Business bankruptcy procedure in Vietnam

Business bankruptcy procedure in Vietnam

Legal Basis

Law on Bankruptcy No.51/2014/QH13 dated June 19th 2014.

Business bankruptcy procedure

2.1. What is Bankruptcy?

Bankruptcy is a legal status of an insolvent entity that is declared bankrupt by the People’s Court. An insolvent enterprise or insolvent cooperative (hereinafter referred to as insolvent entity) is an enterprise or a cooperative having failed to meet the debt liability for 03 months from the deadline for repayment

2.2. Eligibility and liability to submit written requests for initiation of bankruptcy process

The following entities have the eligibility and liability to submit written requests for initiation of bankruptcy process:

Any creditor of unsecured debts or partly-secured debts is entitled to send a written request for initiation of bankruptcy process after 03 months from the payment due date for the debts which the enterprise or cooperative does not pay..
Any employee, internal Trade Union (or the superior Trade Union if the internal Trade Union is not established) is entitled to send a written request for initiation of bankruptcy process after 03 months from the day on which the entity have to pay salaries and other debts to the employees.
The legal representative of each enterprise or cooperative is liable to send a written request for initiation of bankruptcy process when the entity is insolvent.
The owner of any private enterprise, the President of the Board of Directors of any joint-stock company, President of the Member assembly of any multi-member limited liability company, the owner of any single limited liability company or any general partner of any partnership is liability to submit a written request for initiation of bankruptcy process when the entity is insolvent.
Any shareholder or any group of shareholders owning at least 20% of ordinary shares for at least 06 consecutive months is entitled to file a written request for initiation of bankruptcy process when the joint-stock company is insolvent. Any shareholder or any group of shareholders owning less than 20% of ordinary shares for at least 06 consecutive months is entitled to file a written request for initiation of bankruptcy process when the joint-stock company is insolvent if it is mentioned in the company’s charter.
Any member of any cooperative or any legal representative of any cooperative which is a member of the cooperative union is entitled to file a written request for initiation of bankruptcy process when the entity is insolvent.

2.3. Competence in bankruptcy settlement of the People’s Court

The People’s Court of central-affiliated cities and provinces (provincial People’s Court) has the competence in bankruptcy settlement for enterprises and cooperatives registered in the province and for one of the following cases:

There are overseas assets or involving entities.
The insolvent entity has branches and/or representative offices located in district and/or cities of various provinces;
The insolvent entity has real estate in district and/or cities of various provinces;
The provincial People’s Court takes the bankruptcy cases under the management of the People’s Court of a district/city of the province due to their complicacy.

The district People’s Court has the competence in bankruptcy settlement for enterprises and cooperatives with headquarters in the district, town, or city of that province and not falling under the jurisdiction of the provincial People’s Court.

2.4. Business bankruptcy procedure

Entities who have ligibility and liability submit written requests for initiation of bankruptcy process (including the request and attachted evidences) to the competent People’s Court.
People’s Court receives the request, considers its validity and requests amendments and supplements if necessary.
People’s Court accepts the application after receiving a valid application, fees, and advance payments on bankruptcy costs.
People’s Court will notify the decision to open or not to open bankruptcy proceedings to relevant parties. During this process, the Court can apply asset preservation measures, inventory assets, and compile a list of creditors and debtors.
Open a debt conference to collect opinions and make decisions.
People’s Court issues a Decision on the declaration of bankruptcy.
Implement the Decision on the declaration of bankruptcy, through liquidation of bankruptcy assets and distribution to creditors in the order of priority prescribed by the Law.

2.5. How to submit

Submit request directly to the competent People’s Court.

Reference

Website of the Supreme People’s Court updates the Notice of bankruptcy declaration:https://www.toaan.gov.vn/webcenter/portal/tatc/thong-bao-tuyen-bo-pha-san