THAILAND Law and Practice Contributed by: Nathee Silacharoen, Tawatchai Boonmayapan and Norrapat Werajong, Chandler Mori Hamada
Pledge A pledge is a possessory security where a pledgor places a movable asset as security in favour of a creditor to secure the performance of an obligation. A pledge can also be created over rights represented by instruments such as shares, bills of exchange, promissory notes and cheques. For a pledge to be perfected, the pledged property must be delivered to the pledgee. For pledges over rights represented by instruments, the instrument must be delivered to the pledgee, with notice sent to the debtor of those rights. Business Security A business security is a non-possessory security under the Business Security Act 2018. Under this act, claims, movable property used in the ordinary course of business (such as machinery, inventory, raw mate - rials), immovable property (for real estate business operators), intellectual property and accounts can be placed as business security. A business security agreement must be made in writ - ing and registered with the competent authority. With limited exceptions, only Thai and foreign financial institutions that syndicate financing with Thai financial institutions, as well as entities with business objec - tives related to lending, leasing and financial leasing, are entitled to be security receivers under a business security agreement. An interim injunction may be issued to prevent the debtor from transferring assets. The criteria and requirements under the Civil Procedure Code (CPC) apply mutatis mutandis (with necessary modifica - tions). Interim injunctions under the CPC include: • seizure; • attachment or restraining orders; and • physical arrest or detention. The court typically grants an interim injunction if the petitioner can satisfactorily prove that damages will continue to accrue if the interim injunction is not grant - ed. The applicable criteria and requirements depend on the type of interim injunction requested. 2.4 Unsecured Creditors Pre-Judgment Attachments
In business rehabilitation proceedings, all creditors will receive repayment in accordance with the Plan. The planner is responsible for determining how each credi - tor is repaid, taking into consideration equal treatment for creditors within the same class, while following the order of priority prescribed for bankruptcy proceed - ings. The repayment plan shall be subject to a vote by the creditors’ meeting. 2.2 Priority Claims in Restructuring and As for new money in business rehabilitation proceed - ings, such funds may be injected for use in the ordi - nary business operations, and creditors providing such financing should be entitled to a certain priority/ ranking over other creditors. A debtor may not take any action that causes encumbrances to be created over its assets in response to obtaining priority new money, except where such action is essential for the debtor to continue normal business operations, or as otherwise ordered by the court. 2.3 Secured Creditors Under Thai law, three major types of security can be granted over assets: • mortgage; • pledge; and • business security. Insolvency Proceedings See 2.1 Types of Creditors . It is important to note that secured creditors under the Bankruptcy Act also include creditors who are vested with the rights of retention or those with preference rights similar to that of a pledgee. Mortgage A mortgage is a non-possessory security, meaning the mortgagor places immovable assets (eg, land, build - ings) or certain types of movable asset (eg, registered machinery, vessels, floating houses) as security in favour of a creditor to secure the performance of an obligation by the mortgagor or a third party, without having to deliver the secured asset to the mortgagee. A mortgage agreement must be made in writing and registered with the competent authority.
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