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Bankruptcy in Thailand

Bankruptcy procedures in Thailand are handled similarly to those in Western countries. It is a legal process involving Thailand’s Central Bankruptcy Court, which covers both personal bankruptcy and corporate bankruptcy.

Going bankrupt in Thailand is not an easy ordeal, but by carefully proceeding through each step of the bankruptcy process, you can clear your debt as quickly as possible and move past this difficult time. However, rushing through the process without professional assistance or a solid understanding of Thai bankruptcy law could lead to a lifetime of debt and poor credit.

This page will explain how bankruptcy laws work in Thailand, how to file bankruptcy in the correct court, and how to get discharged from your Thai bankruptcy case.

Bankruptcy Law in Thailand

Bankruptcy in Thailand is governed by the Thai Bankruptcy Act B.E. 2483 (1940), which has been updated over the years to stay in line with modern legal and financial systems. The law is designed to assist both individuals and corporate entities who can no longer repay their debts, and offers a legal process to either repay or discharge those debts in a fair and organized way.

The Central Bankruptcy Court in Bangkok handles the majority of Thailand’s bankruptcy cases; however, there are also regional bankruptcy courts that oversee cases in other provinces. The Ģ����Ƶ Execution Department under the Ministry of Justice enforces the decisions made by these courts, facilitating asset seizures and payment distributions to creditors.

In Thailand, bankruptcy is a detailed legal process that includes court approval, investigation of assets, and repayment plans. It can have serious, long-lasting legal and financial consequences, so it’s important to understand your rights and responsibilities before beginning the process.

What’s the difference between corporate bankruptcy and personal bankruptcy in Thailand?

Bankruptcy in Thailand applies to both individuals and companies, but the procedures and outcomes are slightly different depending on the type of case.

Corporate Bankruptcy

Corporate bankruptcy applies to legal entities (often referred to as "juristic persons" in Thailand), including those formed through company registration in Thailand, Thai business partnerships, and branch office setups for multinational corporations. This process usually initiates when such an entity cannot pay its debts and a creditor (or the company itself) files a petition with the Bankruptcy Court.

To be eligible for the bankruptcy process in Thailand, the juristic person must owe more than 2 million Thai baht in total among all of its creditors.

If the legal entity qualifies and the court agrees to the bankruptcy petition, it may issue a bankruptcy order and begin the process of either:

• Liquidation – Selling off the company’s assets to pay creditors.
• Business Rehabilitation – Attempting to restructure and continue the business under court supervision so that it can pay its debts.

Rehabilitation is often seen as a way to save a business and repay debts over time, while liquidation generally ends the business altogether.

Personal Bankruptcy

Personal bankruptcy involves individuals or sole proprietors who owe more than 1 million Thai baht and are unable to repay their debts. The court must be convinced that the person is truly insolvent, meaning their debts are greater than their assets and income.

If a debtor owes less than the 1 million baht limit, the creditor will have to seek alternative methods of debt collection.

Unlike corporate bankruptcy, individuals do not go through rehabilitation. Instead, their assets may be sold to repay creditors, and they may face restrictions such as being banned from serving as a company director or traveling overseas until they are able to repay their debts or they are discharged from bankruptcy.

How to File for Bankruptcy in Thailand: Step by Step

If you or your business is facing insurmountable financial trouble, filing for bankruptcy may be the best possible course of action. Here is a simplified overview of how the bankruptcy process works in Thailand:

Step 1: Assess Your Financial Situation

Before filing, you should fully understand your financial position to determine if it is truly necessary. Gather details about your debts, assets, income, and expenses. If you're filing as an individual, ensure your total debt exceeds 1 million baht. If you're filing as a company, ensure your total debt exceeds 2 million baht, and assess whether you're able to continue operations or if business rehabilitation is an option.

Step 2: File a Bankruptcy Petition

Either a creditor or the debtor can file a bankruptcy petition with the Thai Central Bankruptcy Court. The petition must include financial statements, evidence of debt, and other required documents.

A bankruptcy claim can be filed by both secured and non-secured creditors. However, under Thai law, secured creditors are given priority if the assets and property owned by the debtor are distributed.

It is at this point, whether you are a creditor or debtor, that you should enlist the help of an experienced bankruptcy lawyer in Thailand. They will help you determine the best course of action, collect the required documents, and file for bankruptcy through the correct procedures.

Step 3: Court Review and Trial

The court will examine the petition and listen to both the creditor and the debtor. If the court believes that the debtor is genuinely unable to repay the debts, it may accept the case and move forward with a bankruptcy trial. As with all courts in Thailand, there are no juries, and the judge has full authority to direct the course and outcome of your case.

Step 4: Court Decision

If the court finds that the debtor is insolvent and meets all legal requirements, it will issue a bankruptcy order. From this point, the Ģ����Ƶ Execution Department may seize and sell the debtor's assets to pay creditors.

Upon the court’s approval to proceed, it will issue an Absolute Receivership Order (ARO). This order will assign a government officer to be a “Receiver” to manage and control all the assets belonging to the debtor that may be used to repay the creditors.

No action can be taken against the property, assets, or business after the receivership order is issued. The debtor shall deliver all the property and other relevant documents, such as account books and company seals, to the Receiver.

Step 5: Debt Payment and Case Management

The court and Ģ����Ƶ Execution Department oversee the distribution of any funds gained from selling assets. Creditors are paid according to a legally defined order of priority, and may or may not recover the full amount owed to them.

Step 6: Bankruptcy Ends or Discharge Granted

Once all assets are sold and debts managed, the bankruptcy case may come to an end. In some cases, the debtor may also be discharged from bankruptcy, which releases them from remaining obligations. In Thailand, the bankruptcy process can take several years, as the debt and/or company must be restructured, and the Ģ����Ƶ Execution Department must find buyers, liquidate assets, and distribute the proceeds.

Do you need a lawyer to file for bankruptcy in Thailand?

Technically, you are not legally required to hire a lawyer to file for bankruptcy in Thailand, but it is highly recommended. Thai bankruptcy law is complex and filled with legal procedures, documents, and deadlines, and an experienced Thai bankruptcy lawyer will help you navigate these.

Even if you are familiar with bankruptcy law in other countries, Thailand’s laws are unique, and trying to tackle the difficult task alone will lead to mistakes that can delay your case or lead to worse outcomes that cost you more.

Furthermore, by law, all court proceedings in Thailand are conducted in the Thai language, including bankruptcy procedures. The court provides no accommodation for those who cannot speak or read the language, so for any chance at a successful bankruptcy procedure, you will need the services of a bilingual bankruptcy lawyer in Thailand who has experience with foreign clients.

A Thai bankruptcy lawyer can help with:

• Preparing and reviewing your petition
• Representing you in court and accompanying you when completing other required tasks
• Communicating with creditors or debtors and the Ģ����Ƶ Execution Department
• Advising on alternatives to bankruptcy
• Protecting your rights under Thai law

If you're a business owner or facing a large amount of debt, having legal support is even more important for the outcome of your case.

Fortunately, with its high expat population and large number of foreign-owned businesses, there are many bankruptcy law firms in Thailand that offer consultation services specifically for non-Thai clients. Not just any firm can meet your needs, however, so be sure to choose a bankruptcy lawyer that is bilingual, has experience with foreigners, and has a long track record of client satisfaction.

Alternative to Thai Bankruptcy: Composition

In many cases, especially for individuals or small businesses, bankruptcy may not be the best or only option. An alternative legal process known as composition might help you avoid bankruptcy altogether.

What is a composition?

A composition is a court-approved agreement between a debtor and their creditors. Instead of going through the full bankruptcy process, the debtor proposes a plan to repay a portion of the debts, often with lower payments or an extended timeline. If the creditors accept and the court approves the plan, the debtor avoids bankruptcy and can begin repaying according to the agreed terms.

How It Works

• The debtor files a request for composition with the Bankruptcy Court.
• Creditors vote on the proposal.
• If a majority of creditors agree, the court may approve it.
• The debtor follows the repayment plan, often with help from a legal advisor or trustee.

Composition is often quicker, less expensive, and less damaging to your reputation than bankruptcy. However, it does require that you have at least some ability to pay back your debts and that creditors are willing to negotiate.

If your bankruptcy attorney can convince your creditors that they have a better chance of getting the full debt repaid through composition and that you can be trusted to follow the plan, they will likely agree to the proposal.

Discharge from Bankruptcy

A bankruptcy discharge in Thailand is a legal release from remaining debt obligations after the conclusion of the bankruptcy process. This is typically only available to individuals under Thai law, and it means you are no longer legally required to pay the remaining debts that were included in the bankruptcy case.

When does discharge happen?

Under Thai law, an individual debtor may be automatically discharged from bankruptcy after 3 years, provided there is no evidence of fraud or misconduct. In some cases, the period may be extended up to 5 or even 10 years if the court finds that the debtor:

• Tried to hide assets
• Made false statements
• Showed bad faith during the process

Once discharged, the person regains their legal status and can once again serve as a company director, sign contracts, and travel freely.

Important Notes on Discharge

• Not all debts can be discharged. Debts from fraud, criminal penalties, and some types of taxes may remain.
• A discharge does not erase the bankruptcy from public records. Credit reporting agencies and future lenders may still view your bankruptcy history.

Bankruptcy Lawyer Services for Foreigners in Thailand

If you are considering bankruptcy as an individual or a company, or you are a creditor considering initiating bankruptcy procedures against a debtor, contact Siam Ģ����Ƶ before proceeding. Schedule a consultation, and our corporate lawyers and litigation lawyers will provide valuable guidance to help you determine the best course of action and provide assistance with the bankruptcy filing process if that is what you decide to do.

As a trusted law firm that’s been helping foreigners in Thailand with their legal needs for over 20 years, Siam Ģ����Ƶ has the knowledge and expertise to help you navigate the bankruptcy process with speed and efficiency. Our talented, bilingual bankruptcy attorneys will ensure a fair process that gives you the best opportunity to clear your debt and preserve as much of your finances as possible.

Contact Siam Ģ����Ƶ today, and our bankruptcy lawyers will work tirelessly to help you successfully move on from this difficult chapter and get your finances back on track.

Thailand Bankruptcy FAQ

How much debt do you need to have before you can file for bankruptcy in Thailand?

You can file for bankruptcy as an individual if you owe not less than 1 million THB, and you can file as a company if you owe not less than 2 million THB.

You must also provide documentation that proves your debt meets the requirements and that you are insolvent.

How do you file for bankruptcy in Thailand?

Whether filing as an individual, company, or creditor, you must petition the Thai Central Bankruptcy Court to initiate proceedings. The court must approve your petition before you can legally file for bankruptcy in Thailand.

What do you lose if you file for bankruptcy in Thai court?

The Thai bankruptcy court will determine what you lose based on your requests, the creditors’ demands, and the court’s judgment. The court may order your valuable assets to be liquidated to cover your debts (cars, jewelry, real estate, financial assets, etc.), or you might have your debt restructured so that you can continue paying it off without losing excess assets.

To get the outcome you desire, your bankruptcy lawyer must make a convincing argument to the court and the judge.

What is the discharge period for bankruptcy in Thailand?

Typically, individual bankruptcies in Thailand are automatically discharged after 3 years. However, this period can be extended to 5 or even 10 years if the debtor is found to have acted inappropriately.

If you try to hide assets to prevent them from being liquidated, lie to the receiver about your assets and income, or otherwise conduct yourself in bad faith, you will face severe penalties, including having your discharge period lengthened.

Also, note that not all debts can be discharged. Taxes and debts related to criminal activity are typically not eligible for discharge in Thailand.

Under Thai bankruptcy law, what is the difference between a secured creditor and an unsecured creditor?

A secured creditor issues credit that is backed by collateral, such as a bank providing a mortgage for a property. Under Thai bankruptcy law, secured creditors receive preferential protections. For example, if the debtor borrowed against their home and became insolvent, the creditor that provided the mortgage will be compensated first when the home is liquidated.