Strategies for post-pandemic recovery in Thailand

By Saravut Krailadsiri, Somboon Sangrungjang and Pariyapol Kamolsilp, Kudun and Partners

The pandemic has impacted almost all sectors of the economy since it first emerged in 2020. Many businesses across the world have experienced supply chain disruption and input shortages, decreased demand for their products and services, and government-mandated closures – and Thailand is no exception.

Not since the 1997 Asian Financial Crisis has the spotlight been focused so brightly on Thailand’s bankruptcy and business rehabilitation laws, for good reason. According to the National Economic and Social Development Council, the country’s GDP shrank by 6.1% in 2020 – the steepest decline since the 1997 regional financial crisis started in Thailand.

Among the early high-profile casualties of this latest downturn was PACE Development, one of the country’s leading property developers, which filed a business rehabilitation petition with the Central Bankruptcy Court in late April 2020.

Next came long-embattled national carrier Thai Airways International, which filed its own business rehabilitation petition on 26 May 2020, citing financial difficulties resulting from the pandemic. Once seen as a shining corporate beacon and the pride and joy of the nation, the airline is now burdened by debts totalling a staggering THB354 billion (USD11.2 billion) – which is destined to be the largest and most talked-about business rehabilitation case in Thailand’s history.

While the business landscape is predicted to be on the uptick in tandem with the re-opening of borders, the pandemic’s impact in the past two years has prompted many companies to explore new ways to stay afloat and get the most effective returns from their resources. Some have begun restructuring their businesses or resorting to business rehabilitation to stave off insolvency.

Although the current situation remains dire for many, there are also opportunities amid the ongoing crisis. In recent years, countless businesses have come to realise that their traditional operational structures were ill-suited to the modern economy, as frequent technological innovations have brought about rapid change across industries.

By forcing many companies to restructure for financial reasons, the pandemic has cleared the way for a more purposeful transformation – away from static hierarchies and towards more vibrant and agile operational models.

Corporate restructuring and business rehabilitation come with their own sets of challenges, and it is worth exploring each process separately to understand what a successful effort involves.


This procedure is often initiated following a sharp decline in revenue, although there may be other reasons, such as a change in company ownership. Corporate restructuring begins after the business appoints a legal and financial adviser, and various options are discussed. In cases where the entity is financially distressed, these options typically include a reduction in overall operations and a formal debt restructuring process.

Saravut Krailadsiri, Kudun and Partners, Strategies for post-pandemic recovery in Thailand
Saravut Krailadsiri
Co-head of Tax and Corporate Restructuring Practice
Kudun and Partners in Bangkok

Structural adjustments can take many forms, and the optimal path forward will depend on the specifics of any given case. For some organisations, a more lenient debt-servicing schedule can provide enough leeway to allow for future growth. For others, shifts in equity or cross-holding patterns may be necessary as part of a larger effort to free up more liquidity.

There are mergers, demergers, divestments, joint ventures, takeovers and many more – each involving subtle legal and procedural issues, accounting aspects, taxation requirements, valuation and funding details to be determined, and more. Mistakes or oversights in these areas can lead to costly delays or penalties for businesses whose resources are already in limited supply.

In all such cases, corporate restructuring should represent an accurate and proportional response to the needs of the company. When the appropriate course of action is agreed upon, it should be carried out promptly and smoothly to patch up the underlying financial issues while causing minimal disturbance to business.


The main purpose of a business rehabilitation proceeding is to assist a debtor facing liquidity problems by giving it an opportunity for rehabilitation before becoming insolvent; allowing the debtor or business owner to go through a court administered process to suspend debt repayments and protect the debtor from litigation, as well as from demands for repayment by specific creditors.

Somboon Sangrungjang, Kudun and Partners, Strategies for post-pandemic recovery in Thailand
Somboon Sangrungjang
Co-head of Business Rehabilitation and Insolvency Practice
Kudun and Partners in Bangkok

Business rehabilitation and insolvency proceedings in Thailand are principally governed by the 1940 Bankruptcy Act, as amended, and can be initiated through formal court proceedings. A legal test will be required to be submitted to the Bankruptcy Court to commence both types of proceedings under the act.

A business rehabilitation proceeding in Thailand commences when a debtor that may potentially go insolvent, one or a group of its creditors, or a competent government authority, files a rehabilitation petition in respect of that debtor with the court, pursuant to section 90/3 of the act. If the court accepts the rehabilitation petition, it will set a hearing date to consider whether or not to allow the debtor to proceed with its rehabilitation and to choose the person or persons who will prepare the rehabilitation plan. Typically, the preliminary court hearing will take place two to three months after filing the rehabilitation petition.

At the preliminary court hearing, the court will consider two matters: (1) whether to allow the debtor to proceed with its proposed business rehabilitation; and (2) appointment of the person or persons who will prepare the debtor’s rehabilitation plan, the “plan preparer”.

In deciding whether or not to allow the debtor to proceed with its business rehabilitation, the court will take into account the matters and apply the legal tests specified in the act. The overall time necessary for all proceedings might be extensive, taking into account all conceivable arguments that could be disputed by dissenting parties and any witness testimony that the court may require.

Thailand’s insolvency and rehabilitation regime is often regarded as pro-creditor. However, because foreign creditors’ rights to participate in repayment and treatment by Thai courts are mainly based on the principle of reciprocity between relevant foreign nations and Thailand, there may be some prejudice against foreign creditors in insolvency procedures.

As for rehabilitation proceedings, the courts will not allow such an approach due to the appointment of a creditors’ committee. For example, the authors have been appointed to lead the creditors’ committee of Thai Airways International’s business rehabilitation plan and oversee its implementation to ensure fairness and transparency.

No fundamental changes to Thailand’s restructuring or insolvency rules have occurred as a result of the pandemic. In a recent endeavour to speed up insolvency processes and ensure adherence to the statutory schedule, the legal execution department of the Ministry of Justice has adopted electronic filing or meeting technology.


The pandemic marks the end of one business era, but also the start of another. As vaccine distribution leads to the re-opening of society, a new and sustained growth period will almost certainly begin as businesses in Thailand are seeing a glimmer of hope on their horizons.

Pariyapol Kamolsilp, Kudun and Partners, Strategies for post-pandemic recovery in Thailand
Pariyapol Kamolsilp
Co-head of Business Rehabilitation and Insolvency Practice
Kudun and Partners in Bangkok

While the latest wave of covid-19 infections continues to hammer the global economy, Thailand had already administered more than 120 million doses of vaccines by February 2022, boosting its defence against the omicron variant as it further eases travel restrictions on tourists.

Yet businesses cannot afford to take the return of their customer base for granted. Market expectations have changed drastically, and habits have been disrupted. Companies should not presume that the key to success is simply to reheat their leftover 2019 strategies. Inertia is never a good policy in the business world, but is even more fatal during periods of rapid change elsewhere.

Companies making good use of the current crisis by streamlining their operations, re-evaluating their products and services and building up internal innovation engines to develop new ideas will be the ones that benefit most from tomorrow’s economic growth.

These restructuring projects require careful planning and constant attention to detail. The authors have the experience and the know-how to guide businesses and enterprises forward – and put them in the best position for future growth.


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