THAILAND Law and Practice Contributed by: Nathee Silacharoen, Tawatchai Boonmayapan and Norrapat Werajong, Chandler Mori Hamada
Chandler Mori Hamada 31st and 36th Floors Sathorn Square Office Tower 98 North Sathorn Road Silom Bangrak Bangkok 10500 Thailand
Tel: +662 009 5000 Fax: +662 009 5080 Email: business-development@morihamada.com Web: chandler.morihamada.com/en
1. Overview of Legal and Regulatory System for Insolvency/Restructuring/ Liquidation 1.1 Legal Framework Insolvency matters in Thailand are principally gov - erned by the Bankruptcy Act AD 1940 (the “Bankrupt - cy Act”). The Central Bankruptcy Court is the com - petent body responsible for exercising judicial power is these matters. The main insolvency proceedings available under the Bankruptcy Act are: • bankruptcy proceedings; and • business rehabilitation proceedings. 1.2 Types of Insolvency As mentioned in 1.1 Legal Framework , two types of proceedings are available under the Bankruptcy Act. Bankruptcy Proceedings Bankruptcy proceedings are court-supervised pro - ceedings aimed at realising the debtor’s assets and distributing the proceeds among its creditors. In such proceedings, if the court, after taking evidence, is of the opinion that a debtor is insolvent and owes THB2 million or more (in the case of a corporate debtor) to one or more creditors, an absolute receivership order will be issued against the debtor. As a result, all busi - ness operations of the debtor will cease. Following the issuance of an absolute receiver - ship order, the court will appoint an official receiver (who is a government official from the Legal Execu -
tion Department, Ministry of Justice) to oversee and manage the debtor’s assets, including collecting and gathering the debtor’s assets from the debtor and any possessors, as well as managing and liquidating those assets. Under the Bankruptcy Act, the debtor is not allowed to submit a petition for voluntary bankruptcy proceedings, as these proceedings may only be initi - ated by creditors. Business Rehabilitation Proceedings Business rehabilitation proceedings are formal, court- supervised efforts to restructure distressed enter - prises, during which a moratorium (automatic stay) is applied to protect the debtor from its creditors. The automatic stay serves as a broad defence that provides debtors with “breathing room” from creditor pressure and prevents creditors from filing separate legal claims. A fundamental principle of an automatic stay is to prevent the debtor from: • selling, distributing or transferring its assets; • paying or incurring debts; or • taking any other actions that may encumber its assets without court approval or outside the ordi - In addition to the foregoing, a solvent liquidation pro - cess (winding-up) may be undertaken by a dissolved company on its own, out of court, in accordance with Thai company law. If, after a solvent liquidation pro - cess has started, the liquidator views the company’s assets as being less than its liabilities, the liquida - nary course of business. Liquidation Proceedings
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