In Thailand, the intersection of corporate insolvency and director liability raises critical questions for company leaders. While the law does not impose a duty on directors to commence formal insolvency proceedings, it does create potential liabilities for failing to address a company’s deteriorating financial health. Moreover, directors who continue to operate a business while insolvent may face exposure if their actions are found to be fraudulent.

Thailand is updating its Bankruptcy Act to introduce a formal pre-packaged rehabilitation mechanism, a reform recently approved by the House of Representatives and currently awaiting Senate review.

This development represents a significant shift in the country’s corporate insolvency framework, building on foundations established after the 1997 Asian Financial Crisis while adapting international practices to Thailand’s legal context.