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Reorganization

Reorganization

The Ministry of Justice has proposed to the government to form a committee to consider the amendment of bankruptcy law.

Concept and history

Since Thailand faced an economic crisis in B.E.2540, causing severe liquidity disruption and insolvency on a plethora of certain types of business that further cause a domino effect of insolvency on some competing businesses.

The payment of debt under the bankruptcy law is not the best way to guarantee the creditor and debtor full repayment and new business respectively. Therefore, the concept of reorganization of the debtor’s business is the goal for solving insolvency and bankruptcy of the debtor.

The Ministry of Justice has proposed to the government to form a committee to consider the amendment of bankruptcy law. As a result, the Bankruptcy Act (No. 4) B.E. 2541 is enacted. It added Part 3/1 on the proceeding of reorganization of the debtor’s business in section 90/1 to 90/90. They contain the principle of business reorganization of a debtor, who is a juristic person facing difficulties of temporary financial illiquidity, which deserves help with an opportunity to have their business reorganized. This in return, increases the opportunity that the creditor will be repaid.

Person eligible for reorganization

Under section 90/1 which states that debtor is a debtor that is a private company limited, public company limited or other types of juristic person in pursuant to a ministerial regulation. Currently, the ministerial regulation prescribes that the Credit Union Co-operative to be considered as a juristic person as well.

Person eligible to call for reorganization

  1. Creditor, who may be one person or a group of persons with the total certain debt of no less than 10 million baht
  2. Debtor, who may be one creditor or a group of creditors with the total certain debt of no less than 10 million baht
  3. The Bank of Thailand, in case where a commercial bank, a finance company or a credit foncier company
  4. Security Exchange Commission, in case where a security company is a debtor
  5. Office of Insurance Commission, in case where an insurance company is a debtor
  6. Government agencies that have the power to control and supervise business operation of a juristic person debtor

Noted that the creditor of a debtor under 3, 4, 5, or 6, or the debtor, could file a request to the court by himself upon the consent in writing from the Bank of Thailand, Security Exchange Commission, Office of Insurance Commission or government agencies under 6, whichever case.

Requirement of filing a reorganization request

  1. The debtor is insolvent, which means he has more debts than asset.
  2. The debtor is one creditor or a group of creditors with the total certain debt of no less than 10 million baht, whether or not it becomes due forthwith or at a future date.
  3. There is a reasonable ground and a way to reorganize the debtor’s business. This means that it should be illustrated that the reorganization will be more beneficial than the enforcement of payment of the debt under the Bankruptcy law.

Exemption of filing a reorganization request

  1. The court has already issued an absolute receivership order against the debtor.
  2. The court or the Registrar has already issue an order to dismiss or withdraw the registration of a juristic person who is a debtor, or if there is a cancellation of business registration, or if the juristic person who is a debtor is dissolved by other reasons regardless of whether or not the liquidation is completed.

Persons involved

  1. Plan preparer means a person who prepares the business reorganization plan.
  2. Plan administrator means a person who manages the business and property of the debtor in accordance with the business reorganization plan.
  3. Debtor’s executives mean directors, managers or persons with authority to operate the debtor’s business on the date of the Court’s business reorganization plan.
  4. Interim executives mean the debtor’s executives or other persons who are authorized by the Court’s order to manage the debtor’s business and property pro tempore during the period of the Court’s business reorganization order while the plan preparer has not yet been appointed.

Government agency involved

The Central Court of Bankruptcy, the Government Complex Commemorating His Majesty, Building A, Floor 2-4, Chaengwattana Road, Laksi, Bangkok

Role of MVP

We can advise on laws in relation to reorganization, and represent you in the proceeding of filling a reorganization request to its completion.