Set-listed Real Estate Company Trouble

[jcon]

Here is a question for you lawyers and bankers:

What is the consequence of an SET-Listed Real Estate company bouncing a company cheque endorsed by the CEO and the CFO?

Long story short, I have requested desposit funds returned to me due to a breach in contract. The company officials (CEO and CFO) agreed to write me a Front-Dated cheque (because they are having financial troubles, clearly) after an emergency meeting I and a few other owners had with them (Christmas eve, 1am, in the office - the details of how they got there are too much to be explained here, but let's say I have enough power to get them in the office to broker this "deal").

Needless to say, I am still concerned that the cheques (company cheques) will not clear on the date which they are supposed to clear (in about one week). I know the company has serious cash-flow problems, let's just say that.

Bouncing company cheques is criminal fraud, but as we know in Thailand, well.... who knows. Which is why I'm asking anybody who may know more about the subject. What are my options should the cheques not clear? What are the "real" consequences to the company (and the CEO and CFO) who endorsed the cheques? I have been advised by another banker that since the cheques are for less than 10 million baht, pursuing bakruptcy is not an option. I wouldn't want to go down that road, anyway - I want my cash, or it's equivalent worth in flesh.

Ideas? (sorry I cannot name names, either - yet).

edit: quiksilva and steveromagnino I would especially like your input on this matter.

Edited January 5, 2009 by jcon

[midas]

Here is a question for you lawyers and bankers:

What is the consequence of an SET-Listed Real Estate company bouncing a company cheque endorsed by the CEO and the CFO?

Long story short, I have requested desposit funds returned to me due to a breach in contract. The company officials (CEO and CFO) agreed to write me a Front-Dated cheque (because they are having financial troubles, clearly) after an emergency meeting I and a few other owners had with them (Christmas eve, 1am, in the office - the details of how they got there are too much to be explained here, but let's say I have enough power to get them in the office to broker this "deal").

Needless to say, I am still concerned that the cheques (company cheques) will not clear on the date which they are supposed to clear (in about one week). I know the company has serious cash-flow problems, let's just say that.

Bouncing company cheques is criminal fraud, but as we know in Thailand, well.... who knows. Which is why I'm asking anybody who may know more about the subject. What are my options should the cheques not clear? What are the "real" consequences to the company (and the CEO and CFO) who endorsed the cheques? I have been advised by another banker that since the cheques are for less than 10 million baht, pursuing bakruptcy is not an option. I wouldn't want to go down that road, anyway - I want my cash, or it's equivalent worth in flesh.

Ideas? (sorry I cannot name names, either - yet).

edit: quiksilva and steveromagnino I would especially like your input on this matter.

I beleive that constitute an " economic crime " in Thailand ? And probably

even more serious because it is a listed Company.

I would pay to get te best legal advice in town.

Edited January 6, 2009 by midas

[soundman]

Bouncing a cheque, whether it be personal or company is a serious offence in Thailand.

From your side: You must be able to specify exactly what the cheque was for. Ie. sale of goods, inv no. etc. - nothing like "personal payment".

You will then ask the company to make payment.

If they do not, you see your lawyer, file a police report & the police will arrange an interview with the cheque bouncer.

If they do not pay after the police interview (provided the police agree the money is owed), the police will charge the individual, or company director(s) who has signed the cheque.

To get out on bail they will have to provide a 33% of the cheque value bond to the court.

On the first court appearance the court will ask the cheque bouncer and you to negotiate and come back before the court another time with the results of your negotiation. On this second appearance the agreement is rubber stamped by the court and either party that deviates from it will be in contempt of court.

Failure to pay the debt, after a court order, will result in imprisonment at a rate of 200B per day to pay off the entire debt.

Hope this is some help.

[quiksilva]

I can not speak as to what legal recourse you may have access to, but the content of soundman's post rings true. I would only add to soundman's post by stating that any request for payment can be made orally but its far better to be made in writing, (Thai officialdom loves its paper trails) stating what the payment is for, invoice number, refer to contract clauses etc.

As to the ramifications for the public listed company, well I can't think who'd still be holding Thai property stock, but if these guys were imprisoned I'm pretty sure any shareholders would be looking to offload their stocks sharpish!

Now depending on how bad their actual situation is it could possibly result in a postponement of trading their stock on the SET, perhaps even leading to delisting.

Whatever the case (and its publicity) will severely hurt their credit ratings (can a developer's get any worse right now?) making it even more difficult to get new sources of credit, and perhaps difficult to draw down on construction loans*, further compounding cashflow problems, leading to real trouble.

(*Although possible, its quite unlikely because banks need to see projects finish and units transfer so that they can receive interest payments)

Still the prospect of doing time in the Bangkok Hilton is a very powerful negotiating tool, right? Well, perhaps...

See this does not necessarily mean that you will get your cash or even see the perpetrators imprisoned, at least anytime soon.

First you will need to make sure that this card is played very close to your chest until such time as you are ready to move, ensuring that the people in question simply do not flee justice and jump on a plane, never to return, which unfortunately does happen here.

Also note that there are many stalling tactics that can be employed to keep you at bay. See the wriggle room in the third step of the process, where the court orders you to come to an agreement... but what if the parties cant agree? You go back and try again... wash, rinse, repeat. (Its not uncommon for this tactic to be employed whilst the management at the troubled firm are overseas). It will get solved eventually (Ive seen it happen) ...but the key question is when, and can you afford the legal costs, unless your lawyer will take it on a no-win, no-fee basis.

Unfortunately as you can see it could all turn out very messy when you take legals steps. It all depends on how much the other party has to lose.

Given your contacts you maybe better offer trying another personal approach before issuing a written demand for payment.

Then go down the legal route once certain that you will not be to settle this, to your satisfaction out of court. Knowing that if you do you could be in for a lengthy fight. Highlight the issues raised here to your legal team and ask for their opinion and what steps can be taken to mitigate stalling tactics.

But Im sure I dont need to tell you any of that. Speak to your lawyer. They'll be able to give you far better and more pertinent advice on this topic than a lowly agent like me.

[jcon]

Thanks for the replies, guys. I really appreciate it.

I do have all of the documents, from initial letters asking from my money back, to the final letter of intent signed on Chrismas Eve by the CEO, CFO, 2 witnesses, etc. that says they will pay on Jan 12.

The contract is a very solid contract as far as Thai standards go (the original condo contract). It there are many clauses that specifically protect the buyer in the case of breach of contract (and the terms of breach of contract are clearly outlined). I think the developer really did intend to fulfill it's obligations, and hence the strong contract. All documents are on my side, and I've all signed papers, etc. Legally, in my favor, I'd say - especially given the company's shady financials if someone were to audit.

That said, I do not want to go into a lengthy legal battle... even with all of the evidence on my side. I'm just wondering if the consequence of writing fraudulent cheques are as strict as they are in other countries.... this is my main concern, that the cheque will bounce, and then it's off to file reports with the police, and then the Thailand-Factor kicks in, and here we go on a run-around for my money.... But I would hope they understand that paying out this small sum of money vs. smearing their name and having the auditors on their arse is the better way to go.

As an aside, I was at SCB main branch today (where this particularly company has an 'old boy's' relationship - many execs are former SCB bankers and SCB is financing their projects), and they said that even though the cheque was written to clear on Jan 12, and I have an SCB account at the same branch as the developer, that I would have to wait until 2pm on the 13th to know if the cheque has cleared.... I thought an intra-bank transaction would be known instantaneously? This is specifically why I went to open an account at the same branch as the Land Developer, to make sure the cheque clears without delay. Is this one-day waiting normal for intra-bank cheques?

Oh, and btw I had the bank check how much money is in the account that the Developer had written the cheques from.... 86k baht. Yep, 86,000 baht. So they are about 5.62 million baht short as of today. But I'm sure they have other accounts, and they had better start shifting some money over... (oh and they also have a 1-billion baht loan out from SCB as I understand it.... another 5-million or so won't hurt, will it

Thanks again, guys. If you know anybody that specializes in this type of case, please feel free to recommend.

edit: so if the cheque does bounce, do I get to go to the police immediately, and how will they treat it aka am I gonna have to pay the police to get off their asses?

Edited January 6, 2009 by jcon

[bkkjames]

Thanks for the replies, guys. I really appreciate it.

I do have all of the documents, from initial letters asking from my money back, to the final letter of intent signed on Chrismas Eve by the CEO, CFO, 2 witnesses, etc. that says they will pay on Jan 12.

The contract is a very solid contract as far as Thai standards go (the original condo contract). It there are many clauses that specifically protect the buyer in the case of breach of contract (and the terms of breach of contract are clearly outlined). I think the developer really did intend to fulfill it's obligations, and hence the strong contract. All documents are on my side, and I've all signed papers, etc. Legally, in my favor, I'd say - especially given the company's shady financials if someone were to audit.

That said, I do not want to go into a lengthy legal battle... even with all of the evidence on my side. I'm just wondering if the consequence of writing fraudulent cheques are as strict as they are in other countries.... this is my main concern, that the cheque will bounce, and then it's off to file reports with the police, and then the Thailand-Factor kicks in, and here we go on a run-around for my money.... But I would hope they understand that paying out this small sum of money vs. smearing their name and having the auditors on their arse is the better way to go.

As an aside, I was at SCB main branch today (where this particularly company has an 'old boy's' relationship - many execs are former SCB bankers and SCB is financing their projects), and they said that even though the cheque was written to clear on Jan 12, and I have an SCB account at the same branch as the developer, that I would have to wait until 2pm on the 13th to know if the cheque has cleared.... I thought an intra-bank transaction would be known instantaneously? This is specifically why I went to open an account at the same branch as the Land Developer, to make sure the cheque clears without delay. Is this one-day waiting normal for intra-bank cheques?

Oh, and btw I had the bank check how much money is in the account that the Developer had written the cheques from.... 86k baht. Yep, 86,000 baht. So they are about 5.62 million baht short as of today. But I'm sure they have other accounts, and they had better start shifting some money over... (oh and they also have a 1-billion baht loan out from SCB as I understand it.... another 5-million or so won't hurt, will it

Thanks again, guys. If you know anybody that specializes in this type of case, please feel free to recommend.

edit: so if the cheque does bounce, do I get to go to the police immediately, and how will they treat it aka am I gonna have to pay the police to get off their asses?

Sounds to me (uneducated guess) that you have purchased on Suk 13?

[jcon]

I assume you mean the Trendy? hahahahahah no, I would never buy there based on the name "The Trendy" alone!

Mine is on Thonglor.

[onlycw]

The directors have the legal obligation to file for bankruptcy when they ran out of cash. Or cannot cover their obligations, like honoring a check.

No reputable company would a) hold a meeting at 1 am unless it is a social event. postdate a check.

Delaying bankruptcy is an offence!

Good luck, keep posting about this...

[jcon]

The directors have the legal obligation to file for bankruptcy when they ran out of cash. Or cannot cover their obligations, like honoring a check.

No reputable company would a) hold a meeting at 1 am unless it is a social event. postdate a check.

Delaying bankruptcy is an offence!

Good luck, keep posting about this...

Well the deadline has come...

and I received my money, plus interest, and signed termination of contract papers today! Check went in yesterday, cleared today.

All in all, I got a 42% return on my initial deposit money hahaha (well they did have my money for about almost 3 years - well at least that's when my first payment was). They paid back all monies with a 1.25% penalty per month (15% per annum) -- this was stipulated in my contract, like I said, my contract was rock solid so I was pretty lucky on this one (well not lucky, everybody should do due diligence here in Thailand, some TOO OFTEN NEGLECTED when people invest money in Thailand).

I'd like to say then, that there is a ray of hope for those who get screwed around by their development companies... but my case was extraordinary and I always had an ace in my pocket (which they could not control with police, mafia, bribes, etc. etc.). And our final terms of agreement were a Chinese-Style Gentleman's Agreement, to which other parties may not have been be privy to... So in the end, power and establishment rules, and power won in this case.... were I some ordinary shmuck, I probably would have gotten the finger, but I must say my partner-in-crime (another co-owner who also demanded repayment) was a regular farang (but dam_n bright) and we were just one hel_l of a team - that's why we got paid.

As for getting the CEO in there on Xmas eve at 1am - well there is a reason he was there, and it was no social event I assure you... so like I say, power (or the perception of it) talks more than money sometimes. In this case, it worked out. I cannot imagine any other set of circumstance where the outcome would have been as it was. But, justice has been served, and I feel bad for everybody else in the Condo who will get screwed, but I did give them a chance to join in (which I'm now glad they never accepted, because we probably never would have gotten our money back if the re-payments were for, say 30 rooms and 100 million baht - this was definitely a case where the smaller group fighting was to our advantage).

The rest is history and the fine details I'm not allowed to discuss under the terms of our agreement.... but one lesson for the rest of you out there - DO YOUR DUE DILIGENCE... I know it sounds trite, but you have no idea how many people get taken for a ride in this country because they leave their brains at the airport thinking Thailand is just women and smiles and everything is mai pen rai (you wonder why they have pretty young sales agents?!? "Ok... duhh... drool... where do I sign?")....

If you wouldn't do/sign something back in your home country, DON'T DO IT HERE... you will have even less recourse here.... that's the only advice I can give, I hope at least one person follows...

[girlx]

congrats

[yasx]

The directors have the legal obligation to file for bankruptcy when they ran out of cash. Or cannot cover their obligations, like honoring a check.

No reputable company would a) hold a meeting at 1 am unless it is a social event. postdate a check.

Delaying bankruptcy is an offence!

Good luck, keep posting about this...

Well the deadline has come...

and I received my money, plus interest, and signed termination of contract papers today! Check went in yesterday, cleared today.

All in all, I got a 42% return on my initial deposit money hahaha (well they did have my money for about almost 3 years - well at least that's when my first payment was). They paid back all monies with a 1.25% penalty per month (15% per annum) -- this was stipulated in my contract, like I said, my contract was rock solid so I was pretty lucky on this one (well not lucky, everybody should do due diligence here in Thailand, some TOO OFTEN NEGLECTED when people invest money in Thailand).

I'd like to say then, that there is a ray of hope for those who get screwed around by their development companies... but my case was extraordinary and I always had an ace in my pocket (which they could not control with police, mafia, bribes, etc. etc.). And our final terms of agreement were a Chinese-Style Gentleman's Agreement, to which other parties may not have been be privy to... So in the end, power and establishment rules, and power won in this case.... were I some ordinary shmuck, I probably would have gotten the finger, but I must say my partner-in-crime (another co-owner who also demanded repayment) was a regular farang (but dam_n bright) and we were just one hel_l of a team - that's why we got paid.

As for getting the CEO in there on Xmas eve at 1am - well there is a reason he was there, and it was no social event I assure you... so like I say, power (or the perception of it) talks more than money sometimes. In this case, it worked out. I cannot imagine any other set of circumstance where the outcome would have been as it was. But, justice has been served, and I feel bad for everybody else in the Condo who will get screwed, but I did give them a chance to join in (which I'm now glad they never accepted, because we probably never would have gotten our money back if the re-payments were for, say 30 rooms and 100 million baht - this was definitely a case where the smaller group fighting was to our advantage).

The rest is history and the fine details I'm not allowed to discuss under the terms of our agreement.... but one lesson for the rest of you out there - DO YOUR DUE DILIGENCE... I know it sounds trite, but you have no idea how many people get taken for a ride in this country because they leave their brains at the airport thinking Thailand is just women and smiles and everything is mai pen rai (you wonder why they have pretty young sales agents?!? "Ok... duhh... drool... where do I sign?")....

If you wouldn't do/sign something back in your home country, DON'T DO IT HERE... you will have even less recourse here.... that's the only advice I can give, I hope at least one person follows...

Good for you.

[jcon]

thanks ladies-x(s)

Now if God can please return to me the rest of the money I lost in 2008, I can move on with my life. OK, at least half of it, he can take the other half as an expensive lesson learned Otherwise, it's back to work...

[quiksilva]

The directors have the legal obligation to file for bankruptcy when they ran out of cash. Or cannot cover their obligations, like honoring a check.

No reputable company would a) hold a meeting at 1 am unless it is a social event. postdate a check.

Delaying bankruptcy is an offence!

Good luck, keep posting about this...

Well the deadline has come...

and I received my money, plus interest, and signed termination of contract papers today! Check went in yesterday, cleared today.

All in all, I got a 42% return on my initial deposit money hahaha (well they did have my money for about almost 3 years - well at least that's when my first payment was). They paid back all monies with a 1.25% penalty per month (15% per annum) -- this was stipulated in my contract, like I said, my contract was rock solid so I was pretty lucky on this one (well not lucky, everybody should do due diligence here in Thailand, some TOO OFTEN NEGLECTED when people invest money in Thailand).

I'd like to say then, that there is a ray of hope for those who get screwed around by their development companies... but my case was extraordinary and I always had an ace in my pocket (which they could not control with police, mafia, bribes, etc. etc.). And our final terms of agreement were a Chinese-Style Gentleman's Agreement, to which other parties may not have been be privy to... So in the end, power and establishment rules, and power won in this case.... were I some ordinary shmuck, I probably would have gotten the finger, but I must say my partner-in-crime (another co-owner who also demanded repayment) was a regular farang (but dam_n bright) and we were just one hel_l of a team - that's why we got paid.

As for getting the CEO in there on Xmas eve at 1am - well there is a reason he was there, and it was no social event I assure you... so like I say, power (or the perception of it) talks more than money sometimes. In this case, it worked out. I cannot imagine any other set of circumstance where the outcome would have been as it was. But, justice has been served, and I feel bad for everybody else in the Condo who will get screwed, but I did give them a chance to join in (which I'm now glad they never accepted, because we probably never would have gotten our money back if the re-payments were for, say 30 rooms and 100 million baht - this was definitely a case where the smaller group fighting was to our advantage).

The rest is history and the fine details I'm not allowed to discuss under the terms of our agreement.... but one lesson for the rest of you out there - DO YOUR DUE DILIGENCE... I know it sounds trite, but you have no idea how many people get taken for a ride in this country because they leave their brains at the airport thinking Thailand is just women and smiles and everything is mai pen rai (you wonder why they have pretty young sales agents?!? "Ok... duhh... drool... where do I sign?")....

If you wouldn't do/sign something back in your home country, DON'T DO IT HERE... you will have even less recourse here.... that's the only advice I can give, I hope at least one person follows...

Congratulations, and very good advice, but sadly I think far too many will ignore it and come in here venting about how they got 'ripped off'.

[thaihome]

.... but one lesson for the rest of you out there - DO YOUR DUE DILIGENCE... I know it sounds trite, but you have no idea how many people get taken for a ride in this country because they leave their brains at the airport thinking Thailand is just women and smiles and everything is mai pen rai (you wonder why they have pretty young sales agents?!? "Ok... duhh... drool... where do I sign?")....

If you wouldn't do/sign something back in your home country, DON'T DO IT HERE... you will have even less recourse here.... that's the only advice I can give, I hope at least one person follows...

Really good advice, but you are expecting people to take responsibility for their own actions, not something many are prone to do.

TH

[dr_Pat_Pong]

All's well that ends well.

[think_too_mut]

and they said that even though the cheque was written to clear on Jan 12, and I have an SCB account at the same branch as the developer, that I would have to wait until 2pm on the 13th to know if the cheque has cleared.... I thought an intra-bank transaction would be known instantaneously?

No. The way cheques are processed depend on bank processing run schedules.

If anyone wants to know what to expect with cheques, please read on:

Cheques are processed by large machines (transports, rollers, sensors, that have Win PC as a controller and external Oracle database on Unix Servers as storage), up to 2000 cheques a minute.

Morning processing is mainly "outclearings" where cheques from other banks are processed and sorted and sent to the clearing house for exchange.

Today many banks send the electronic (file) to other banks and hard copies follow in 2 exchange runs.

Inclearings run is their second run and that is where they process their own cheques. That happens from about 10:30am and goes for about 2 hours.

The file containing cheque code (MICR) lines is then sent to the bank's mainframe and that is when the real thing happens. It is between 1 and 2 pm.

If the cheque bounces, it will be (it's codeline) inserted into the derogatory file.

Now, they will have to physically locate the cheque and chase up people who issued and signed it.

Physical search is often done automatically, through cheque processing machines by loading all the cheques again, running them through the machine and outsorting them if they match an entry in the derogatory file.

I used to be a software developer for those machines and exchange with mainframes with all 3 major suppliers, that's how I know the way it works.

Good chance people (around the world) reading this are having their cheques processed through my software that still runs well and healthy.

[quiksilva]

and they said that even though the cheque was written to clear on Jan 12, and I have an SCB account at the same branch as the developer, that I would have to wait until 2pm on the 13th to know if the cheque has cleared.... I thought an intra-bank transaction would be known instantaneously?

No. The way cheques are processed depend on bank processing run schedules.

If anyone wants to know what to expect with cheques, please read on:

Cheques are processed by large machines (transports, rollers, sensors, that have Win PC as a controller and external Oracle database on Unix Servers as storage), up to 2000 cheques a minute.

Morning processing is mainly "outclearings" where cheques from other banks are processed and sorted and sent to the clearing house for exchange.

Today many banks send the electronic (file) to other banks and hard copies follow in 2 exchange runs.

Inclearings run is their second run and that is where they process their own cheques. That happens from about 10:30am and goes for about 2 hours.

The file containing cheque code (MICR) lines is then sent to the bank's mainframe and that is when the real thing happens. It is between 1 and 2 pm.

If the cheque bounces, it will be (it's codeline) inserted into the derogatory file.

Now, they will have to physically locate the cheque and chase up people who issued and signed it.

Physical search is often done automatically, through cheque processing machines by loading all the cheques again, running them through the machine and outsorting them if they match an entry in the derogatory file.

I used to be a software developer for those machines and exchange with mainframes with all 3 major suppliers, that's how I know the way it works.

Good chance people (around the world) reading this are having their cheques processed through my software that still runs well and healthy.

Interesting, good stuff TTM!

[jcon]

Thanks everybody.

TTM, nice info, I never knew how cheque-clearing worked... something new every day!

AND, most importantly, I got dr_Pat_Pong to reply in one of my threads The circle is now complete... order has been restored to the universe.

[aurelius]

Interesting that SCB revealed the developer's bank balance to you....

[jcon]

Interesting that SCB revealed the developer's bank balance to you....

Not really... the sum to be taken from the developer's account was not insignificant, and I had already made it known that I was concerned about the cheque bouncing, so I asked her to check if they had the funds in the account... she only revealed the balance of 86k most likely out of surprise that it was so little compared to the cheques that were to clear in just a few days.

Though I'm sure I could have gotten the balance anyway, with a smile and a wink