In the current challenging and difficult economic context, many businesses are in a state of financial crisis, insufficient budget to pay salaries to employees, make due payments as well as other financial obligations to the State. Faced with this situation, many businesses have been forced to carry out bankruptcy processes to protect the rights and interests of stakeholders. For the purpose of providing legal support to businesses, KALF sends customers information about the conditions and procedures for settling corporate bankruptcy procedures in Vietnam.

1. Conditions for conducting bankruptcy procedures for enterprises

The enterprise or cooperative is insolvent, i.e. fails to perform the obligation to pay the debt within 03 months from the due date of payment (Clause 1, Clause 2, Article 4 of the Bankruptcy Law 2014).

2. Process of settlement of bankruptcy procedures

Step 1: The person who has the right and obligation to prepare a petition for initiation of bankruptcy procedures and documents and papers related to the due debts of the enterprise.

Step 2: Submit the dossier to the competent People’s Court for settlement. Method of filing a petition for initiation of bankruptcy procedures: Submit directly or by post to the people’s court. The date of filing the application is counted from the date the People’s Court receives the application or the date of the postmark where it is sent (Article 30 of the Bankruptcy Law 2014).

Step 3: The court receives the petition and accepts the bankruptcy request for the enterprise if the dossier is valid. After receiving the petition, the Court shall consider the validity of the dossier and notify the requester of payment of the court fee advance (if any); or request amendment or supplementation of dossiers; or transfer the application to another competent court; or return the application (Article 32 of the Bankruptcy Law 2014).

The People’s Court shall accept the application upon receipt of the receipt of payment of bankruptcy fee or advance payment of bankruptcy expenses, in case of exemption, the time of acceptance shall be counted from the date the Court receives the petition for initiation of bankruptcy procedures (Article 39 of the Law on Bankruptcy 2014).

Step 4: The People’s Court shall issue a decision to open or not to open bankruptcy procedures within 30 days from the date of receipt of the petition for initiation of bankruptcy procedures and send the decision to the relevant parties. In that process, the Court will take measures to preserve the assets of the enterprise (Article 42 of the Bankruptcy Law 2014).

Participants in bankruptcy procedures have the right to request reconsideration of the decision to open or not to open bankruptcy procedures within 07 days from the date of receipt of the decision.

 

Step 5: The Court shall convene a meeting of creditors within 20 days from the date of completion of the inventory of assets or the date of completion of the list of creditors, whichever comes later.

A creditors’ meeting may only be conducted when the number of participating creditors represents at least 51% of the total unsecured debt. Asset management officers and asset management and liquidation enterprises assigned to settle petitions for initiation of bankruptcy procedures must participate in creditors’ meetings. In case the conditions are not met, the Court shall convene the 2nd Meeting of Creditors.

The creditors’ meeting has the right to issue a resolution proposing the suspension of the settlement of the request for initiation of bankruptcy procedures; or propose the application of measures to restore business activities; or propose to declare prodigy of enterprises or cooperatives.

Step 6: The court issues a decision to declare the enterprise or cooperative bankrupt.

The court shall issue a decision to declare bankruptcy for an enterprise or cooperative when:

– The 2nd creditors’ meeting is convened but is not eligible to be conducted or the creditors’ meeting cannot pass a resolution: within 15 days from the date of receipt of the report on the results of the creditors’ meeting.

– The creditors’ meeting approves a resolution proposing the declaration of bankruptcy of the enterprise: within 15 days from the date of receipt of the resolution of the creditors’ meeting. (Article 106, Article 107 of the Bankruptcy Law 2014).

 

Step 7: Execute the decision to declare the enterprise or cooperative bankrupt

Within 05 working days from the date of issuance of the decision to declare bankruptcy, the civil judgment enforcement agency shall issue an enforcement decision and assign an enforcer to execute the bankruptcy declaration decision.

Above is the entire content of consultancy related to the conditions and order of opening enterprise bankruptcy procedures. In case you need support, please contact KALF for answers.