Thailand Law Journal 2010 Spring Issue 1 Volume 13

A Private Bankruptcy Administrator: Another Solution to Improve the Efficiency of Bankruptcy Administration in Thailand

By Kanok  Jullamon^**

I. Introduction

In recent years, there has been a steady increase of bankruptcy cases being filed.¹ The Legal Execution Department (LED).as an agency of the Ministry of Justice in charge of bankruptcy administration, has to manage these large volumes of cases with Hmited manpower. Currently, at the LED, there are 566 government officials and 606 government employees working in the position of Legal Officer.² The Human Resource Division does not separate the numbers of those working in Civil Case Enforcement Divisions and Bankruptcy Divisions. Nonetheless, a rough estimation reveals that half of those numbers -283 government officials and 303 government employees-are working in the Bankruptcy Divisions. As it has been government policy for years to downsize the government departments, in general, each public unit is not allowed to recruit newgovernment officers.Instead,each agency can hire only government employees on short-term contracts whose maximum duration is four years. There is also a limit on how many government employees one organization can hire due to a restricted annual budget. Consequently, each passing year LED is .able to only hire a small number of new staffs, creating a personnel shortage problem. The LED simply does not have enough people to handle bankruptcy administration.

In addition, with the growing complexity of the bankruptcy cases, it is required that the knowledge breadth of those in charge of cases comes from more than just the legal perspective. To successfully acquire and maximize the value of the estate of the debtor and/or to continue the business of the debtor profitably, background in accountancy and business administration are a must. Presently, almost all of the Official Receivers³ are law graduates. This situation has led to complaints by all parties concerned with bankruptcy administration, from either the creditors, debtors, bankers or other government agencies, about the delay and efficiency of the management of the bankruptcy cases by the LED. The official receivers have also been accused of not being active enough in searching for the properties of the debtors in order to increase the dividend payment to the debtor's creditors. Some critics assert that the official receivers do not work as hard as they could because there are no incentives for them to do so. The receivers do not receive realization charges from the debtor's properties found and sold; they only receive a monthly salary from the Ministry of Finance.

So, what are the solutions to these problems at the LED? One obvious answer is to request the government to make an exception for the LED to have more government officers recruited by Office of the Civil Service Commission (OCSC). In reality, this solution is very difficult or impossible to implement. For years, it has been the policy of the government to lower the number of government officials and make agencies smaller with more efficient personnel, Thus, the question arises as to whether the efficiency of the administration of bankruptcy cases would increase if the bankruptcy administration tasks were transferred partly or wholly to the private sectors, especially in a situation where new regulations would allow a bankruptcy trustee to bill an hourly rate for their work and/or get a certain amount of percentage from the assets seized and sold. The result could be increased competition among private practitioners or firms to find the properties of a debtor in order to get a realization charge and to win trust from the creditors so that the creditors would choose them again when bankruptcy cases arise. This, in turn, would be very beneficial to the nation’s economy due to the decrease in non-performing loans. The creditors could get a greater percentage of his/her loans back and the debtor should be able to pay back his/her debts more quickly, resulting in the reduced amount of interests incurred and also being discharged from bankruptcy sooner.
      In this article, we will first take a look at the current roles of the official receiver under the Bankruptcy Law of Thailand. Then, the roles of the official countries will be studied. Lastly, I will discuss the chances of there being a private bankruptcy administrator in Thailand, the considerations needed to be taken into account; the roles of the LED as a supervision agency and/or LED’s responsibilities to perform certain types of bankruptcy case administration.

2. Roles of the official receiver or the bankruptcy administrator under the Thai Bankruptcy Act

"Official Receiver" includes all persons assigned by the receiver to act on his/her behalf (section 6. Bankruptcy Act B.E.2483(A.D. 1940))⁴. The Justice Minister is empowered to appoint any one or more persons whom he/she deems appropriate, based on such person or such person's rank, as receiver, and is empowered to remove such receiver from the position' (section 139).

According to these two sections.the Official Receiver/Receiver is a government officer in charge of bankruptcy case administration under the Legal Execution Department (LED), Ministry of Justice. In addition, section 139 allows the Justice
Minister to appoint any person a receiver, regardless of whether such person is a government official or not. A receiver- also includes all persons assigned by the receiver to act on his/her behalf.

2.1 Powers and duties of the official receiver
2.1.1 To manage and liquidate debtor's business and properties

As soon as the court has ordered the debtor to be placed under receivership⁵, the receiver will only have the powers to manage and dispose of the assets of the debtor, or carry out any necessary acts to complete any pending business of the debtor or to collect and receive money or assets belonging to the debtor, or which the debtor is entitled to receive from others
(sections 22(1X2). 120). The receiver also has a right to attach seals, accounting ledgers, and documents belonging to thedebtor,and all assets in the possession of other persons, which may be distributable in the bankruptcy action (section 19). In addition, the receiver can file a motion to the court for an order to cancel fraudulent acts under sections 237 to 240 of the Civil and Commercial Code (sections 113 and 114). Upon the filing of a motion by the receiver, the court is empowered to cancel any transfer of assets or any act done or permitted to be done by the debtor during the three months prior to an application to adjudicate him/her as a bankrupt and thereafter, and with the intention to give undue preference to a creditor (sections 115 and 116).