Bankruptcy laws in Thailand are governed by the Bankruptcy Act which was first introduced in the year 1994, however the final amendment was in the year 2004 as well as the Civil and Commercial Code sections 1247-1273 on corporate bankruptcy. The law of Bankruptcy deals usually with two main categories of bankruptcy whether this is to be personal bankruptcy or corporate bankruptcy whereas a company is to go into insolvency. Insolvency may be briefly described as the state of excess debts that have exceeded the personal or company monetary funding that are to be paid to various creditors which they are liable to regarding the specific debts owed to the individual creditors.
In the event of personal bankruptcy by an individual, the individual does not in essence file a case of bankruptcy; however, it is the party of creditor who is to apply as a petitioner in order to be able to apply for receivership through a court order with the Bankruptcy Courts. Once the court order has been filed, the court will then after determining the evidence that strongly points to the fact that the debtor is indeed suffering from bankruptcy, will then issue a court order to provide receivership to the creditor (petitioner) in which permits the authority for the relevant official to be able to track the debtor’s assets in order to seize these assets for repayment to the creditor.
It is often that an individual who are impacted with a case of bankruptcy, do not know how to proceed and therefore are not able to protect their rights completely against the creditor. As the process of bankruptcy does not arise until an action has been filed initially by the creditor, it is essential that if you are in the position of the debtor and have received notice of such bankruptcy action filed against you that you contact a lawyer or solicitor in order to be able to proceed with the next steps to protect your rights and determine your obligations expected of you during this process. It may not be known to many; however, there are certain rights that a debtor does have in order to avoid a bankruptcy action against them. There are several options such as:
Allows a debtor to be able to file a composition consisting of a petition in order for the creditors to be able vote to strike out the claim of bankruptcy upon the debtor through a court process.
Discharge from bankruptcy under the Bankruptcy Act
No. 7 2004, which involves discharge after a period of three years. However, this period may be extended if found guilty of fraud or misconduct and previous bankruptcy filings against the debtor.
Additional ceasing of bankruptcy claims or petitions can be by the following:
1. In the event that no creditor assists with the retrieving of properties and or other assets;
2. In the event that the creditor does not provide enough information to be able to file a bankruptcy claim upon the debtor.
3. In the event the debtor has complied with full obligation of payment completion
4. In the event that the appointed and authorized receiver is not able to identify any further assets of any kind from the debtor.
In the event that a company is to go into insolvency there are several types in which must be distinguished as there are various procedures differ from each.
1. Petitioned by a Creditor
This is similar to the personal insolvency in that the bankruptcy is initiated by the creditor who provides sufficient evidence to the court in order to appoint a receiver to gather all the assets of the debtor and distribute them to the individual creditors.
2. Filed for by Liquidator (by the debtor)
This is in the event that the liquidator of the debtor has filed for bankruptcy on behalf of the debtor when the liabilities and debts of the company have exceeded the assets.
In the event of wishing to restructure the company’s assets and debts as well as liabilities in a way to be able to reorganize the structure of such to benefit the company. This can be initiated by either the creditor or the debtor. However, in order to file such a petition with the Bankruptcy court, there are a few requirements which include:
1. That the debts must be at least an amount of 10 million baht.
2. Sufficient evidence must be provided for review the relevant court official or receiver in order for petition to be accepted.
In the event the petition is accepted; the company will remain in the restructuring process until completion. This term usually lasts for a period of 5 years or until the Court has determined that the company may be released from bankruptcy.
The debtor is able to nominate for appointment of the receivership and if approved by vote of the creditors, that individual will be responsible for the distribution and reorganization of the entire company’s assets and liabilities. As the process of bankruptcy is complicated for both an individual or in a corporate structure, it is essential to obtain professional advice on how to proceed.
At Juslaws & Consult, our expertise in various areas of bankruptcy laws and in particular bankruptcy disputes are vast and various. Our attorneys use their profound experience in commercial transactions to build up customized strategies that protect our clients’ rights and help them determine the most appropriate course of action for each situation. We assist clients with implementing business practices and procedures to minimize the risks inherent in obtaining and extending credit, and we assist in collection efforts if the credit runs into problems. The representative services include reorganization & liquidation, bankruptcy & commercial litigation, loan documentation & administration, and creditor representation.
Please contact us today at our office in Bangkok or Phuket for more information.