Recently, on 12th January 2022, the Council of State by the ad hoc law committee considered the draft bill to amend the Insolvency Act BE2483 (1940) focusing on sections regarding business rehabilitation in order to modernize business rehabilitation criteria and process as well as to add more convenience for SMEs to be eligible for business rehabilitation; the draft bill has passed the 3rd reading of the council with the anticipated key changes to the Insolvency Act are as provided below:
1. Increase of the minimum debt amount eligible for business rehabilitation process from THB 10m to THB 50m and apply changes to the relevant sections;
2. Revise the entire chapter 3/2 relating to SMEs business rehabilitation:
- cut out particular wordings in the definition of “Debtor” which currently limits the types of SMEs eligible for business rehabilitation in order to enable all types of SMEs to be qualified for business rehabilitation;
- remove the definition of “Plan Administrator" to allow the debtor itself to be its plan administrator;
- change the classification of debtors and the applicable amount of debt eligible for SMEs to apply for business rehabilitation i.e. currently, THB 2m applies for a debtor who is an individual whereas the proposed amendment provides a range of no less than THB 1m but no more than THB 50m for a debtor who is an individual as well as expanding to a debtor who is a group of individuals or an unregistered general partnership; whereas a range of no less than THB 2m but no more than THB 50m applies for a debtor who is a registered general partnership, a limited partnership, a private or public limited company or a juristic entity declared in the Ministerial Regulation (the current range is at least THB 3m for a debtor who is a group of individuals, or an unregistered general partnership, a registered general partnership, a limited partnership or a juristic entity declared in the Ministerial Regulation while an amount of at least THB 3m but less than THB 10m applies for a private limited company)
- expedite the process by having the court approve the request for business rehabilitation in place of the previous requirement for the debtor to submit the rehabilitation plan approved by creditors with no less than 2/3 of the total debt amount to the court. After an approval of rehabilitation from the court is granted, a creditors meeting then can be convened to approve the plan; the requirements for passing a resolution to approve the rehabilitation plan by the creditors currently applicable to non-SMEs will now apply to SMEs too;
- expedite the period of publication and method of notification e.g. shorten the advance notice period for publishing the preliminary hearing date in a newspaper to 7 days from the current 15-day period; notification to the Receiver and Registrar of Partnerships and Companies shall now be made upon approval/dismissal of rehabilitation plan replacing the current requirement to notify the Receiver and the Registrar at the preliminary hearing process (since the approval of the rehabilitation plan will no longer be tied to the preliminary hearing).
- introduces a validity period for automatic stay against secured creditors to enforce the collateral that is limited to a period of 1 year from the date of the case acceptance, 2 further extensions, each with a period of no more than 6 months, may be granted by the court. Accordingly, after the 1-year period or the extended period in case granted, the secured creditors can proceed with enforcement.
- rehabilitation plan will be prepared after the court order allowing the rehabilitation, and the debtor shall carry out its own rehabilitation plan instead of appointing a plan administrator.
- extending the limited time for processing the plan from 3 years to 5 years, remove certain mandatory components of the plan such as redemption of secured collateral, liability of guarantor and liquidity management strategy.
- After the court has approved the rehabilitation plan, amendment of such plan can be made subject to approval of the creditors and the court. The amendment to the plan by extension of the plan processing period can be made once and shall be no longer than one year unless it is apparent that the operation of such plan is approaching its goal, the time limit can be extended to accommodate the achievement of such goal.
3. Addition of Chapter 3/3 for accelerated rehabilitation process in which debtors still can opt to submit the petition for business rehabilitation altogether with the plan and approval from creditors to initiate accelerated process, if the case is dismissed the debtors are still allowed to follow the ordinary rehabilitation process; and
4. Empower authority of the receiver to issue writs to summon relevant person(s) and/or documents to investigate the offences prescribed in the Act as well as prescribing punishment for the failure to comply with such authority of the receiver.
We shall update you for any development on this bill and should you need any more details or have any queries, please feel free to contact email@example.com or firstname.lastname@example.org
5th Floor, Zuellig House 1-7 Silom Road, Silom Bangrak, Bangkok 10500 Thailand
Tel : +66 2 6360585
Fax : +66 2 6360587
E-mail : email@example.com
No. 791, Lower Phone Gyi Road, Lanmadaw Township, 11191, Yangon, Myanmar
E-mail : firstname.lastname@example.org