How and when does Business Reorganization take place?
Business Reorganization is a court process by which a petitioner may file a case to the Central Bankruptcy Court for the debtor’s business reorganization under the provisions in the Thailand Bankruptcy Act.
Business Reorganization can take place in the following situations:
1. If the debtor is a Limited Company, a Public Company Limited or any other Juristic Person, as prescribed in the Ministerial Regulations;
2. When the debtor is insolvent;
3. Indebted to a single or multiple creditors, for a fixed amount not less than 10 Million Baht;
4. There are reasonable grounds and prospects to rehabilitate the business;
5. The debtor is not adjudicated by a Court Order for absolute ownership; or
6. The debtor has not received an order from the Court or the Registrar for dissolution of the Juristic Person, or the debtor has not dissolved for any reason whether or not the liquidation of the Juristic Person is completed.
Who are eligible to file a petition for a Business Reorganization?
1. A single creditor or multiple creditors owed a fixed amount of not less than 10 Million Baht.
2. The debtor who is insolvent and indebted to a single or multiple creditors for a fixed amount not less than 10 Million Baht.
3. The Bank of Thailand when the debtors are the following:
Finance and Securities Company
Credit Foncier Company
4. The Securities Exchange Commission and the Stock Exchange of Thailand when the debtors are securities companies.
5. The Insurance Department when the debtor is a Life Insurance Company or Insurance against loss Company.
6. Government Offices with the authority to supervise debtor’s business operations under the Ministerial Regulations.
What are the requirements when filing a petition for Business Reorganization?
A petition for Business Reorganization must clearly show:
1. the insolvency of the debtor;
2. list and contact details of all creditors owed an amount of at least 10 Million Baht;
3. reasonable grounds and prospects rehabilitate the business;
4. name and qualifications of the Plan Preparer; and
5. a letter of consent from the Plan Preparer.
If a creditor is the petitioner, they must provide the data of other known creditors. In case a debtor is the petitioner, they must attach the list of all existing assets and debts, including the names and addresses of all creditors.
What are the rights and obligations of a creditor in a Business Reorganization?
The creditor who is eligible for voting at the Creditors Meeting to select the Plan Preparer must have the debts occurred before the Court issues the Reorganization Order.
Creditors intending to attend the Creditors Meeting to select the Plan Preparer must submit Form Foh19 or Foh19/1 from the Legal Execution Department and attach the evidence claims to the official receiver before the meeting date. In case of appointing a proxy, It is necessary to have a Power of Attorney in Form Foh12 or Foh12/1.
The creditor must certify the photocopied claims evidences as true copy.
Creditors may examinethe evidence of claims filed by other creditors to the official receiver.
Creditors must attend each Creditors Meeting either in person or through a proxy to pass the resolution at such meeting.
A creditor may object to what the other creditors have voted.
Creditors may propose the name of a Plan Preparer together with his/her consent to the Creditors Meeting.
What happens after issuing the Court Order for Business Reorganization and Appointment of Plan Preparer?
The creditor must submit an application for repayment in Form Foh20 or Foh20/1. This must come with one set of copy to the Official Receiver within one month after publishing the Court’s appointment of the Plan Preparer. In case of appointing a proxy, It is necessary to have a Power of Attorney.
The repayment application must include an account showing details of assets and evidences of claim (original document or certified true copy).
The creditor may check and object the repayment application with the Official Receiver within 14 days after the closing date of application filing.
The creditor is subject to investigation. He must submit the documents required by the official receiver for consideration of the repayment application.
The creditor may file a petition to the Court objecting the Official Receiver’s order, dismissing the application for repayment or allowing full or partial repayment, within 14 days upon acknowledgment of the Official Receiver’s order.
Reference: Business Reorganization Office, Legal Execution Department, Ministry of Justice