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:
– transfers property or rights on property management to others for the benefit of all his creditors, whether within or outside Thailand;
– turns over his assets with dishonest intent or fraud, whether within or outside Thailand;
– transfers his property or creates any right over such property which, if the debtor were a bankrupt, considers this an act of preference, whether done within or outside Thailand;
– does any of the following things to avoid or delay payment of his debt:
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;
– has had his property seized under a writ of execution, or there is no property of any kind is capable as debt payment;
– informs any of his creditors, or the court in any action that he cannot pay his debts;
– submits a proposal for the compromise on his debts to any two or more of his creditors;
– informs any of his creditors that he cannot pay for such debt;
– receives demands from his creditor not less than twice, at intervals of not less than thirty days, and still doesn’t 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.