Bankruptcy is a legal proceeding involving a person or business that is unable to repay outstanding debts. Under Thai law, bankruptcy is an involuntary act whereby the law causes the distribution of the debtor’s assets among its creditors to repay a part of outstanding debt.
Secured Creditor means the creditor holding rights over the property of the debtor in the nature of a mortgage, pledge or right of retention, or a creditor possessing preferential rights which can be enforced in the nature of a pledge.
Secured creditors have the most senior protection in bankruptcy. This is because they have specific assets that provide a sufficient level of reassurance against default risks. Secured creditors generally have the right to repossess or foreclose on the property when the borrower is in default.
Any creditor owed more than 1 Million Baht by an individual debtor or more than 2 Million Baht by a corporate debtor may file a bankruptcy action against such debtor. However, there must be a proof that the debtor is insolvent.
A debtor may be insolvent if any of the following proceedings by the debtor occurs:
1. Leaves or remains outside Thailand;
2. Leaves the premises in which he has resided, or conceals himself in any premises, or absconds, or closes his place of business;
3. Removes assets out of the Court’s jurisdiction;
4. Consents to a judgment ordering the payment of money which he should not pay;
An individual adjudged bankrupt shall immediately be discharged from bankruptcy after the lapse of 3 years from the adjudication date. However, if such person has had a previous bankruptcy within 5 years, the automatic discharge period becomes 5 years.
In cases of dishonest bankrupts, the court may extend the period to 10 years. This excludes cases of special conditions on the request filed by the Official Receiver or the bankrupt person.
An offense on misappropriation or cheating on borrowings from the public, the automatic discharge period is 10 years.