Klongchan gets funds ready for creditors as rehab looms

The cooperative board, tasked since Friday by the Bankruptcy Court to formulate a rehabilitation plan for submission in three months, held a meeting yesterday over related points including creating the plan, remedial measures, and whether they need to hire a consultant.
After the meeting, Padet said his role as chairman and the tasks of other executives would end under the court ruling – they would become executives to formulate the rehabilitation plan instead. He would seek clarity from the Cooperative Promotion Department on the status of the board, as their term is due to expire tomorrow.
Padet said he gave approval during the meeting for loans to cooperative members, who would be able to borrow up to 10 per cent of their savings deposit amount but not more than Bt50,000 per head, at 6 per cent interest per annum. This loan would be available once a month, for up to five months, he explained, adding that this would cost about Bt199 million. He said they had enough money to cover this.
With some members wishing to withdraw money – Bt170 million in total – the cooperative had arranged Bt300 million to ensure liquidity, he said.
The meeting yesterday resolved that requests to withdraw money would be put before the court, and when it receives court approval, the cooperative would notify members to take their money. He said it was initially set that members would be allowed to withdraw up to 10 per cent of their savings amount but not more than Bt20,000.
He said the board would seek advice from the Department of Legal Execution on the definition of “creditor”. The department only counts people with savings deposits. The board told the court that cooperative shareholders should also be regarded as creditors. So, the board would initially require its members to give details of their share holdings in the “letter of creditor status” form, to protect their rights. The form would be posted to members to fill in and be returned by May 7, he said. As soon as they find a solution to the “creditor” status, they would notify members in a meeting on April 4.
Padet said creditors could submit the form from April 7 onwards, following the court order being published in the Royal Gazette. He warned that those who submitted the form after May 7 would miss out on the chance to get their money back.
In related news, Nakhon Ratchasima Teachers’ Savings Cooperative Ltd, one of Klongchan’s creditors, which is owed Bt540 million, concluded a proposal yesterday for an eight-step plan, which will be submitted to Klongchan next week. The cooperative’s manager, Yongyuth Buaphud, said the eight steps include:
1 Nakhon Ratchasima Teachers’ Savings Cooperative Ltd would file a request for Klongchan to repay the debt in one month;
2. The teachers’ savings cooperative would assign a representative to submit a request for its debt to be repaid;
3. The Klongchan board should create the rehabilitation plan in three months or in up to five months (if the two one-month extensions are applied);
4. The teachers’ cooperative must be informed about the rehabilitation plan so they can study it first;
5. The Bankruptcy Law’s Official Receivers would convene a meeting to vote on whether to accept Klongchan’s rehabilitation plan for submission to the court;
6. In case creditors are not happy with the Klongchan plan, they would propose amendments and vote before the amended plan is submitted to the Bankruptcy Court. If the court approves the plan, it would be binding on all creditors and it must be implemented in five years;
7. If the plan is implemented and results in a good trend towards recovery but without all debts paid, the court could extend it for another two years;
8. The creditors must have their debts repaid within 5-7 years from the day the court approves the rehabilitation.