Dissolving A Thai Company - Bankruptcy - Liquidation - Insolvency

Bankruptcy Insolvency Liquidation

Bankruptcy, insolvency and liquidation of a Thai company or person are governed by the Bankruptcy Act B.E. 2483. The Bankruptcy Act details how to proceed with the dissolution of a Thai company or an individual. It is not possible for a Thai company or individual to simply declare bankruptcy or insolvency and move toward liquidation. There is a significant process involved and will require the help of experts trained in the Bankruptcy Act. An expert in Bankruptcy cases is also a very good negotiator and can save a company both time and money and possible legal action.

Bankruptcy Act B.E. 2483 - Dissolving A Thai Company

A company registered in Thailand may be dissolved either By Law or By Court order.

- By Law - A company can be dissolved By Law under the following scenarios:

  • In the cases, if any, provided by its regulations;
  • If formed for a period of time, by the expiration of such period;
  • If formed for a single undertaking, by the termination of that undertaking;
  • By a special resolution to dissolve;
  • By the company being forced into bankruptcy.

- By Court Order - A limited company may also be dissolved by Order of the Court for the following grounds:

  • If default is made by not filing the statutory reports or by not holding the statutory meetings;
  • If the company does not commence its business activities within a year from the date of registration or suspends its business for a whole year;
  • If the business of the company can only be carried on at a loss;
  • If the number of the shareholders is reduced to less than what is prescribed by law.

Definitions

Bankruptcy is a state in which the court permits the distribution of assets that belong to a debtor among creditors, as allowed by law. A debtor must be proven insolvent before a creditor can file a bankruptcy action.

Insolvency is a financial state in which a debtor can no longer pay his debts.

Creditors must be owed more than two million Baht by a corporate debtor in order to file a Bankruptcy action against a corporate debtor.

Secured Creditors, as defined by the Bankruptcy Act, are creditors who have preferential rights over a debtor’s property. Secured creditors are paid first in the event of distribution of the debtor’s property.

Commencing Bankruptcy Proceedings

According to the Bankruptcy Act, here are the steps required in order for a Company to be declared Bankrupt:

  1. A creditor must file for a bankruptcy action against a debtor
  2. The debtor must prove that they cannot pay and wish to be declared insolvent
  3. Once the court is satisfied that the debtor is indeed insolvent the court will order the debtor to be under absolute receivership and appoint an Official Receiver
  4. The Official Receiver must call a meeting of all the creditors to consider whether the proposal made by the debtor is acceptable
  5. If the proposal submitted by the debtor is not acceptable the Official Receiver will ask the court to declare the debtor Bankrupt and to consult on the future management of the debtor's assets.

EXTREMELY IMPORTANT - The Thai Bankruptcy Act is very complex and requires that specific procedures are taken, thus we strongly suggest that clients who are facing financial difficulties to please consult with a professional at PCS. The 1st consultation is totally FREE. Simply use the contact form below and we will contact you as soon as possible!

Contact PCS

Our Address

219/2 Asoke Towers Building, 2nd Floor, Sukhumvit 21 Road

Email Us

info@pcsthai-1.com

Call Us

+66 2 120 9480

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