THAILAND Law and Practice Contributed by: John Frangos, Nuanchun Somboonvinij, Santhapat Periera and Niti Muangkote, Tilleke & Gibbins
the debtor’s outstanding debts to government credi - tors in order to export the aircraft. 2.9 Insolvency Proceedings 2.9.1 Overview of Relevant Laws and Statutory Regimes Governing Restructurings, Reorganisations, Insolvencies and Liquidations Under the Thai Bankruptcy Act BE 2483 (as amend - ed), there are two types of insolvency proceedings in Thailand: bankruptcy and business rehabilitation. Both bankruptcy and business rehabilitation proceed - ings are under the jurisdiction of the Central Bank - ruptcy Court. Whether a lessee files for bankruptcy or business rehabilitation will have a significant effect on the lessor’s ability to repossess the aircraft. Bankruptcy If the lessee files for bankruptcy in Thailand, the les - sor can still seek the deregistration and repossession of the aircraft. The lessor has this option regardless of whether the lessee is under absolute receivership in a bankruptcy. However, the lessor cannot file a lawsuit against the lessee for debts owed. The lessor has to submit a debt repayment application to the official receiver under the bankruptcy proceedings. The debt repayment application must be filed within two months of the date of the publication of an order placing the lessee in absolute receivership. However, if the lessor is located outside Thailand, the official receiver may grant an extension of time for a period not exceeding two months. Business Rehabilitation If the lessee files for rehabilitation in the Central Bank - ruptcy Court, it will be more challenging for the les - sor to repossess the aircraft. Rehabilitation proceed - ings aim to resolve the debtor’s financial difficulties by allowing it to continue engaging in its business, while helping creditors be repaid. To allow the debtor to continue engaging in its business, the Bankruptcy Act gives the debtor relief from creditors by provid - ing for an “automatic stay”. The ”automatic stay” is imposed when the court accepts the debtor’s reha - bilitation petition and prevents, among other things, creditors from pursuing claims against the debtor and restricting a creditor’s right to enforce security.
The Bankruptcy Act states that when the automatic stay is effective, an owner of leased property which is “essential for the operation of a debtor’s business” cannot recover the property when it is in the debtor’s possession or another person relying on the debtor’s rights (eg, a sublessee). However, if the lease agree - ment has expired, the lessor can recover its property. When the debtor is an airline, the leased aircraft is like - ly to be considered essential for the operation of the debtor’s business. If the aircraft is not airworthy and the debtor has insufficient assets to properly maintain the aircraft, a lessor could argue that the leased air - craft is not essential to the debtor’s business. 2.9.2 Overview of Relevant Types of Voluntary and Involuntary Restructurings, Reorganisations, Insolvencies and Receivership See 2.9.1 Overview of Relevant Laws and Statutory Regimes Governing Restructurings, Reorganisa- tions, Insolvencies and Liquidations . 2.9.3 Co-Ordination, Recognition or Relief in Connection With Overseas Proceedings If the lessee files for bankruptcy in another jurisdic - tion, the foreign action will have no legal effect on the deregistration or repossession in Thailand. Thailand is not a party to any international treaty on insolvency or on the enforcement of recognition of foreign judg - ments. Thai laws also do not specifically provide for direct enforcement of a foreign judgment. A foreign court action may be used as evidence in Thailand, but that is all. 2.9.4 Effect of Lessee’s Insolvency on a Deregistration Power of Attorney Although the lessee is in the process of liquidation, the DPOA still stands. However, under the Bankruptcy Act, if the lessee is declared to be under receivership, they are prohibited from undertaking any act relat - ing to its business, except if ordered by or with the approval of the court, the official receiver or a credi - tor’s meeting. 2.9.5 Other Effects of a Lessee’s Insolvency If a lessee in possession of an aircraft is put into liq - uidation or administration:
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