Thailand Insolvency Court: Business Rehabilitation Procedure

TL;DR

The Bankruptcy Court (ศาลล้มละลายกลาง, frequently called the Insolvency Court in international contexts) operates under the Bankruptcy Act B.E. 2483 (1940), with the business rehabilitation Chapter III/1 added by major amendments (1998, 2016, 2018, 2021). Eligible debtors include companies with debts exceeding statutory thresholds. The rehabilitation process suspends creditor actions through an automatic stay, appoints a planner, and produces a court-approved rehabilitation plan. Recent reforms have introduced procedures more accessible to SMEs.

Eligibility for Business Rehabilitation

Procedure (Ordinary Rehabilitation)

1. Petition to Bankruptcy Court.
2. Court orders automatic stay on creditor actions (Section 90/12).
3. Court appoints planner (typically professional from the licensed planner roster).
4. Creditors file proofs of claim within statutory window.
5. Planner prepares rehabilitation plan addressing creditor classes, payment terms, business continuation.
6. Creditor meeting votes on the plan (separate creditor classes; supermajority approval rules).
7. Court approval if plan meets statutory standards.
8. Plan execution — monitored by the planner or plan administrator.
9. Discharge upon completion.

SME Rehabilitation

Amendments introduced a streamlined SME procedure with lower thresholds, expedited timelines, and simpler planner / monitoring arrangements — aimed at micro and small enterprises with limited creditor counts.

Outcomes

• Successful plan execution returns the debtor to normal operations.
• Failed rehabilitation may proceed to bankruptcy (liquidation).
• Director liability questions can arise where corporate distress was foreseeable.

Common Mistakes

Avoid these traps:

• Delaying filing past the point of viability — fewer options remain.
• Inadequate planner selection — quality of rehabilitation outcome depends on planner skill.
• Underestimating creditor-class objections — secured creditors have specific protections.
• Treating rehabilitation as discharge without performance — non-performance can revert to bankruptcy.

FAQs

1. What is the difference between rehabilitation and bankruptcy?Rehabilitation aims to restructure debt and continue the business. Bankruptcy is liquidation — assets are realised and distributed to creditors.

2. Are foreign creditors treated differently?Foreign creditors have equal status under the Act. Cross-border insolvency cooperation has improved with recent legal reforms.

3. Can directors be personally liable?Limited circumstances — Civil and Commercial Code B.E. 2468 (1925) provisions on directors' duties may attach where the corporate veil is pierced or specific liability statutes apply.

4. What is the role of the planner?

Court-appointed planners (typically professionals on the licensed roster) prepare the rehabilitation plan, oversee implementation, and report to the court. Planner remuneration is set in the plan.

5. Can creditors block a plan?

Plan approval requires supermajority creditor approval by class. Secured creditors have specific veto-style protections. Court approval is the final gate.

Related Reading

• Bankruptcy Law Hub
• Business in Thailand Hub