Thailand’s business rehabilitation regime under the Bankruptcy Act B.E. 2483 (1940) continues to serve as a vital legal mechanism for companies facing financial distress. At the heart of this process lies the court’s assessment of whether a debtor has a credible justification for rehabilitation — a determination that blends legal criteria with practical feasibility.
Under Section 90/3 of the Bankruptcy Act, four conditions must be met for a company to enter rehabilitation. Among these, the court pays particular attention to two interrelated elements:
- the cause of insolvency or inability to pay debts, and
- the justification for rehabilitation and the feasibility of the proposed recovery plan.
These elements are not just procedural requirements — they reflect the court’s role in safeguarding both debtor viability and creditor interests.
The justification for rehabilitation must show that the debtor has a realistic opportunity to recover and continue operations. This requires more than a declaration of financial distress; it demands a substantiated plan that outlines how the business can be restored to viability. Courts assess whether the debtor retains operational capacity, whether restructuring is feasible, and whether the proposed plan is likely to succeed.
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