Most economists agree that the COVID-19 pandemic is hastening a global recession on a scale unseen since the Great Depression. As large-scale quarantines, business closures, and a sharp fall in consumer and business spending progress, they will inevitably spiral down to more corporate layoffs and bankruptcies.
While this may seem bleak, Thailand’s past experience with economic disruption has resulted in a robust and resilient bankruptcy and restructuring framework that provides something of a glimmer of hope. In the past 20 years, Thailand has faced two major financial crises, followed each time by an uptick in bankruptcy and restructuring filings: the so-called Tom Yum Goong crisis in 1997, which spread throughout East and Southeast Asia; and the 2008 global financial crisis. The Tom Yum Goong crisis spurred the overhaul of bankruptcy laws to allow for corporate reorganization, and filings for court rehabilitation jumped six fold between 1999 and 2000. In 2008, the aftermath of the financial crisis resulted in the number of bankruptcy cases doubling by 2010.
Building on this experience, a review of Thailand’s bankruptcy laws as they now stand paints a picture of a system that is well-prepared for the hard times ahead. This primer does just that—examining the evolution of the Thai bankruptcy law, and showing how it’s provisions are designed to be used strategically to provide relief to those in crisis, and to cushion creditors from the impact of those crises.
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