The Thai legislation regulating insolvency issues is the Bankruptcy Act BE 2483 (AD 1940). There are several specialized courts in Thailand that deal with bankruptcy and reorganization matters. Our Thai lawyers can help you become familiar with the relevant local legislation and help you comply with it for restructuring or closing down your business in Thailand.
Overview of the Thai Business Reorganization Act and the Bankruptcy Act
In Thailand, the legal framework for restructuring and insolvency primarily consists of the Business Reorganization Act (BRA) and the Bankruptcy Act. These laws govern the processes and procedures for corporate rehabilitation, business reorganization, and bankruptcy proceedings. If you are facing bankruptcy in Thailand, you can get legal help from our lawyers. Our attorneys in Thailand can offer you comprehensive information as well as assistance for reorganization. Please find below a general overview of Business Reorganization and the Bankruptcy Act:
1. Business Reorganization:
- The Business Reorganization Act provides a legal framework for financially distressed companies to reorganize and rehabilitate their business operations;
- The Act allows a debtor to propose a rehabilitation plan to creditors, aiming to restructure the business and repay debts over an extended period;
- The debtor must meet certain eligibility criteria and obtain court approval for the rehabilitation plan;
- If the plan is approved and successfully implemented, the company can continue its operations while repaying debts under the agreed terms.
2. Bankruptcy:
- The Bankruptcy Act governs the process of declaring bankruptcy in Thailand;
- Bankruptcy in Thailand can be initiated either by the debtor (voluntary bankruptcy) or by creditors (involuntary bankruptcy) if the debtor is unable to meet its financial obligations;
- Thai Bankruptcy proceedings involve the liquidation of the debtor’s assets to repay creditors;
- The court appoints a receiver to manage the liquidation process and distribute the proceeds to the creditors based on their priority claims.
It is important to note that the Thai legal system encourages debt restructuring and rehabilitation over liquidation. The aim is to preserve viable businesses and protect the interests of both debtors and creditors. The emphasis is on finding a fair and equitable solution that allows financially distressed companies to recover and continue their operations, while also ensuring creditors receive their due payments. For specific and detailed advice regarding restructuring and bankruptcy in Thailand, it is strongly recommended to consult with our qualified lawyers in Thailand who specialize in Thai law. They can also offer you legal services in other matters. For instance; if you are interested to immigrate to Thailand, our attorneys can also help you with relocation.
What are the proceedings for business reorganization in Thailand?
Business reorganization proceedings in Thailand are governed by the Business Reorganization Act (BRA). The Act provides a legal framework for financially distressed companies to propose a rehabilitation plan and restructure their operations to repay their debts. Here are the general procedures involved in business reorganization in Thailand:
1. Filing the Petition:
- The debtor, who must be eligible under the BRA, files a petition for business reorganization with the Central Bankruptcy Court (CBC) with the help of our Thai attorneys;
- The petition includes essential information about the debtor’s financial situation, assets, liabilities, and proposed rehabilitation plan.
2. Appointment of Planner:
- Once the petition is accepted, the CBC appoints a planner who is responsible for assisting in the reorganization process;
- The planner, typically an experienced lawyer or accountant, works closely with the debtor to prepare the rehabilitation plan.
3. Preparation of Rehabilitation Plan:
- The planner, in coordination with the debtor, drafts a rehabilitation plan that outlines the proposed measures for restructuring the debtor’s business operations, assets, and debts;
- The plan aims to restore the company’s financial viability and repay debts to creditors.
4. Submission and Examination of the Rehabilitation Plan:
- The rehabilitation plan, along with supporting documents, is submitted to the CBC for examination;
- The court reviews the plan to ensure it meets the requirements specified in the BRA and is feasible for implementation;
- Creditors have the opportunity to review and comment on the plan during this stage.
5. Approval or Rejection of the Rehabilitation Plan:
- After reviewing the plan and considering any objections from creditors, the CBC may approve or reject the proposed rehabilitation plan;
- If the plan is approved, it becomes binding on all creditors, and the debtor must adhere to the terms and conditions outlined in the plan;
- If the plan is rejected, the court may dismiss the reorganization proceedings and initiate bankruptcy liquidation.
6. Implementation of the Rehabilitation Plan:
- Once the rehabilitation plan is approved, the debtor must proceed with its implementation;
- The debtor, with the assistance of the planner, works towards restructuring the business, settling debts, and fulfilling the obligations outlined in the plan.
7. Monitoring and Supervision:
- The CBC closely monitors the progress of the rehabilitation plan, ensuring that the debtor is adhering to the agreed terms and taking necessary actions to rehabilitate the business;
- The court may appoint a supervisor to oversee the implementation process and report to the CBC on the debtor’s progress.
Throughout the proceedings, the aim is to achieve a fair and equitable resolution that benefits both the debtor and the creditors. If you have any questions about bankruptcy in Thailand, you are welcome to consult with our law firm in Thailand. Furthermore, if you are a company owner and have been living in Thailand for a certain period, you may be eligible to apply for permanent residence in Thailand with the help of our lawyers.
Restructuring proceedings in Thailand
In 1998, Thailand introduced an amended act to the bankruptcy legislation, introducing an alternative restructuring procedure for companies. Thus, the corporate rehabilitation procedure takes place through a Court process. Debtors and creditors need to negotiate and agree in view of a restructuring plan.
The management of a Thai company that goes through a restructuring process is not necessarily affected by this procedure, but a financial adviser is usually employed in order to supervise carefully the transactions and cash flow of the enterprise.
Insolvency proceedings in Thailand
Insolvency proceedings in Thailand start with a creditor taking action against a company that crosses bankruptcy. A petition can be filed if the insolvent company owes the creditor at least 2 million Baht.
In Thailand, the courts may give an order for compulsory liquidation or companies may take the decision to shut down the business operations themselves, through a meeting of the board. This second situation is called voluntary liquidation, through which a liquidator is employed in order to transform the remaining assets of the company into liquidities and pay the creditors.
Our restructuring and insolvency lawyers in Thailand can give you detailed information on these proceedings and can assist you at any stage of these legal processes.
Assistance in restructuring and insolvency matters in Thailand
Our Thai lawyers can offer legal counseling and professional assistance to companies that face a difficult financial situation. Our firm offers services such as:
- financial restructuring as well as operational reorganization;
- consultancy during the insolvency procedure;
- debt recovery;
- preventive measures against insolvency.
Feel free to contact our lawyers in Thailand to help you in any insolvency or restructuring-related situation that you may face with your enterprise in Thailand.