bankruptcy

Bankruptcy case is different from general civil case. That is to say in the general civil case, when the dispute arises between debtor and creditor, and the case is brought to the court, one party will win it. For instance, if the court rules that the creditor is winning, the debtor must compensate the creditor. However, during the enforcement stage, the creditor cannot enforce for the debt in full amount because the debtor might have multiple debt and other creditors seeking to share the enforceable assets, causing complication for creditor aiming to claim their debt according to the court’s judgement. Therefore, bankruptcy litigation is designed to allow debtor a chance to clear their debt and start over, while the creditor can receive an equal distribution

If the business of any legal entity or debtor is insolvent (for individual debts not less than 1 million baht, and for corporate debts not less than 2 million baht), both secured and unsecured creditors have the right to file a petition with the bankruptcy court to declare the “debtor” bankrupt. If the court considers the conditions met, such as the debtor being unable to prove their ability to fully repay the debt, it will issue an order for “Absolute Receivership.” This order appoints the official receiver, who is an official under the Bankruptcy Act B.E. 2483, to act as an assistant to the court in gathering the debtor’s assets and managing them to ensure that all creditors are paid equally. While the court hasn’t yet judge, debtor still can negotiate for a composition. If the creditor’s meeting agrees that debtor’s proposal to compound a debt is possible, and the court approve agreement between the creditor’s meeting and the debtor, the debtor will be released from bankruptcy and freed from the debts involved in the bankruptcy case and binding to the terms of the composition. However, if the composition cannot be achieved, the court will rule the debtor “Bankrupt” and the official receiver will then manage the debtor’s assets. Nevertheless, the debtor can be “discharged from bankruptcy” under different conditions, such as being released from the bankruptcy status after a period of 3 years from the court’s bankruptcy judgement or by negotiating for a post-bankruptcy composition.