Thailand Law Journal 2010 Spring Issue 1 Volume 13

4.6 Bond or guarantee and professional liability insurance

The private bankruptcy administrator should have to place bonds for compensation which may arise from the performance of his/her duties. This could be a general bond which covers all the cases in his/her responsibility in an amount to be stated in the Ministerial Rules or an individual case bond in an amount not less than the total value of the debtor's estate. The bond could be in the form of cash, letter of guarantee from a bank, or other forms of security as deemed fit by the Committee. The private bankruptcy administrator should also have professional insurance because the above-mentioned bond or guarantee would only protect the estate of the debtor not the administrator from any damages that might happen. The administrator should have this insurance to protect him/herself in case he/she might be personally liable from the case administration.

4.7 The hiring of other professional experts and their compensation

The private bankruptcy administrator could hire accountants, auditors, appraisers, auctioneers, or lawyers to assist in managing the debtor's estate and maximize its value. The payment of this professional compensation should be subjected to bankruptcy court approval and paid after the closure of the case order has been issued. The amount of payment should be indicated in the final report to the bankruptcy court for the order of the case closure. The Committee should be responsible for verification of all the expenditures claimed and compensation requested and could send its opinion or objection to the court as to whether such expenses and rewards are suitable for the work performed.

4.8 Inspection by the Committee, suspension of work assignment and revocation of the bankruptcy administrator license

On a yearly basis, the private bankruptcy administrator should send a report to the Committee for inspection. The report should include the number of cases closed and the pending ones, work guarantee leverage, the number of specialists such as the appraiser, accountant, or auctioneer hired and the compensation paid for such work, assets collected or repossessed by the administrator with their appraised value, and other expenditures in each case. The Committee will look into those documents and find whether the administrator has performed his/her tasks of managing the debtor's estate as stipulated in the bankruptcy act, related laws and regulations and has obeyed the Committee's orders or recommendations. The administrator must perform his/her duties in an honest manner and not commit any criminal offenses. If there is any inconformity or damage, the Committee will ask the administrator for explanation and correction. The administrator has to amend those errors within the time designated by the Committee. Otherwise, the Committee can revoke the bankruptcy administrator license or not renew the license. The suspension order or any order by the Committee could be appealed to the Minister of Justice. The Justice Minister's decision is final.

4.9 The compensation for the private bankruptcy administrator

There should be two types of compensation: the first one is the fixed rate for the case expenditures; the second is the percentage charge from the amount of properties realized and distributed to all the creditors. This percentage rate would be stipulated in the Ministerial Rules; it could be 3%, 5% or 8% of the total amount of dividends distributed. The bankruptcy administrator would be entitled to receive such money when he/she files a final case report including the detail of the distribution, case expenditures and calculated compensation to the bankruptcy court for the court's approval. The Committee could object to the compensation payment citing previous work records.

4.10 The roles of the LED Selection Committee ("The Committee")

In summary, the Committee should have the duties of reviewing the private bankruptcy administrator application, inspecting the administrator's books and records once a year, renewing, suspending, or revoking the administrator's license, and reviewing and commenting or objecting to the compensation of the administrator and other professionals hired by the administrator for consideration of the court.

5. Conclusion

For the sake of the increased efficiency of the bankruptcy case administration and the country's economy, the Legal Execution Department, Ministry of Justice should transfer part of the bankruptcy case administration (asset cases) to the private sector. With the current numbers of personnel and the improbability of acquiring large numbers of new officials within this year or the next, bankruptcy case administrations have been moved forward at a very slow pace. It is time for all parties, specifically those in powers, to admit that there is a problem and it is an urgent one. These burdens should not be placed on the debtors, creditors or other interested parties. There certainly is a way out-a private bankruptcy administrator could be one of the answers that we are looking for. As recommended in this paper, well-designed licensing procedures and rigorous supervision measures by the LED Selection Committee who are high caliber in their areas of expertise would ensure the existence of well-rounded private administrators who would perform their utmost to collect, increase the value of the estate and run the debtors business in the best interests of everyone. We should also guarantee that the administrator’s compensation is awarded at a deserved rate. Furthermore, the transfer of bankruptcy case administration from the public sector to the private sector should go smoothly; the effect of the change should be able to be kept at a minimum. The LED still remains a powerhouse in bankruptcy case administration as a government agency dealing with no-asset bankruptcy cases and a unit overseeing the work of the private bankruptcy administrator. Last but not least, Thailand is not the first country to pass bankruptcy case administration on to the private sector. Other developed countries such the United States of America, the Commonwealth of Australia, and Canada have successfully implemented this scheme. It is evident that Thailand could achieve the same result.