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​ 

April 15, 2026
On March 31, 2026, Vietnam’s government issued Decree 102/2026/ND-CP (Decree 102), which amends Decree 75/2019/ND-CP on administrative sanctions for competition law violations (Decree 75). Effective from May 20, 2026, the new decree introduces a number of significant changes aimed at strengthening enforcement, revising penalty structures, and broadening the range of remedial measures, primarily for violations related to economic concentration. Revised Penalties for Economic Concentration Violations Decree 102 significantly revises the penalties for violations related to economic concentration. Failure to notify an economic concentration; implementing an economic concentration before clearance Under the new framework, Articles 14 and 15 of Decree 75 have been amended to impose a range of monetary fines, rather than relying solely on percentage‑based penalties as under the previous regime, for violations involving the failure to notify an economic concentration or the implementation of an economic concentration prior to clearance. The fines range from VND 500 million to VND 1 billion for each enterprise participating in a concentration with combined assets, revenues, or purchase value below VND 3,000 billion in the preceding fiscal year, capped at 5% of the violating enterprise’s total turnover in the relevant market. For concentrations meeting or exceeding the VND 3,000 billion threshold across those same metrics, the fines increase to VND 1 billion to VND 2 billion per enterprise, also subject to the 5% cap. These differentiated thresholds allow penalties to better reflect the size of the transaction and its potential competitive impact. Non-compliance with conditional approvals Enterprises that do not implement or only partially implement the conditions specified in a conditional economic concentration approval decision face fines ranging from 1% to 3% of total turnover in the relevant market during the fiscal year preceding the violation. Decree 102 also adds a new remedial measure requiring enterprises to fully implement all conditions
Read More
March 31, 2026
Against the backdrop of Vietnam’s rapid economic and technological transformation and its ambition to build a knowledge-driven economy, the National Assembly of Vietnam adopted Law on Higher Education No. 125/2025/QH15 on December 10, 2025, The new law took effect on January 1, 2026, replacing Law on Higher Education No. 08/2012/QH13 of 2012 and its subsequent amendments after more than a decade of implementation. The new law reflects a significant policy shift toward enhancing the institutional autonomy of higher education institutions (“HEIs”)—universities and other university-level institutions. By granting broader autonomy, Vietnam aims to enable HEIs to operate more proactively, better respond to market needs, and improve the quality and efficiency of education and research activities. Comprehensive Institutional Autonomy in HEIs The new law marks a significant shift by granting HEIs comprehensive autonomy as a statutory right, within the bounds of the licensed scope of educational operation and the legal framework, rather than a conditional right as provided under the former law. Under the new law, HEIs are empowered to exercise autonomy over their academic expertise, training, scientific research, international cooperation, organizational structure, personnel, finance, and other higher education activities. The expansion of institutional autonomy is also accompanied by a correspondingly strengthened framework of institutional accountability. However, Vietnam maintains a certain degree of control and imposes restrictions on institutional autonomy in sensitive and strategically important areas. These controls and restrictions include limitations on training autonomy in the majors of teacher training, national defense, and security; and restrictions on financial and personnel management autonomy for HEIs under the administration of the Ministry of National Defense and the Ministry of Public Security. New Model for Curriculum Development The new law removes the concept of “opening a training major” and focuses regulation on how training programs are developed and delivered. Under the previous regime,
Read More
March 31, 2026
Thailand’s Department of Business Development (DBD) has issued a regulation imposing additional requirements for amending a company’s directors and signatory power to designate a foreign national as an authorized signatory of the company. This measure, effective April 1, 2026, has been introduced in response to the widespread use of Thai nationals as nominees to conduct business on behalf of foreigners, a practice considered to have an adverse impact on the country’s economic stability and security. The new measures are particularly concerned with changes to the authorized signatory structure of companies that originally had only Thai directors authorized to sign for and bind the company. Under the new rules, any amendment that results in a foreign national becoming an authorized signatory—whether solely or jointly—for such a company will be subject to additional verification. Directors signing an application to register such an amendment to the company’s authorized signatory structure are now also required to provide a statement confirming that all shareholders of the company have made genuine contributions and no Thai national has assisted with, supported, or participated in business activities in a nominee capacity. Implications Companies intending to appoint foreign directors as authorized signatories should be aware of the increased regulatory requirements and assessments. Additional documentation and confirmations may be required as part of the registration process.
Read More
March 31, 2026
On December 10, 2025, the National Assembly of Vietnam adopted Law on Vocational Education No. 124/2025/QH15, which took effect on January 1, 2026, replacing Law on Vocational Education No. 74/2014/QH13 of 2014. The new law broadens the categories of institutions eligible to deliver vocational training, introduces vocational upper secondary schools, and shifts governance structures for private institutions from ownership-representative boards of management to stakeholder-based school councils. These reforms aim to diversify training providers, align programs with labor market needs, and create a more flexible, open vocational education ecosystem, offering expanded opportunities for foreign and domestic investors, universities, and enterprises. Some highlights of the new Law on Vocational Education are presented below. Expansion of Vocational Training Levels and Programs In addition to elementary, intermediate, and college—the three levels of vocational training program set out under the 2014 Law on Vocational Education—the new law expands the structure by introducing two new levels: Vocational high school training programs are placed between elementary and intermediate levels, and are aimed at combining upper secondary education with vocational training, expanding options for learners after graduating from the lower secondary level. Other vocational training programs are not specified in detail under the new law, but aim to equip learners with the capability to perform and handle one or several simple tasks of an occupation. Expansion of Vocational Education Providers The new law reclassifies and extends vocational education providers by classifying them into two distinct categories: Vocational education institutions, which include colleges, intermediate schools, and vocational high schools. Establishments participating in vocational education activities, which include vocational education centers, vocational-continuing education centers, continuing education centers, other centers with vocational education functions, enterprises, cooperatives, and higher education institutions. Vocational education providers may provide one vocational training level only, or several/all levels, depending on the type of provider. The
Read More