition for business rehabilitation is accepted, a planner is appointed, who in turn possesses duties and powers to manage the debtor's business as well as assets. In case, a planner is appointed, then the debtor executive's power in administering the business and assets would cease. In such a situation, until the appointment of a planner, the court will employ one or more persons or sometimes the debtor's executive for a temporary period to deal with the debtor's business and assets under the administration of the receiver.

During this interim period, the receiver has complete right to administer interim executives and to order them to prepare explanation regarding the account details as well as anything pertaining to the management of business and assets. The interim executives would be relieved from the powers of receiver by the court when the receiver makes a motion.

In such situations, the court would employ new provisional executive to presume the office. In case the court does not appoint interim executive, then according to the Section 90/20 of the Bankruptcy Act, the receiver would be given power for a temporary period to manage debtor's business and assets. Likewise, according to the Section 90/21 of the Bankruptcy Act, until a planner is appointed, all of the rights of the debtor's shareholders would be suspended except for in the case of right to obtain dividends.

Once the acknowledgement order for business rehabilitation has been received, the debtor's executive should handover everything from assets and seals to book keeping ledgers and documents pertaining to business, assets, and liabilities of the debtor to the provisional executive or the receiver.

Nowadays, a number of leading law firms is in the scenario to provide excellent services in connection with business rehabilitation and bankruptcy. Many of them undertake a plethora of such services in connection with business reorganization as analysis as well as consultation with creditor or debtor, filing petition for business rehabilitation, plan administration, and planner representation.