Debt Restructuring

We hope that our newsletters of August 2021 have given readers a well-rounded understanding of the Financial Rehabilitation Measures issued by the Thai Government with cooperation from the Bank of Thailand (“BOT”), to enhance the liquidity or cash flow of businesses owned by either an individual or corporation who has suffered adversity due to the COVID-19 pandemic. In this newsletter, we will draw your attention to additional measures which have been announced by the BOT with the purpose to help both household and business debtors of financial institutions and other non-bank business operators (collectively referred to as “Business Operator”) to be entitled to debt restructuring. The details of each measure are as provided below.

Measure to provide credit assistance to household debtor - phase 3

On 14 May 2021, the BOT, with cooperation from finance-related associations and clubs¹, announced a financial rehabilitation measure with the purpose to provide assistance for the debtor who lacks the ability to repay debt due to the impact of the third wave of Covid-19; the “measure to provide credit assistance to household debtor - phase 3”. Under this measure, the debtor who wishes to apply for help from the Business Operator must possess the following qualifications:

• Must be a household debtor (a business debtor is not permitted to apply for assistance under this measure); and
• Must not be a Non-Performing Loan (NPL) debtor or a debtor who has outstanding debt (either principal or interest) for a period exceeding 90 days or three months as at 1 March 2020.

In this regard, the levels of assistance that each Business Operator shall provide to each household debtor are as set out below:

DR BIZ Project

In addition to the above, the BOT together with the Thai Bankers Association, Association of International Banks and Government Financial Institutions Association have also issued a specific mechanism to help restructure debt of the business debtor, by launching the “DR BIZ Project” on 28 September 2020, with a purpose to provide financial facilitation for the business debtor with multi-creditors who are in debt in the range of Baht 50-500 million; as long as it/he/she is not categorised as a Non-Performing Loan (NPL) debtor or under litigation proceedings with any of its creditors.

Under this project, a business debtor shall be entitled to some particular debt restructuring measures, including but not limited to a moratorium of debt repayment, a lowering of the installment amount and/or a change in condition for debt repayment.

This project is open for the business debtor who is interested in applying to receive financial assistance until 31 December 2021.

Measures to Enhance the existing debt restructuring facilities to be more sustainable

On 3 September 2021, the BOT launched an additional policy to enhance the support given to debtors affected by the COVID-19 situation, namely measures to enhance the existing debt restructuring facilities to be more sustainable. This measure mainly focuses on a long-term debt restructuring programme, which would be tailor-made to the specific characteristics of debtors. Below are examples of financial assistance provided under this measure, depending on each credit type:

This measure applies to all types of debtors, covering large and SME business debtors, as well as household debtors.

This is intended merely to provide a regulatory overview and not to be comprehensive, nor to provide legal advice. Should you have any questions on this or on other areas of law, please do not hesitate to contact:

Nuttaros Tangprasitti
Partner

Kewalin Tiyajamorn
Attorney-at-Law

• ¹ Including 1) Thai Bankers Association; 2) Association of International Banks; 3) Government Financial Institutions Association; 4) Thai Hire-Purchase Association; 5) Vehicle Title Loan Trade Association; 6) Thai Motorcycle Hire-Purchase Association; 7) Credit Card Club, Thai Bankers Association; and 8) Personal Loan Club.
• ² This measure is applicable to a Car Title Loan only; a Motorcycle Title Loan is excluded.
• ³ This measure is applicable to a Car Title Loan only; a Motorcycle Title Loan is excluded.