It has been nearly a month since we have updated our customers and we want to keep you informed on progress towards restructuring of New Nordic Development as well as correct some misinformation you may have seen in the social media and news.

In respect of the application for the formal business reorganisation of NND, we have been notified by the Central Bankruptcy Court that the hearing previously scheduled for 31 May 2021 has been rescheduled to 22 September 2021. This delay was decided by the Court, due to the overwhelming number of cases currently being handled by the court, paired with the various disease control measures being enacted in response to the COVID-19 pandemic. We have posted the notification from the Court on the New Nordic Restructuring website for your reference and the court notice and unofficial translation is attached to this update.

As has been reported extensively in the international press, the third wave of COVID-19 has hit Thailand severely. Over 2,500 new infections were recorded each day in May. This is having a significant adverse impact on Thailand’s economy, from which all reports indicate will be a long and slow recovery. For example, the Tourism Authority of Thailand recently reported that they forecast tourism will not rebound until 2026. This sector previously contributed 20% to the Thai economy and is now decimated with over 7 million workers without jobs.

Clearly, for the immediate future tourism cannot be relied upon to contribute to property rental returns or drive even new projects, and this will need to be factored into our business reorganization plans.

Also, as we stated last month, most buildings are closed due to this lack of tourists, but we continue to protect and maintain all our projects and assets around the clock., This is essential while we work on solutions that will return to our customers the best possible outcome.

Finally, in recent times, we have seen adverse comments on social media and in the press, much of which is factually incorrect or misleading. We want you to know the current state of the company and its projects and to provide answers to some of the most common concerns to help you understand the facts behind our current situation.

1.    Is New Nordic Bankrupt? What is a “reorganization” and what does it mean?

NND is insolvent meaning the amount of present and future debt is greater than available cash. As an “insolvent” company, NND is entitled to file a business reorganization petition with the court, as a means of protecting the Company whilst at the same time enhancing the prospects of creditors to be paid. (This is very much like Chapter 11 in the USA and many companies use this.)

The difference between “liquidation” and “reorganization” is that reorganization aims to help the company agree on a scheme to repay its debts whereas liquidation is the process of selling all assets before dissolving the company and closing operations.

We do note that a fundamental principle of business reorganisation in Thailand is that every creditor cannot be worse off and should be better off than if the company were to be liquidated, and once a reorganisation petition is accepted by the court, the activities of the Company are conducted under the supervision of the courts.

2.    Was New Nordic a serious business?

NND and the New Nordic Group (NNG) have completed 45 buildings in Phratamnak, Pattaya and 24 more buildings in Asia were in various stages of construction with most close to completion. NNG diversified from its Pattaya base to other popular Thailand tourist destinations such as Phuket and Koh Samui.

NNG also developed a land bank in Thailand and overseas for future developments and invested free cash in this landbank, like most property developers globally.

NNG decided to pioneer developments in secondary tourist markets such as Chumphon and Phetchaburi Park.  This diversification was so successful that virtually all units were sold from the plan.

The offshore regional developments had head offices in Hong Kong and Dubai. Sometime later a regional office was opened in Panama for Latin America. Developments in the Philippines, Indonesia and Cambodia were also successful, and most sold off the plan or during construction.

The successes in Asia led to developing opportunities in Latin America and Africa.

Unfortunately, no one could have predicted the current pandemic nor the impact this would have on global markets.

Whilst the past 2 years have been stressful and disappointing, the Executive team, third party advisors and professional planners are working on a strategy to save as much value in the company as possible which may include disposal of non-performing assets, withdrawal from certain projects and markets as well as the cancellation of cashback and rental guarantees.

3.    What has happened to my money?

Many clients have posed questions to our Helpdesk about the various ‘Director Loans’ indicated on the balance sheet of New Nordic Development, claiming that these funds were misdirected or otherwise used improperly by the shareholders or directors. This is not true.

New Nordic’s Thailand operations are made up of over one dozen companies handling various aspects of the Group’s business – development, maintenance, accommodation, land banking and more. Such arrangement is normal industry practice, wherein a business the size of New Nordic Group is designed to ensure tax and operational efficiency as well as segregation of liability between various business operations.

Within Thailand and globally, New Nordic Group’s various entities operated as an affiliated business group, and NND, being the parent company and longest-established company essentially acted as a source of initial capital funding for other projects through intercompany loans. All loans between NND and the group companies are documented and were made available to NND’s auditors for the preparation of its audited financial statements. Having this internal treasury allowed the Company to successfully purchase land and make investments in a nimble, efficient manner which positively impacted the Group’s bottom line.

In answer to the question, investment money went toward the development of assets, buildings and land banks and working capital requirements of the New Nordic Group.

During the business reorganization process, it is normal for all loans to be re-evaluated and, where loan contracts provide for, or where such event can be successfully negotiated, all loans will be called back to NND.

4.    What is the role of Kurt Svendheim in this process ?

Although Kurt founded NND in 2009, he sold his minority shareholding in 2012 but continued as a director of NND until he resigned in 2016, some five years ago. He was first based in Hong Kong and then in Dubai, UAE to concentrate on other opportunities within the New Nordic Group, predominantly in international markets.

Kurt did not abandon the Company and its customers, agreeing to stay with the NND in the capacity of external advisor to the shareholders and directors.

In addition to the time spent on numerous international projects, he continues to be actively involved and supportive of the various New Nordic companies in Thailand and continues to ensure that the quality and function of the projects and operations are maintained for the benefit of customers.

Today, due to various global travel restrictions, Kurt participates via video conference in weekly meetings with the legal and executive team charged with managing the restructuring, as well as continuing regular communication with the Company’s sales agencies.

5.    What happened with Phetchaburi Park?

The concept for the Phetchaburi Park project was a new, exciting “back to nature” lifestyle development in a virtually untouched region of Thailand. The project was to include integrated residential, shopping, and hospitality construction in this unique environment. It is strategically located not far from Bangkok and the pristine beaches of Phetchaburi and Hua Hin.

The project was planned on nearly 70 Rai along with a total green area of about 500 Rai. The land for this project was based upon substantiated and legitimate title deeds which were issued more than 30 years ago. Further, the land changed hands several times without issues before NND bought it in 2017.

In 2017, and during the planning of the project, NND was not aware of any encumbrance or restriction on development since the title deeds were verified and had been owned for more than 30 years. However, during the process of applying for the various licenses and permits for the project, NND was informed that certain parts of the overall plot had been unilaterally reclassified and new building restrictions were to be applied, namely limitations on the size of individual buildings in various zones.

The Company immediately took steps to revise the master plan to comply with the Government’s new requirements. We continue to work with our consultants, and we are in constant discussion with officials in the Thai government to ensure that the project will comply with all pertinent zoning and environmental laws. It was unfortunate that due to the size of the project we have had delays and complications in finalising approval for the project.  This has been compounded by legal challenges by Individuals and self-interest groups and finally, there was a delay in boundary measurement by the Land Office.

Phetchaburi Park is unfortunate and frustrating, but it was not deceptive. The Company has invested in the land and improvements thereon, as well as the architectural designs which together have cost several hundred million Thai Baht. NND intends to have the project built, as it has done with more than 60 diverse real estate projects over the past decades. NND never presented the project concept intending to not complete this project.

NND’s problems are common to many other real estate developers in Thailand and can be traced to both the delays in project approval as well as a slowing Thai economy, a continuing decline in quality tourism and the final catastrophic impact of the pandemic in early 2020. NND could not foresee any of these problems and this has inevitable forced NND to stall the Phetchaburi project until the situation improves and there is a clear way forward.

6.    I invested in another project which is not part of New Nordic Development. What is the status of the other projects? / What is happening in Koh Samui, Chumphon and Phuket?

Presently only New Nordic Development has petitioned the Court for business reorganization. The affected projects and buildings can be found on the New Nordic Restructuring website. At present, the Company is evaluating all projects in Thailand on an individual basis to determine viability and potential impact from the ongoing pandemic. We encourage all customers to examine their purchase agreements to verify which entity sold the unit, then keep checking the New Nordic Restructuring website for further updates.

7.    I want to vote for reorganization and confirm my creditor claim but I do not know how to do this.

During the process of business reorganisation, you will receive a notice from the Official Receiver (and there will be a notice published in newspapers) advising you of the business reorganisation of the Company and this notice will provide details on how you should lodge your claim.

We are unable to provide legal advice to individual clients and encourage interested parties to engage their legal counsel as required. Should you have a claim against New Nordic Development Co. Ltd. which is either missing from or incorrectly displayed in the creditor’s list that has been published, please advise us in writing. However, in such a case we also encourage you to retain a lawyer in Thailand to represent you.

As a service to creditors, we have identified Legal and Commercial Services International Co., Ltd as a law firm that can provide creditor support in English, Italian, French and Thai. They are not affiliated with NND, its affiliates or the current restructuring team and they have never had any association with NND or its affiliates previously nor have they had any clients that engaged with NND.

They have offered to represent creditors who support business reorganization and will file creditor claims at a significant discount. They are unable, however, to support creditors who oppose reorganization as this would lead to conflicts in their overall representation.

If you would like their help, then you can contact them directly at:

Legal And Commercial Services International Co., Ltd
142 Two Pacific Place, 14th Fl., Suite 1406 – 1407 Sukhumvit Rd.,

Klongtoey, Bangkok 10110 Thailand

Phone: +66 2 255-4941   Email: nn@lcsbangkok.com

8.    I will not vote for the reorganization plan but I want to have my contract honoured.

As a creditor, it is your absolute right to vote to accept or reject any proposed reorganization plan. It should be noted that the Company has not yet announced any details about the reorganization plan and the Court has not yet ordered the Company to undergo this rehabilitation process.

As mentioned above, the first hearing to appoint a Planner and for the court to review the company’s petition has been postponed until September 22, 2021.

Regardless of who is appointed as Planner, a rejection of the plan will result in the Company entering liquidation. The liquidation process will be carried out by the Legal Execution Department and all Company assets will be sold at public auction, a process that is expected to take several years. The assets sold will include all apartments which have yet to have the title transferred to buyers and all units held by the Company on behalf of leasehold buyers.

The Company has consistently maintained that business reorganization will be a better outcome for all creditors than liquidation or “free fall” bankruptcy as described above.

At the time of filing for business reorganization, all debt of the Company is frozen and cannot be repaid and the Directors and shareholders have no rights to transfer assets, enter into new agreements or otherwise bind the Company beyond ordinary day-to-day operations. This is for the protection of all creditors and means that no ‘deal’ or special arrangement can be done with any individual creditor.

9.    Next Update

We will send out a further update to creditors of NND as soon as there is any significant development. In the meantime, please let us know through the Help Desk (https://nng-restructuring.com/contact-us/) if there were any further questions you would like answered.

Unfortunately, due to the ongoing COVID crisis in Thailand, we cannot accommodate face-to-face meetings until further notice. However, the Helpdesk can be used to schedule virtual meetings via Zoom if you would like to speak with us.

Best Regards,

New Nordic Restructuring Team