This paper discusses the relevant sections of the reorganization law
that copes with secured debts, the contested issues and the Supreme
Court rulings, current challenges with the secured regimes in reorganization
proceedings, and the author’s thoughts concerning the parties of
the rehabilitation process. Regarding the treatment of secured creditors
in Thai reorganization law, the law does not strip the secured creditor’s
of its right to priority repayment. Secondly, the secured creditors may seize
their collateral if they do not get adequate protection as regards the worth of their security. Thirdly, the secured creditor may opt for filing a proof of
claims with a bankruptcy trustee within the stipulated timeline like any creditor of the debtor. Fourthly, once the reorganization plan is approved
by the creditors’ meeting and confirmed by the court, any creditor
will be repaid according to the terms and conditions of the plan. Lastly,
in the above mentioned treatment of secured creditors, such handling
under Thai law is the same regardless of the secured creditor’s
nationality. Concerning contested issues concerning secured creditors
in the reorganization case, over the past 19 years, the Supreme
Court has laid down guidance for three main topics : the bifurcation issue,
the different recovery rate of each class of creditors, and the asset
valuation method for plan confirmation. Currently, there are two challenges
to the reorganization law regarding secured transactions. Firstly, with the
entry into force date of the Business Collateral Act B.E. 2558 (2015 A.D.),
there will be more types of secured creditors in the rehabilitation process.
Secondly, the new rehabilitation chapter for Small and Medium
Enterprise went into effect on 25 May 2016. The sharp distinction
between Chapter 3/1 for company debtors and Chapter 3/2 for SMEs
debtors is the steps taking place before the filing of the reorganization
petition, which may indirectly affect the interests of secured creditors.
The author’s thoughts regarding the interested parties in the reorganization process are as follows. Creditors should study their rights and obligations in the reorganization procedure before making any loans. Also, the rehabilitation procedure does not help the debtor write off all their debts.