Protection of non-adjusting creditors of private limited companies in Thailand

This dissertation examines the legal protections available to non-adjusting creditors of private limited companies in Thailand. Non-adjusting creditors are those that cannot negotiate the terms on which they extend credit: for example, a small supplier to a large and powerful trade purchaser, or a victim of a wrongful act committed by a company. Unable to take advantage of contractual or proprietary protections, and unlikely to recover their debts through bankruptcy proceedings, non-adjusting creditors are particularly exposed to the risks of the debtor’s managers and shareholders engaging in harmful behaviour: actions which illegitimately reduce the debtor company’s assets or increase the risks of business failure. This dissertation evaluates the applicable legal framework against the enlightened shareholder value normative model of corporate governance. Additionally, it performs a comparative historical analysis with English and German law to reveal the path of development of Thai law. It highlights various deficiencies in the current framework, particularly the lack of incentives or requirements for directors to consider the interests of non-adjusting creditors when they have become the company’s residual claimants. The comparative analysis shows that Thai law primarily focuses on creditor protection through enforcement of criminal law.The dissertation makes several recommendations, including the improvement of public enforcement of directors’ duties through the introduction of a director disciplinary sanctions regime, to better protect the interests of non-adjusting creditors in alignment with the enlightened shareholder value model of corporate governance.