You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

November 11, 2016

New Rehabilitation Regulations: Survival Tools for SMEs

Subscribe to Updates
Bangkok Post, Corporate Counsellor Column

Small and medium-sized enterprises (SMEs) have grown rapidly in Thailand over the past ten years, creating millions of jobs and contributing to the Kingdom’s steady economic growth. According to the 2015 annual report of the Office of SMEs Promotion (OSMEP), there were approximately 2.7 million SMEs at the end of 2015, employing around 10 million people, particularly in the tourism, construction, and wholesale sectors.

This has prompted the government to issue numerous privileges that encourage entrepreneurs to start up their own businesses, such as special rates for loans and tax breaks. The latest privilege, issued under the Bankruptcy Act (No. 9) B.E. 2559 (2016) on May 24, 2016, offers SMEs the opportunity to rehabilitate and avoid bankruptcy in the face of short-term liquidity problems. This privilege is designed to protect popular SMEs which experience temporary liquidity problems and are unable to make repayments in the short-term.

Unlike previous rehabilitation regulations, which only allowed debtors of more than THB 10 million to file a request for reorganization to the court, the new Bankruptcy Act provides SMEs with the opportunity to enter rehabilitation if there are reasonable grounds and prospects for rehabilitating the business. This may prevent such SMEs from being declared bankrupt.

Requirements for Rehabilitation

The new Bankruptcy Act allows an SME to enter into the rehabilitation process regardless of whether it is a natural person, juristic body, partnership, or private limited company, provided that the SME is registered with OSMEP or another related government agency, in accordance with the SMEs Promotion Act B.E. 2543 (2000).

The new Bankruptcy Act lowers the minimum threshold of debt that an SME which is in no position to repay the debt must meet in order to be eligible to enter into the rehabilitation process. The thresholds vary, depending on the type of SME. Natural persons are required to have a definite amount of debt amounting to not less than THB 2 million. Juristic bodies, registered or unregistered ordinary partnerships, or limited liability partnerships must have a definite amount of debt of not less than THB 3 million. And private limited companies must have a definite amount of debt of not less than THB 3 million, but not more than THB 10 million.

Key Differences in the Rehabilitation Process for SMEs

Under the normal rehabilitation process, a plan preparer is appointed by the court to draft a rehabilitation plan. This plan must be approved by the creditor(s) and the court, and all of these processes will take place once the petition for rehabilitation has been accepted by the court. In contrast, for an SME to apply for rehabilitation, the SME or its creditor(s) must file a petition to rehabilitate to the Central Bankruptcy Court, together with a rehabilitation plan. This plan must be approved by the creditor(s) of at least two-thirds of the total amount of debt.

This presents some challenges to SMEs that want to enter into the rehabilitation process, as they need to organize the creditor meeting and persuade the majority of creditors to accept the plan, in order to complete the rehabilitation petition and submit the petition to the court. In contrast, under the normal rehabilitation process, the official receiver handles these processes by sending an official notice to every creditor, inviting them to attend the official creditor meeting.

For the rehabilitation of an SME, after the rehabilitation petition has been submitted to the court, a plan preparer is not appointed, and the plan cannot be amended, unlike the normal rehabilitation process. Thereafter, the court has sole discretion as to whether to accept the petition.

Automatic Stays

Much like the normal rehabilitation process, under the rehabilitation process for SMEs, an automatic stay would be applicable starting from the date the court accepts the SME rehabilitation petition until:

  • the expiration of the period of time stipulated under the rehabilitation plan;
  • the date the plan is successfully accomplished;
  • the date that the court dismissed the petition, disposed of the case, or repealed the order for the business rehabilitation; or
  • the business rehabilitation has been canceled.

As with automatic stays under the normal rehabilitation process, automatic stays under rehabilitation for SMEs prevent creditors from claiming or seizing the SME’s assets, and they also halt all ongoing seizures and auctioning of the SME’s assets.

Under the new Bankruptcy Act, the government is effectively offering entrepreneurs protection in the form of a safety net that allows them to survive temporary liquidity problems. Many business operators are expected to take advantage of this, and as a result, SMEs should continue to play an important part in Thailand’s economic growth.

Download Full Article
Related Professionals

Practices

Corporate/M&A

Dispute Resolution and Litigation

Location

RELATED INSIGHTS​ 

October 2, 2026
On July 24, 2026, a new 12.5% Section 301 tariff took effect on most imports from Thailand into the United States. The tariff was imposed by the Office of the US Trade Representative (USTR) under Section 301 of the Trade Act of 1974, following a finding that Thailand had failed to impose and effectively enforce a prohibition on imports of goods produced with forced labor. The new tariff replaced the temporary 10% Section 122 surcharge that had applied since February 24, 2026, following the US Supreme Court’s invalidation of the prior tariffs imposed under the International Emergency Economic Powers Act (IEEPA). The 12.5% tariff is not the only potential source of additional US duties on Thai-origin goods. Thailand is also subject to a separate Section 301 investigation concerning structural excess manufacturing capacity, which could result in additional duties. Unlike the Section 122 surcharge, which was capped at 15% and limited to 150 days, Section 301 provides a more flexible framework for imposing and maintaining trade measures. Section 301 actions are generally subject to a four-year termination rule but may continue following a review if continuation is requested. The new tariff therefore represents a potentially longer-term change in the tariff treatment of Thai-origin goods entering the US market. This article explains the legal and policy developments that led to the new tariff, how the Section 301 tariff differs from the tariff regimes that preceded it, Thailand’s response and ongoing negotiations with the United States, and the practical implications for businesses that manufacture, export, import, or distribute goods between Thailand and the United States. From IEEPA to Section 122 to Section 301 IEEPA Era (April 2025–February 2026) Beginning in April 2025, the US administration imposed sweeping tariffs under the International Emergency Economic Powers Act (IEEPA), invoking national emergencies relating to trade
Read More
September 28, 2026
Thailand has expanded the mandatory use of the Electronic Government Procurement (e-GP) system to cover submissions of procurement appeals to all government agencies subject to the Public Procurement and Supplies Administrative Act B.E. 2560 (2017) (Government Procurement Act). The expansion, which was set out in an official circular dated September 16, 2026, from the Public Procurement and Supplies Administrative Ruling Committee, takes effect on October 1, 2026. Notable Changes Under the expanded framework, bidders challenging an e-bidding or selective-method procurement result must file their appeal exclusively through e-GP within seven working days of the result being announced by the Comptroller General’s Department. While the system accepts filings around the clock during that window, submissions on the final day must be fully completed by 16:30 according to the e-GP system clock—merely starting a draft or uploading materials before the cutoff does not count as a confirmed submission. Government agencies that disagree with an appeal, in whole or in part, will also report their findings and supporting documents to the Appeals Committee through e-GP using the prescribed Appeal Opinion Report, also within seven working days of receipt. Withdrawals of appeals must likewise follow prescribed e-GP steps that vary depending on whether the matter is still under agency review, has been forwarded to the Appeals Committee, or has already been resolved. Excluded Categories Certain categories of procurement are not subject to the new guidelines on filing appeals electronically. These include: Procurement of supplies for confidential government use. Procurement conducted by government agencies operating overseas where the bidder is a foreign legal entity with no legal representative in Thailand, or where the bidder is a non-Thai national. Consulting service procurement under chapter 7 of the Government Procurement Act Design or construction supervision procurement under chapter 8 of the Government Procurement These exclusions apply
Read More
September 23, 2026
Arbitration under Thai law rests on consent. Section 11 of the Arbitration Act B.E. 2545 (2002) requires an arbitration agreement to be in writing and signed by the parties. This may also be satisfied by communications, an unchallenged allegation in pleadings, or incorporation by reference to a document containing an arbitration clause. A non-signatory cannot, as a general rule, be compelled to arbitrate merely because it participated in the transaction, received a benefit, or belongs to the corporate group of a signatory. Thai law nevertheless permits arbitration agreements and awards to affect third parties indirectly in limited circumstances. Under section 24, an arbitration clause is separable from the main contract; the invalidity of the contract does not invalidate the clause. In Supreme Court Judgment No. 3918/2563, an apparent sales contract concealed a construction contract and was void under the Civil and Commercial Code. However, the concealed construction contract and written arbitration clause remained effective. The tribunal had jurisdiction, and its award was enforceable under the Arbitration Act. Under the Arbitration Act, when a claim or liability is validly transferred, the transferee is bound by the related arbitration agreement. This includes assignment, transfer of obligations, legal succession, and subrogation. Depending on the facts and contract and agency law, consent may arise through execution by an authorized agent, ratification, assumption of obligations, or conduct accepting the contract and its arbitration clause. Thai law respects separate corporate personality. The group-of-companies doctrine has no statutory basis under the Arbitration Act, while alter egos or sham allegations require compelling evidence and an identifiable legal basis. Supreme Court Judgment No. 9161/2568 illustrates the procedural treatment of non-signatories. A consultancy contract required LCIA arbitration seated in Dubai. When the employer sued a consultant and his spouse in Thailand concerning a housing loan, the court disposed of
Read More
September 15, 2026
The Myanmar Investment Commission (MIC) has issued a notification that gives investors with projects in Myanmar clearer guidance for securing approval and for changing, expanding, or exiting an approved project. Issued on August 19, 2026, MIC Notification No. 5/2026 replaces MIC Notification No. 26/2021 and sets procedures for state or regional investment committees to review, approve, and supervise investment projects, including project amendments, investment increases, land-use rights applications, compliance inspections, and suspension or termination of approved businesses. Endorsement Application Timeline and Deemed Acceptance In Myanmar, prospective investors seeking approval under the Myanmar Investment Law generally do so through an MIC permit or an MIC endorsement, depending on the nature of the investment. While certain large-scale investment projects require an MIC permit, projects that are not required to obtain an MIC permit may instead apply for an MIC endorsement. Investors seeking MIC endorsement for their planned projects typically submit their applications to the relevant state or regional investment committee. These committees are established under the Myanmar Investment Law and are authorized to approve investments of less than USD 5 million, subject to the project’s nature and location. MIC Notification No. 5/2026 specifies that upon receiving an endorsement application, the relevant investment committee office will check it for completeness and determine whether it can be considered at the state or regional level or must be referred to the MIC; if it must be forwarded to the MIC, this will be done within 10 working days. If an application is within its purview, the committee may reject the endorsement application within 15 working days of receipt; otherwise, the application is deemed accepted. If approved, the endorsement certificate will be issued within 10 working days of the approval decision, subject to applicable procedures. Endorsement Certificate Amendment The notification clarifies which amendments a state
Read More