THAILAND Law and Practice Contributed by: Olaf Duensing, Jerrold Kippen and Weeraya Kippen, Duensing Kippen, Ltd.
3.6 Formalities When a Borrower Is in Default Mortgage Where the security provided is a mortgage, the lender must notify the debtor in writing to settle the debt within a reasonable time to be fixed in the notice. If the debtor fails to comply with the notice, the lender may then file an enforcement action in the Thai civil court to have the property seized and sold by public auction. The typical range of time needed to realise and enforce on a real estate security varies most significantly depending on the parties’ chosen dispute resolution mechanism. Where the par - ties have chosen Thai courts, the typical range is 12 to 24 months. However, where the parties have chosen a competent arbitration procedure, the typical range is six to 12 months. Pledge Where the security provided is a pledge, the lender must also notify the debtor in writing to settle the debt within a reasonable time to be fixed in the notice and if the debtor fails to com - ply, the lender may sell the property but only by public auction, prior to which the lender must notify the debtor in writing of the place and time of the auction. Business Collateral If the security is provided under the Business Collateral Act, then the lender must send a notice to the debtor to settle the debt within 15 days of receipt of the notice. A copy of this notice must also be sent to any preferential creditors regis - tered under the Act. If the debtor fails to comply, the lender may then sell the property. There have been no restrictions on a lender’s ability to foreclose or realise on collateral in real estate lending that have been implemented by
governmental entities in response to the pan - demic. 3.7 Subordinating Existing Debt to Newly Created Debt In general, registered security rights over immov - able property rank in order of registration. How - ever, if the security is given by way of mortgage or registration under the Business Collateral Act, and a later preferential right in the property is registered based on preservation of or work done on the property, then such later registered right may be exercised in preference to a mort - gage or business collateral security interest. 3.8 Lenders’ Liability Under Environmental Laws A lender holding or enforcing security over real estate cannot be held liable under the Enhance - ment and Conservation of National Environmen - tal Quality Act for any pollution emanating from real estate that secures a loan, unless the lender actually caused the pollution. 3.9 Effects of a Borrower Becoming Insolvent Security interests created by a borrower in favour of a lender are not made void if the bor- rower becomes insolvent. However, insolvency is grounds for any relevant lender to force the debtor into bankruptcy. Under the Bankruptcy Act, a secured creditor may enforce their secu - rity rights without need of permission from the bankruptcy court, but the lender must allow the property to be examined by the bankrupt - cy receiver. Furthermore, if the juristic act that created the security occurred within the three months prior to the bankruptcy petition and such act is found to have been done in order to intentionally advantage one creditor to the disadvantage of any other creditor, the act may be cancelled. If the advantaged creditor is an
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