2023 was a year of political and economic uncertainty in Thailand, especially for the Thai stock market, when a number of companies in financial distress aggressively sought rescue by engaging in a formal court-supervised restructuring process (known as “Rehabilitation Proceedings”). This trend is expected to continue in 2024.

2023 Key Takeaways

Insolvency matters in Thailand are regulated by the Bankruptcy Act, B.E. 2483 (1940) as amended (the “Bankruptcy Act”). The authoritative body that wields judicial power in these matters is the Central Bankruptcy Court (the “Court”). The core insolvency procedures are: (i) bankruptcy proceedings; and (ii) rehabilitation proceedings. Bankruptcy proceedings are legal procedures overseen by the Court and the official receiver, with a key objective of gathering debtor's assets to be distributed as repayment of debt among the creditors.

1. INTRODUCTION

Introduction

Chapter 19

REHABILITATION

Doing Business in Thailand: Third Edition

CHAPTER 19 | REHABILITATION

On 15 June 2021, the Central Bankruptcy Court approved the rehabilitation plan for Thai Airways International PCL (“THAI”), marking a significant milestone for one of the largest insolvency proceedings in Thailand.  A number of factors underlined the unprecedented nature of the THAI restructuring. This was the first-time rehabilitation proceedings were sought by a national flag-carrying airline in which the Thai government controlled a substantial portion of the equity.

As the global travel industry continues to grapple with the effects of COVID-19, many companies are now beginning to seek protections under various insolvency regimes. On 30 July 2020, Nok Airlines Public Company Limited ("NOK") filed a petition for business rehabilitation under the Bankruptcy Act at the Central Bankruptcy Court of Thailand (the "Court") and the Court accepted such petition on the same day under case number ForFor. 21/2563 with a debt amount of THB 26,522,203,418. NOK has nominated the following as its rehabilitation planners:

The Covid-19 pandemic has had a significant and unprecedented impact on businesses around the world, especially the airline industry. Businesses in Thailand, even large state-owned enterprises, have not been immune to the effects of the pandemic or the resulting restrictions on movements of goods and people.

During the COVID-19 crisis, with the exception of ensuring the health of their employees, business operators will be primarily concerned with their overall financial condition. Lock down policies and social distancing campaigns may minimize possibilities of the deadly virus to spread more widely; at the same time, however, these policies can also cause various businesses to encounter substantial decline of their revenues due to their inability to operate as usual, which unavoidably leads to illiquidity of internal cash flow, and in the worst case, insolvency.