Resolving Insolvency

When facing insolvency, businesses may go through bankruptcy or reorganization. This section discusses the procedures, time and costs using a case study to provide investors with a general understanding of the bankruptcy and reorganization process.

Sample case :

The Debtor is a Thai Hotel, experiencing a decrease in revenue

There are two types of credits:

1. The Bank - 74% of total debt. The debtor uses all of its assets to secure the loan. The market value of assets is equal to the loan amounts.

2. Other Creditors - 26% of the dept. (suppliers, employees). These are unsecured creditors.

If the business is sold as a going concern, the value will be 100% of market value, but if sold as peicemeal, it will receive 70% of market value. Therefore the most likely outcome is reorganization or selling of the business as a going concern.

The time indicated is an average figure.