Suing a Company or Limited Partnership Whose Liquidation Has Been Registered as Complete

Issues surrounding the filing of claims against a dissolved and liquidated juristic person — a practical analysis of standing, jurisdiction, and enforcement options.

A practical problem arises where a juristic person has applied to register the dissolution of a company or limited partnership and has also registered the completion of its liquidation. The juristic person thereby ceases to exist and loses legal capacity under Sections 1249 and 1270, paragraph 2 of the Civil and Commercial Code (CCC). (A juristic person is deemed to continue to exist only for as long as is necessary for liquidation. The liquidator submits the liquidation report for registration within the time prescribed by law, and once the Registrar accepts the registration, it is deemed the conclusion of the liquidation, meaning that the juristic person has ceased to exist. Once liquidation is complete, there is no longer any need for the company or partnership to retain juristic personality, and that personality comes to an end.) But if liquidation has not actually been carried out, juristic personality continues to exist.

This case study addresses the situation in which a juristic person has registered the completion of its liquidation, but the creditor did not know of, or was never notified by the debtor of, the registration of the dissolution of the debtor company or of its liquidation. The question is whether the debtor's failure to give such notice can still be regarded as a registration of completed liquidation under the CCC. Furthermore, if it emerges that the creditor's debt was not shown in the financial statements and statement of financial position submitted for the liquidation, the debtor has improperly prepared its statement of financial position. When such false information is filed with the Registrar, it amounts to making a false statement to a public official, causing the Registrar to believe that the company's creditors have already been paid. Such conduct is regarded as a liquidation conducted in bad faith, with intent to defraud the creditor.

The Supreme Court has set a precedent on such conduct: the liquidation is regarded as not yet complete under CCC Section 1249, so the two-year prescriptive period has not begun to run, and the debtor's juristic personality still exists and is not subject to the limitation period under that section. The creditor can exercise its rights in court and does not need to ask the Registrar to restore the debtor's name to the register or to revoke the registration of completed liquidation. This may be an option for the creditor: it may choose not to remedy the question of the debtor juristic person's capacity, and not to take the route of first applying to the Registrar for revocation of the registration of completed liquidation and then suing in the Administrative Court. (If the Registrar does not act, that may be regarded as an administrative order; the creditor can appeal that order and apply to the Administrative Court for an order revoking the Registrar's registration of completed liquidation, following the procedure for administrative cases.) However, if it is necessary to exercise the right to sue a juristic person that has registered completion of its liquidation, there may be a problem with the requirement to sue or take legal action within 2 years from the date of registration of completed liquidation under CCC Section 1272. This period is a prescriptive period that extinguishes the creditor's right to sue.

In the author's opinion, this concerns the exercise of the right to sue in a case where the liquidation was conducted in good faith. That is, if the circumstances of the case show that the liquidation was carried out in good faith, and the creditor did not exercise its right to sue within 2 years, the plaintiff's case brought before the court is time-barred. The period under Section 1272 is a special provision, separate from the general prescriptive period; it is a period whose lapse forfeits the right. If the claim is not brought within the period prescribed by Section 1272, which provides: “No suit may be brought after the expiry of two years from the date of the conclusion of the liquidation,” then even if no one raises the limitation issue under Section 193/29, the court would probably apply Section 1272 from the stage of examining the complaint, holding that the complaint or the plaintiff's exercise of its right is prohibited by Section 1272, and would issue an order refusing to accept the complaint, or could even dismiss the case on that ground. Because this provision concerns the time limit for bringing an action, the court can always decide the point itself, by analogy with Section 1375, paragraph 2: “An action to recover possession must be brought within one year from the date of dispossession.”

The issue that needs to be studied is therefore how this applies where the liquidation has not reached its conclusion, so that the registration of liquidation is regarded as not yet complete, for example where debts remain outstanding or assets remain to be dealt with. The debtor's failure to notify the creditor of the liquidation is a liquidation carried out dishonestly, intended to defraud the creditor and cause the creditor loss.

Where the creditor never received notice of the company's dissolution from the debtor, the creditor was unable to submit a claim for payment. Such conduct by the debtor is regarded as a liquidation in bad faith, and therefore an improper liquidation. The debtor's failure to give notice of the dissolution to the creditor is regarded as meaning that the liquidation has not been completed. Accordingly, the prescriptive period under CCC Section 1272 has not begun to run, and the juristic person continues to exist until liquidation is complete under Section 1249. Supreme Court Judgment No. 4466/2533 (B.E.) confirms this, holding that the debtor's failure to give notice of the company's dissolution to the creditor means the liquidation is not complete. The substance of that judgment is as follows:

“The Supreme Court ruled on points of law. Siam Commercial Bank Public Company Limited, Plaintiff, v. Suwimol Engineering and Construction Company Limited and another, Defendants. Civil Procedure Code Sections 142(5), 246, 247; CCC Sections 856, 1246 paragraph (1), 1246 paragraph (6), 1246 (former), 1249, 1250, 1253, 1270, 1272; Act Prescribing Offences Relating to Registered Partnerships, Limited Partnerships, Limited Companies, Associations and Foundations B.E. 2499 (1956), Section 32.

CCC Section 1249 provides: ‘A partnership or a company, even though dissolved, shall be deemed to continue to exist for as long as is necessary for liquidation,’ and Section 1250 provides: ‘The duty of the liquidator is to wind up the affairs of the partnership or company, and to pay its debts and distribute its assets.’ These two provisions clearly show the legislative intent that a juristic person, being a fictitious person, can be dissolved only if liquidation takes place, so that its debts are paid to creditors and its assets distributed, as the case may be. The duties of the liquidator are therefore expressly prescribed in order to protect the rights of creditors and to compel the liquidator to perform them, which results in fairness to all parties having legal relations with the juristic person. Moreover, the State has enacted the Act Prescribing Offences Relating to Registered Partnerships, Limited Partnerships, Limited Companies, Associations and Foundations B.E. 2499 (1956), which attaches criminal penalties. Section 32 prescribes a fine not exceeding 80,000 baht for a liquidator who fails to comply with CCC Section 1253, which prescribes the duties the liquidator must perform, such as sending notice that the juristic person has been dissolved, by registered mail, to every creditor whose name appears in the books of account or documents of the partnership or company.

In the liquidation of Defendant 1, the liquidator was Defendant 2, who was a director of Defendant 1 and also a guarantor of the debts under the overdraft agreement and loan agreement that Defendant 1 had made with the plaintiff. Defendant 2 deliberately failed to comply with the requirements prescribed by law by not sending notice of the dissolution to the plaintiff, so that the plaintiff could file a claim for the debt against Defendant 2 as liquidator. The circumstances of the case give reason to believe that Defendant 2 conducted the liquidation in bad faith, with intent to defraud the plaintiff as creditor. The liquidation must therefore be regarded as not having been completed under CCC Section 1270, paragraph 1. The Registrar's acceptance of the registration of the liquidation, whether in collusion with Defendant 2 or through being misled, does not mean that the liquidation of Defendant 1 has concluded; rather, Defendant 1 must be regarded as continuing to exist for as long as necessary for liquidation under Section 1249. The two-year period under Section 1272 has therefore not begun to run, and the plaintiff's case is not time-barred under that provision. The plaintiff also has no need to petition the court for an order directing the Registrar to restore Defendant 1's name to the register as a juristic person under Section 1246(6) (Section 1273/4 as amended). That is because such a provision concerns a case where the Registrar has reasonable grounds to believe that a company has ceased to carry on business or operations, and Section 1246(1) (Section 1273/1 as amended) therefore requires the Registrar to send a letter of inquiry to the company. This differs from the present case, in which Defendant 1 itself expressed the intention to dissolve the company.

Although the overdraft agreement fixed no term, Defendant 1 had not operated the account for a long time. The plaintiff, as a financial institution, ought to have exercised its right to demand payment or terminate the agreement, giving Defendant 1 a reasonable period. Even though the plaintiff did not directly give notice of termination to Defendant 1, the plaintiff's inaction in the face of Defendant 1's failure to operate the account gives sufficient reason to find that the plaintiff and Defendant 1 impliedly intended to terminate the current account agreement from 30 June B.E. 2538 (1995), the date of the last closing of the account under the agreement. The plaintiff changed the interest rates under the overdraft agreement and the loan agreement from time to time, using the General Loan Rate (GLR) plus the maximum margin for general customers according to the plaintiff's announcements. It is therefore appropriate to amend the judgment by ordering all three defendants to pay the plaintiff interest under both the overdraft agreement and the loan agreement at a floating rate, namely the General Loan Rate (GLR) plus the maximum margin for general customers, so as to accord with financial market conditions under the plaintiff's announcements and the announcements of the Bank of Thailand issued under Section 14 of the Commercial Banking Act B.E. 2505 (1962) (as then in force). This is a question of law concerning public order, which the Supreme Court may raise and decide on its own under Civil Procedure Code Section 142(5) read with Sections 246 and 247.”

The plaintiff sued and amended its complaint, asking the court to declare that the liquidation of Defendant 1 had not reached its conclusion, and to order the three defendants jointly to pay 2,122,814.84 baht, together with interest at 18.5 percent per annum on the principal of 1,931,712.65 baht from the day after the filing of the suit until payment in full. Failing payment, the plaintiff asked that the mortgaged land under title deed no. 32246, parcel no. 1197, Prachathipat Subdistrict, Thanyaburi District, Pathum Thani Province, together with its buildings and the other assets of the three defendants, be seized and sold at auction and the proceeds applied to pay the plaintiff in full. Defendant 1 defaulted in filing an answer and defaulted at trial. Defendants 2 and 3 filed answers and amended answers asking for the case to be dismissed. The Court of First Instance dismissed the case, but without prejudice to the plaintiff's right to file a new suit, subject to the law on prescription; each party was to bear its own costs.

The plaintiff appealed.

The Court of Appeal Region 2 modified the judgment, ordering Defendant 3 to pay the plaintiff 781,610.35 baht under the overdraft agreement, together with simple interest at 18.5 percent per annum from 16 June B.E. 2538 (1995) until payment in full, and to pay the plaintiff 799,082.32 baht under the loan agreement, together with interest at 18.5 percent per annum from the day after the filing of the suit until payment in full. Failing payment, or if payment is incomplete, the land under title deed no. 322246 [sic], parcel no. 1197, Prachathipat Subdistrict, Thanyaburi District, Pathum Thani Province, together with its buildings, was to be seized and sold at auction to pay the plaintiff's debt, and if that was insufficient, Defendant 3's other assets were to be seized and sold at auction to pay the plaintiff in full. In all other respects the judgment of the Court of First Instance was upheld. Each party was to bear its own costs on appeal.

The plaintiff appealed to the Supreme Court.

The Supreme Court, Division for Commercial and Economic Cases, ruled as follows. As to the plaintiff's ground of appeal that Defendant 2, as liquidator, conducted the liquidation without following the requirements prescribed by law,because he did not send notice of the dissolution of the company to the plaintiff so that the plaintiff could file a claim for the debt against Defendant 2 as liquidator; that this was a fraudulent liquidation that led the Registrar to be misled into accepting the registration of the company's dissolution; that Defendant 1 must therefore be regarded as not yet dissolved; and that the case was therefore not time-barred: the Court considers that, under Book 3, Specific Contracts, Title 22, Partnerships and Companies, Chapter 5, Liquidation of Registered Partnerships, Limited Partnerships and Limited Companies, of the Civil and Commercial Code, Section 1249 provides: ‘A partnership or a company, even though dissolved, shall be deemed to continue to exist for as long as is necessary for liquidation,’ and Section 1250 provides: ‘The duty of the liquidator is to wind up the affairs of the partnership or company, and to pay its debts and distribute its assets.’ These two provisions clearly show the legislative intent that a juristic person, being a fictitious person, can be dissolved only if liquidation takes place, so that its debts are paid to creditors and its assets distributed, as the case may be. The duties of the liquidator are therefore expressly prescribed in order to protect the rights of creditors and to compel the liquidator to perform them, which results in fairness to all parties having legal relations with the juristic person. Moreover, the State has enacted the Act Prescribing Offences Relating to Registered Partnerships, Limited Partnerships, Limited Companies, Associations and Foundations B.E. 2499 (1956), which attaches criminal penalties. Section 32 prescribes a fine not exceeding 80,000 baht for a liquidator who fails to act in accordance with CCC Section 1253, which prescribes the duties the liquidator must perform, such as sending notice that the juristic person has been dissolved, by registered mail, to every creditor whose name appears in the books of account or documents of the partnership or company.

It can thus be seen that in this case the liquidator of Defendant 1 was Defendant 2, who was a director of Defendant 1 and also a guarantor of the debts under the overdraft agreement and loan agreement that Defendant 1 had made with the plaintiff. The plaintiff pleaded in its complaint that Defendant 2, as liquidator, had not sent notice of the dissolution of the company to the plaintiff. Although Defendants 2 and 3 filed answers contesting the case, they did not dispute that fact, and they must therefore be regarded as having accepted it, so the facts are settled as stated above. Since the liquidation of Defendant 1 was not carried out in accordance with the requirements prescribed by law, Defendant 2 as liquidator having deliberately failed to comply, and since the circumstances of the case give reason to believe that Defendant 2 conducted the liquidation in bad faith with intent to defraud the plaintiff as creditor, and since the law must be applied in accordance with the intent of the legislature as already determined above, the liquidation must be regarded as not having been completed under CCC Section 1270, paragraph 1. The Registrar's acceptance of the registration of the liquidation, whether in collusion with Defendant 2 or through being misled, does not mean that the liquidation of Defendant 1 has concluded; rather, Defendant 1 must be regarded as continuing to exist for as long as necessary for liquidation under Section 1249. The two-year period under Section 1272 has therefore not begun to run, and the plaintiff's case is not time-barred under that provision.

Nor does the plaintiff need to petition the court to order the Registrar to restore Defendant 1's name to the register as a juristic person under CCC Section 1246(6) (Section 1273/4 as amended), as Defendants 1 and 2 asserted in their response to the appeal. That is because such a provision concerns a case where the Registrar has reasonable grounds to believe that a company has ceased to carry on business or operations, and Section 1246(1) (Section 1273/1 as amended) therefore requires the Registrar to send a letter of inquiry to the company. This differs from the present case, in which Defendant 1 itself expressed the intention to register the dissolution of the company. This ground of the plaintiff's appeal is well founded.

As to whether the overdraft agreement remained in effect until 12 March B.E. 2541 (1998), the date on which the plaintiff terminated the agreement: according to the current account statements, Defendant 1 operated the account under the agreement throughout. On 16 January B.E. 2538 (1995), Defendant 1 issued a cheque for 7,504 baht, and the debt on that day stood at 791,071.30 baht; when the plaintiff closed the account on the 31st of the same month, interest of 9,660.81 baht was added, so the debt under the agreement stood at 800,732.11 baht. On 16 June B.E. 2538 (1995), the same day on which Defendant 2, as liquidator, applied to the Registrar to register the completion of the liquidation, Defendant 1 operated the account by depositing 160,000 baht in cash and, on the same day, withdrew money on two occasions, 50,000 baht each time. On the 30th of the same month, the plaintiff closed the account, with interest of 10,390.99 baht, bringing the total debt on that date to 792,001.34 baht. Thereafter there was no further operation of the account, only the interest that the plaintiff calculated and charged each month.

This clearly shows that, since the overdraft agreement fixed no term but Defendant 1 had not operated the account for a long time, the plaintiff, as a financial institution, ought to have exercised its right to demand payment or terminate the agreement, giving Defendant 1 a reasonable period. Even though the plaintiff did not directly give notice of termination to Defendant 1, the plaintiff's inaction in the face of Defendant 1's failure to operate the account gives sufficient reason to find that the plaintiff and Defendant 1 impliedly intended to terminate the current account agreement from 30 June B.E. 2538 (1995), the date of the last closing of the account under the agreement. This ground of the plaintiff's appeal is partly well founded.

Furthermore, as to the interest rate of 18.5 percent per annum, which Defendants 2 and 3 raised in their response to the appeal on the ground that it conflicts with the Constitution of the Kingdom of Thailand B.E. 2540 (1997) and with the rulings of the Constitutional Court: that allegation was raised by Defendant 1 for the first time at the Supreme Court stage, and cannot be regarded as having been properly raised in the Court of First Instance and the Court of Appeal Region 2, so it is barred from appeal under Civil Procedure Code Section 249, paragraph 1. The Supreme Court therefore declines to rule on it. As to the Court of Appeal Region 2's judgment ordering Defendant 3 to pay interest at 18.5 percent per annum on the principal under the overdraft agreement and the loan agreement: it appears from the interest calculation records that the plaintiff changed the interest rates under the overdraft agreement and the loan agreement from time to time, using the General Loan Rate (GLR) plus the maximum margin for general customers according to the plaintiff's announcements. It is therefore appropriate to amend the judgment by ordering all three defendants to pay the plaintiff interest under both the overdraft agreement and the loan agreement at a floating rate, namely the General Loan Rate (GLR) plus the maximum margin for general customers, so as to accord with financial market conditions under the plaintiff's announcements and the announcements of the Bank of Thailand issued under Section 14 of the Commercial Banking Act B.E. 2505 (1962) (the former Act). As to the Court of Appeal Region 2's judgment ordering Defendant 3 to pay interest under the loan agreement on the principal of 799,082.32 baht from the day after the filing of the suit until payment in full: according to the plaintiff's complaint, Defendant 1 owed only 653,336.21 baht under the loan agreement, so the principal used to calculate interest was incorrect. That is a question of law concerning public order, which the Supreme Court may raise and decide on its own under Civil Procedure Code Section 142(5) read with Sections 246 and 247.

The judgment is amended as follows. The three defendants are jointly liable to pay the plaintiff the debt under the overdraft agreement of 792,001.34 baht, together with interest at the General Loan Rate (GLR) plus the maximum margin for general customers under the plaintiff's announcements, but not exceeding 18.5 percent per annum, on that principal from 1 July B.E. 2538 (1995) until payment in full. The three defendants are also jointly liable to pay the principal and interest under the loan agreement, calculated up to the date of filing the suit, of 799,082.32 baht, together with interest at the General Loan Rate (GLR) plus the maximum margin for general customers under the plaintiff's announcements, but not exceeding 18.5 percent per annum, on the principal of 653,336.21 baht from the day after the filing of the suit until payment in full, likewise to the plaintiff. Failing payment, or if payment under both agreements is incomplete, the land under title deed no. 32246, parcel no. 1197, Prachathipat (Khlong Rangsit South Bank) Subdistrict, Thanyaburi (Klang Mueang) District, Pathum Thani (Thanyaburi) Province, together with its buildings, and the other assets of the three defendants, shall be seized and sold at auction to pay the plaintiff in full. Defendants 1 and 2 shall jointly pay the plaintiff's costs at the Supreme Court level in proportion to the amount in which the plaintiff succeeded, with attorney's fees fixed at 10,000 baht; as between the plaintiff and Defendant 3, each shall bear its own costs at the Supreme Court level. In all other respects the judgment of the Court of Appeal Region 2 stands.”

(Somchai Chulinit – Manas Luangprasert – Montri Yodpanya)

Rayong Provincial Court – Mrs. Amara Thanachaisawat

Court of Appeal Region 2 – Mr. Pisit Sudlapa

In addition, Supreme Court Judgment No. 2101/2557 (B.E.) decided a matter of a similar nature, comparable to the judgment above, as follows: “Company S held a general meeting chaired by Defendant 1, and the meeting resolved to dissolve the company and appoint both defendants as liquidators. The two defendants had a duty jointly to prepare, as quickly as practicable, a balance sheet showing the company's creditors and debtors, to submit it to the auditor for certification of its accuracy, and to wind up the company's affairs and pay the company's debts. Both defendants knew well that the company owed the plaintiff money. The company hurriedly arranged the meeting to dissolve itself and appoint both defendants as liquidators, assigning Defendant 1 to register the dissolution and the completion of the liquidation, while the two defendants failed to perform their duty to arrange payment of the company's debts to the plaintiff. The two defendants, as liquidators, must therefore jointly be liable to the plaintiff for the debts of Company S, because the two defendants did not perform their duty to arrange payment of the debts.”

The problem creditors encounter is this. When a creditor checks, after the 2-year period from the date of registration of completed liquidation has passed, it finds that the juristic person has already ceased to exist, so the creditor cannot sue the debtor because the debtor no longer has legal capacity. Compared with a natural person, the debtor is, in effect, dead. But in the case of a juristic person, before it can die or cease to exist, the law requires that creditors be notified and paid first; that is, debts and assets must be properly liquidated before it can die or cease to exist. Dying or ceasing to exist without notifying creditors is regarded as secretly “dying” to escape the creditors' debts. A crafty debtor of this kind is said to be “faking death”: refusing to pay the debt and simply declaring oneself dead. In an economic downturn like the present, such problems are very common, as are problems of juristic persons being struck off the register. When the creditor tries to demand payment and obtains a certificate of registration, it turns out that the entity has already ceased to exist. In such a case the creditor is unlucky and must put in considerable effort. In practice, how can a way out be found so that the creditor can sue this kind of crafty debtor? If the creditor has to go and remedy the question of the debtor's capacity, this may take a long time and cost a great deal. And is it possible to apply to the Registrar to revoke the registration of completed liquidation? On this point the Department of Business Development has taken the position that, where the registration of completed liquidation has been made and the Registrar has properly considered the documents and evidence under CCC Section 1019, the Registrar will not revoke the registration. Instead, the Registrar will notify, or send away, the shareholders or interested persons to sue the liquidator or the company's directors themselves in tort, or else to sue the court to revoke the registration of the liquidation; the Registrar has no power to consider revocation. Even suing the Registrar in court to revoke the Registrar's order is not correct, since the Department of Business Development takes the view that the defect arose from the fault of the company or the liquidator itself, not from any fault of the Registrar. (Sources: Department of Business Development letters No. Phor Nor 803.03/1408 dated 29 December B.E. 2548 (2005) and No. Phor Nor 0803/1056 dated 18 April B.E. 2548 (2005).)

Applying to the Administrative Court to Revoke the Registrar's Order

The Registrar's order under CCC Section 1270, paragraph 2 is an administrative order under Section 5(1) of the Administrative Procedure Act B.E. 2539 (1996). To exercise rights in this case, the creditor must first apply to the Registrar to revoke the order. If the Registrar issues an order refusing to revoke the registration of completed liquidation, on the ground that he has no power because the error was that of the liquidator, who himself erroneously registered the completion of the liquidation, that order of the Registrar is an administrative order. An appeal against the order must be filed within 15 days of the date of receiving notice of the order. If the order is still not changed, a suit to revoke the order must be filed in the Administrative Court. In filing with the Administrative Court, the practitioner must study the time limits and procedures carefully, because if the correct procedure is not followed or the prescribed time is exceeded, the court may refuse to accept the complaint or may dismiss it.

Filing a Petition to Revoke in the Civil Court

It must first be considered whether a request to revoke the order is a case in which the law provides for the exercise of rights through the courts. The Civil and Commercial Code, however, makes no provision for applying to the court to revoke a completed liquidation, unlike the application to restore a defunct juristic person to the register, which is specifically provided for. Where there is no law recognizing the right to do so, the court may refuse to accept the petition or may dismiss it under Civil Procedure Code Section 55. However, there is a line of authority in Supreme Court Judgment No. 3302/2553 (B.E.), which held that where, after the Registrar has registered the conclusion of the liquidation, the juristic personality and the duties of the liquidator end, so that there is a period with no liquidator, but it is afterwards discovered that the company still has assets remaining, the facts amount to the company's liquidation not yet being complete.

The facts of that judgment were as follows. When the petitioner learned that two plots of land remained that required liquidation, the petitioner applied to the Registrar to complete the liquidation of both plots. The Registrar did not act and said the petitioner must apply to the court for revocation. The petitioner therefore filed a petition to revoke the completed liquidation and to appoint the petitioner as liquidator. The Court of First Instance dismissed the petition because there was no law recognizing that the petitioner's petition could be made. That is, a petition to revoke the registration of completed liquidation, asking the court to issue an order as in a non-contentious case, commenced as a petition under Civil Procedure Code Sections 55 and 188(1), has no legal basis. Examples of matters for which the law provides that the case be commenced by petition as a non-contentious case include a petition for estate administration, a petition for adverse possession, a petition to claim a preferential right in a debt, and a petition to restore a struck-off juristic person to the register. In such cases, if they sometimes turn out to be contentious, the petitioner has the status of plaintiff and the opponent the status of defendant, and if the case concerns land and ownership is later disputed, court fees must be paid. Under this Supreme Court judgment, the Court of First Instance considered that the petitioner had started the case in the wrong way: on the circumstances of the case, the Registrar's refusal to register the revocation of the completed liquidation amounted to the Registrar disputing the petitioner's right. Given the fact that the liquidation was not yet complete, the Registrar should have been ordered to revoke the registration for the petitioner, and since he did not, the petitioner should have sued the Registrar or the Department of Business Development as a co-defendant, to obtain an order revoking the registration of completed liquidation because the liquidation had not concluded. But in that judgment the petitioner exercised the right in the form of a non-contentious case. The issue went up to the Supreme Court by direct appeal on points of law only, under Civil Procedure Code Section 223 bis. The Supreme Court ruled:

“The petitioner's petition arises from the completion of the company's liquidation, which, once registered, is regarded as the conclusion of the liquidation under CCC Section 1270. However, this does not mean that after registration, if there is a necessary obstacle arising from the original liquidation of the company's business, no further liquidation may be carried out; there is no law prohibiting this. Moreover, if the facts are as the petitioner, who was originally the liquidator, requested — concerning two plots of land owned by the company, which are assets of the company that remain without having been liquidated by any method, where the company no longer exists because it has ceased to be a juristic person — this would also affect the shareholders' right to receive a return of the assets. The petitioner's case on the petition therefore has grounds for exercising rights through the court under Civil Procedure Code Section 55. The Court of First Instance's order dismissing the petition, without accepting it for an inquiry first, is not in accordance with the Supreme Court's view. The petitioner's appeal is well founded.”

From that line of Supreme Court authority, the Supreme Court in effect held that the Court of First Instance's refusal to accept the petition and its dismissal without an inquiry, on the ground that there is no law providing for the petitioner's proceedings, was not agreed with; an inquiry must be held and an order issued. How the court would then rule on the substance is another matter, which cannot be verified, and the outcome of that case is not known. As far as has been checked, there is as yet no Supreme Court authority on such a case.

Therefore, applying to revoke the order of completed liquidation in the Civil Court or the courts of justice by way of a petition in a non-contentious case carries a considerable risk that the court will refuse to accept the petition at the outset. It is also borderline on overlapping jurisdiction: if proceedings are brought in the Civil Court and the Registrar is a party, the Registrar would have to contend that the matter is an administrative dispute or an administrative order. Or, if before filing a civil suit no request has been made to the Registrar to revoke the order accepting the registration of completed liquidation, how can the Registrar be said to have disputed the right? Or, if a request to revoke has been made to the Registrar, would that order be an administrative order or not, and in what way? It is therefore difficult for anyone bringing this kind of case to know in which court to start in order to save the most time and expense.

Where an interested person or creditor has not applied to the Registrar to revoke the order accepting the registration of completed liquidation, but has instead sued the Registrar and the juristic person, partners, shareholders and liquidator in the courts of justice, rather than in the Administrative Court, on the ground that the procedure of the Administrative Court was not being followed, and a dispute over jurisdiction has arisen, there has been a ruling of the Committee on Jurisdictional Disputes between Courts, Ruling No. 31/2547 (B.E.). It ruled that it must first be established whether the liquidation complied with the Civil and Commercial Code and the regulations of the Central Partnership and Company Registration Office. If the liquidation was lawful, the juristic personality and the various rights and duties come to an end; if the liquidation was not lawful, then the personality, rights and duties do not come to an end. This is a dispute over the rights, duties and juristic personality of the company in civil law, and only then can the court consider whether the Registrar's acceptance of the registration of completed liquidation was lawful. The registration of completed liquidation does not in any way change the legal relations or the juristic personality; as for whether the legal relations between the partnership and the plaintiff, or the status of the partnership's rights or duties, are extinguished or changed in any way, this must be considered by reference to civil-law rights, not from the registration. Since the court must consider the civil-law rights of the partnership, which are principally a dispute between private parties, the dispute in this case is not a dispute over a state official issuing an unlawful order under Section 9, paragraph 1(1) of the Act on Establishment of Administrative Courts and Administrative Court Procedure B.E. 2542 (1999), but falls within the jurisdiction of the courts of justice.

The issue in the case is that the court will examine the facts as to whether the liquidator carried out the debtor's liquidation procedure correctly and in good faith as the law prescribes. If it is found that facts were concealed or there was fraud, the liquidation is regarded as an act contrary to the law. The Registrar's acceptance of the registration of completed liquidation arose as a direct result of such acts. Since this is a dispute between private parties, but its result affects the facts on which the registration was accepted, the Registrar becomes involved in the case. Even if the Registrar did not know of such facts, if it is proved that they exist, there is a defect in the Registrar's acceptance of the registration of the conclusion of the liquidation. As the power to revoke the registration belongs to the Registrar, the Registrar is regarded as an interested party in relation to the company's or the registering juristic person's fraud, and must therefore join the case as a party. The main issue in dispute is a civil-law right, not an administrative one; it is only that, once the civil-law right has been recognized by a judgment, the Registrar must act in accordance with it.

Conclusion

It is difficult for a person exercising rights through the courts to choose which route to take, whether to bring an administrative case or to go to the courts of justice, and this depends on the facts of each case. From what has been compiled and summarized, either route is possible; practitioners must simply study further for themselves which route will carry the least risk of procedural error if the case is contested. This case study was prepared because of a case in which the creditor had not received any notice demanding payment from the liquidator or the debtor itself, but when preliminary document checks were carried out in preparation for suing, the debtor's company certificate showed that its liquidation had already been completed. If the facts accord with Supreme Court Judgment No. 4466/2553 [sic], such a case is regarded as a liquidation that is not complete, so the juristic personality has not ended. This article is prepared so that interested persons or lawyers who must conduct cases of this kind can save time in preparing the case and can see the picture more clearly.

Legal Team

Pleased to advise on companies whose liquidation has been registered as concluded, and on defunct companies.