Under the new Bankruptcy Act, which went into effect on May 25, all SMEs (small and medium-sized enterprises) can seek rehabilitation plans, according to the Legal Execution Department.
The new amendment is aimed at helping struggling small businesses that have been affected by the stagnant economy.
The previous bankruptcy law only allowed limited public companies and limited companies with debts of over 10 million baht to ask for rehabilitation, which left tens of thousands of small businesses in the dark.
Department chief Ruenwadee Suwanmongkol said the amendment was ordered by the Justice Ministry to help SMEs and boost Thailand’s competitiveness. The department worked alongside the Office of Small and Medium Enterprises Promotion (a.k.a. Osmep) to draft the amendment. Ms. Ruenwadee says the new law allows SMEs to take advantage of the same bankruptcy protection offered to registered companies.
“The new law includes individuals because Osmep believes many Thai SMEs fall into this category,” Ms. Ruenwadee added.
The National Legislative Assembly approved the law earlier in the year, but it only went into effect on May 25.
The new rules also helps creditors loan more without fear of being sued by other creditors after debtors enter the rehab plan.
Salinee Wangtal, director of Osmep, said 12% of the 420,000 SMEs that file their financial reports regularly have debt ranging from 3 to 10 million baht.
Roughly 7,400 of the 12% have a combined debt of 43 billion baht and reported declining sales over the last three years. Mrs. Salinee says this group will benefit the most from the new law.
SMEs that are under the rehabilitation plan will receive special consideration for loans from the office, which will be drawn from the SME recovery fund, worth 1 billion baht.