June 11, 2024
Over the past decade, business rehabilitation proceedings in Thai courts have received a great deal of attention from debtors and creditors, especially after the COVID-19 pandemic. Business rehabilitation and bankruptcy proceedings have different objectives in court. As a result, Thai courts have a different perspective and set of criteria for considering and approving rehabilitation proceedings than for bankruptcy petitions. Both proceedings are outlined in the Bankruptcy Act B.E 2483 (1940). This article mainly discusses in-court business rehabilitation proceedings. Three parties can petition the court to initiate business rehabilitation proceedings: Debtors; Creditors; and Certain authorities, such as the Bank of Thailand For a debtor to be subject to business rehabilitation proceedings, it must: Be insolvent or unable to repay debt of at least THB 10 million (for corporate debtors) or from THB 2 million to less than 10 million (for SME debtors); Have debt that is determinable but has not yet become due; Be indebted to one or more creditors, where the combined total of the debt is within the required debt amounts above; and Have reasonable cause and possible ways to rehabilitate its business. Court Approval of a Petition Upon receipt of the business rehabilitation petition, the Bankruptcy Court will schedule a hearing on it. In conducting an inquiry into the petition, the court will consider whether: The facts in the petition are true; There are prospects of success for business rehabilitation; and The petitioner has filed the petition in good faith. If these three criteria are met, the court will approve the business rehabilitation. Prospects of Success In considering whether there are prospects of success for business rehabilitation, the court will look at whether the business rehabilitation petition contains reasonable grounds as well as appropriate and feasible solutions for rehabilitating the business. In that regard, the petitioner must