THAILAND Law and Practice Contributed by: Jessada Sawatdipong, Sarunporn Chaianant, Supawich Nimmansomboon and Supawin Pongthananikorn, Chandler Mori Hamada
7.4 Rescue or Reorganisation Procedures Other Than Insolvency Business rehabilitation procedures outside of insol- vency proceedings are available in Thailand. Either the debtor or the creditor has the right to submit to the court a petition for a business rehabilitation. If it appears that a debtor is insolvent or unable to pay its debt, is indebted to one or more creditors for a definite amount of not less than THB10 million – regardless of whether such debt is due immediately or not – and there are reasonable prospects of rehabilitating the debtor’s business, the court will usually accept the petition for rehabilitation proceedings. Application for Repayment As soon as the court issues an order to initiate the rehabilitation proceedings and appoints the planner (nominated by the one who filed the rehabilitation peti- tion or by the creditors), all creditors (including foreign creditors) are required to file debt repayment applica- tions, together with all supporting documents, against the debtor with the official receiver within one month from the date on which the order appointing the plan- ner is published in the government gazette. Failure to file a claim by the end of such period (which is not extendable, and where no exceptions are provided for foreign creditors) will result in the creditor forfeiting its claim against the debtor. Business Rehabilitation Plan After the plan has been prepared by the planner, a creditors meeting must be held for approval of the plan. The proposed plan must be approved by either: • creditors holding at least two-thirds of the out- standing debt value and more than half the number of total creditors from each class of creditors; or • creditors holding two-thirds of the outstanding debt value and more than half the number of total creditors from at least one class of creditor, and creditors holding 50% of the outstanding debt value of all classes of creditors. Upon approval by the creditors and the court, the plan will be considered to be binding on all creditors who submitted an application for repayment, whether vot- ing for or against the plan and regardless of being absent during the voting. If creditors have not filed an
application for repayment of debt, these creditors will forfeit their rights to repayment unless the rehabilita- tion plan states otherwise, or the court cancels the order for business rehabilitation. In any case, the creditors will always have the right to claim the full amount of debt from any guarantor, joint debtor or third-party security provider, since they are not bound by the rehabilitation plan. 7.5 Risk Areas for Lenders The major risks to lenders when obligors become insolvent are the risks of the financing transaction or any related action thereof being subject to revocation under undue preference provisions pursuant to the Bankruptcy Act and the Thai Civil and Commercial Code. In a case where it appears that the borrower, security provider or guarantor becomes insolvent and is subject to bankruptcy proceedings, other creditors or the offi- cial receiver may be entitled to ask the court to cancel any payment made or provision of any security by the borrower, the security provider or the guarantor to the lender with knowledge that it would prejudice other creditors. There is a legal presumption that if the pay- ment or the provision of security is made during a peri- od of one year before the initiation of the bankruptcy proceedings and thereafter, the borrower, the security provider or the guarantor – and the lender – knew that such action would be prejudicial to the other creditor(s). In addition, in the bankruptcy proceedings of the bor- rower or security provider, the court has the power, upon the application of the official receiver, to order the cancellation of the transfer of property or any act carried out by the borrower or security provider, or carried out with the borrower’s or the security pro- vider’s consent, three months before the bankruptcy petition or thereafter with the intent to give any credi- tor an advantage over other creditors.
8. Project Finance 8.1 Recent Project Finance Activity
Project financing continues to be active in the renewa- ble energy sector. Thailand’s second round of renewa-
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