This article takes a close look at corporate bankruptcy in Thailand, outlining the potential outcomes.
Corporations are much like companies, in as much as they can be forced into bankruptcy, which could be caused by mismanagement or a shift in the economy. A creditor must be owed at least 2 million baht to file for bankruptcy of the debtor corporation. The creditor might decide to file for bankruptcy after receiving legal advice, or there might be a better way forward.
Asset Seizure
The first step of bankruptcy is for a government official to seize all the corporation’s assets. The receiver must publish this in the Government Gazette and at least one national newspaper. The debtor must submit all company records, assets and accounts to the receiver, who then calls a meeting with the creditors.
Creditor Meeting
The receiver calls a meeting with the creditors to discuss the options and whether they agree to the debtor’s proposition to settle all accounts.
Court Declaration
When the court declares the corporation bankrupt, all assets are distributed to the creditors, the outstanding debts are paid in full, or to the point where there are no more assets. If you are planning to file a bankruptcy claim due to money owed by a corporation, arrange a meeting with a reputable multilingual law firm, such as a Chinese law firm in Bangkok, and their legal professional can explain the process and make you aware of every possible outcome.
Debtor’s Rights
Of course, the debtor can appeal against the decision to close the business if they can present a proposal that would pay the creditors and stay in business. The court would want to see certain financial guarantees and a firm plan of action if they were to overturn the bankruptcy. It has been known for a corporation to be saved at the last minute by a group of investors who back the corporation financially; such a large organisation is worthy of exploring all avenues that keep the business running.
Satisfactory Outcome
If you hire a good litigation lawyer, the chances of a favourable outcome are greater; it is typical for the creditor to receive the money within 12-18 months of the bankruptcy date. A lot depends on the number of creditors and the total amount owed; your lawyer has years of hands-on experience presenting the client’s case in the strongest possible light.
Other legal experts such as conciliation solictors in Thailand can play a vital role. These specialised lawyers have extensive knowledge and experience in alternative dispute resolution methods, such as conciliation, with a primary goal on facilitating negotiations between debtors and creditors, aiming to reach a mutually agreeable settlement that avoids bankruptcy.
Conciliation solicitors employ their expertise in bankruptcy laws and regulations to mediate between the parties involved, helping them explore feasible repayment plans, debt restructuring options, or alternative arrangements that can alleviate financial burdens and preserve the business or individual’s financial standing. By acting as intermediaries and advocates for their clients, conciliation solicitors strive to achieve fair resolutions, fostering a constructive approach to bankruptcy cases while minimising the adverse consequences that accompany formal bankruptcy proceedings.
Corporate Acquisition
When one corporation is in serious trouble, another corporation, perhaps a rival, might be interested in acquiring the business. This means that all creditors will receive the full amount and that usually takes a couple of months. Of course, the creditors are satisfied and it is better for another organisation to take over and retain the employees.
Merger
A corporation is a huge organisation. Many are multi-national and the Board of Directors and the CEO would move mountains to keep the ship afloat. A competitor might be interested in a merger and if both parties stand to gain, this is a win-win for everyone, including the creditors.
High Legal Fees
When a corporation is acquired or merges with another entity, the legal fees are astronomical, as both parties seek to get the most out of the relationship. There can be many sticking points – redundancy, asset division, asset value and other things.
Bankruptcy is not always a failure; sometimes it is the best option for the business and creditors to receive their money.
If your business is owed money by a corporation, talk to a lawyer and find out all your options. An online search will reveal the whereabouts of top law firms in Thailand and you can have a free video call to discuss your situation with a legal expert.