THAILAND Law and Practice Contributed by: Nathee Silacharoen, Tawatchai Boonmayapan and Norrapat Werajong, Chandler Mori Hamada
Security Enforcement Once the court accepts the rehabilitation petition for further consideration, an automatic stay comes into effect immediately. Secured creditors are not entitled to enforce their security unless the court orders oth - erwise or until one year (or up to two years subject to the court order) has passed since the court accepted the rehabilitation petition. 5. Statutory Insolvency and Liquidation Procedures 5.1 The Different Types of Liquidation Procedure Under the Thai legal framework, only bankruptcy pro - ceedings initiated by a creditor or statutory bankruptcy proceedings commenced by the liquidator (during a voluntary winding-up) are permitted. The Bankruptcy Act does not allow debtors to submit a petition for voluntary bankruptcy proceedings. 5.2 Course of the Liquidation Procedure Under the Bankruptcy Act, if a creditor is owed more than THB2 million by a debtor company, the credi - tor may initiate bankruptcy proceedings against the insolvent debtor by filing a petition or claim with the Bankruptcy Court. The Bankruptcy Court will then schedule a hearing to examine witnesses; if, by the end of the hearing, the Bankruptcy Court issues an absolute receivership order, it will be published in the Government Gazette. The main objective of bankruptcy proceedings is to place the debtor into receivership, and to appoint an official receiver to liquidate the debtor company and distribute the proceeds to creditors. As a conse - quence, the debtor will be prohibited from managing its assets, except by order of the Bankruptcy Court or with the approval of the official receiver or the credi - tors’ meeting. The official receiver is also responsible for: • settling claims; • filing or defending actions related to the debtor’s assets; and
• reviewing the merits of the claims for debt repay - ment filed by creditors. 5.3 The End of the Liquidation Procedure(s) Composition Bankruptcy proceedings can be terminated through a composition. After the deadline for filing debt repay - ment applications has passed, the official receiver will arrange a creditors’ meeting to consider whether to accept the debtor’s proposal for a composition (if any) or whether the debtor should be declared bankrupt. If the composition is approved by the creditors’ meet - ing, it will be submitted to the Bankruptcy Court for endorsement. Once approved, the approved compo - sition becomes legally binding on all creditors, irre - spective of whether they voted in favour of or against, or abstained from voting on, such composition. Not - withstanding, dissenting creditors retain the right to lodge an appeal with the higher court against the court’s endorsement of the composition within one month (with possible extensions). Discharge of Bankruptcy A debtor may be discharged from bankruptcy pro - ceedings either by court order or automatically upon the expiry of the period prescribed by the Bankrupt - cy Act. To obtain a discharge, the debtor must file a motion demonstrating that at least 50% of the assets have been distributed to creditors and that the debtor has not engaged in dishonesty. This discharge releas - es the debtor from most debts, with certain excep - tions, such as debts related to taxes, duties or goods taxes owed to the government authority, as well as debts arising from dishonesty or fraud. Notably, a discharge order by the court does not release partners, joint debtors or guarantors from their obligations. The court also retains the authority to revoke the discharge if the debtor fails to co-oper - ate with the distribution of assets, misses required appearances or otherwise obstructs the bankruptcy proceedings. 5.4 The Position of Shareholders and Creditors in Liquidation Creditors’ Claims for Repayment All creditors must file an application for debt repay - ment within two months from the date that the abso-
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