Procedures for filing bankruptcy for businesses in Vietnam

I. Persons with the Right and Obligation to File for Bankruptcy

1. Unsecured creditors and partially secured creditors have the right to file for bankruptcy when three months have passed from the due date of the debt and the enterprise or cooperative has not fulfilled its payment obligation.

2. Employees, grassroots trade unions, and superior trade unions in places where grassroots trade unions have not been established have the right to file for bankruptcy when three months have passed from the due date of salary payments and other debts owed to employees, and the enterprise or cooperative has not fulfilled its payment obligation.

3. Legal representatives of enterprises or cooperatives have the obligation to file for bankruptcy when the enterprise or cooperative becomes insolvent.

4. Owners of private enterprises, Chairpersons of the Board of Directors of joint-stock companies, Chairpersons of the Members' Council of limited liability companies with two or more members, owners of single-member limited liability companies, and general partners of partnerships have the obligation to file for bankruptcy when the enterprise becomes insolvent.

5. A shareholder or a group of shareholders owning at least 20% of the common shares for a continuous period of at least six months has the right to file for bankruptcy when the joint-stock company becomes insolvent. A shareholder or group of shareholders owning less than 20% of the common shares for a continuous period of at least six months has the right to file for bankruptcy when the joint-stock company becomes insolvent if stipulated in the company's charter.

6. A member of a cooperative or the legal representative of a member cooperative of a cooperative union has the right to file for bankruptcy when the cooperative or cooperative union becomes insolvent.

II. Jurisdiction of People's Courts in Bankruptcy Cases

The People's Court of a province or centrally-run city (hereinafter referred to as the Provincial People's Court) has the jurisdiction to resolve bankruptcy cases for enterprises or cooperatives registered for business or enterprise, or cooperatives registered for business or cooperative in that province, and falling under one of the following circumstances:  

a) Bankruptcy cases involving assets located abroad or with parties to the bankruptcy proceedings residing abroad;

b) Insolvent enterprises or cooperatives with branches or representative offices in multiple districts, towns, or cities within different provinces;

c) Insolvent enterprises or cooperatives with real estate located in multiple districts, towns, or cities within different provinces;

d) Bankruptcy cases falling under the jurisdiction of the People's Court of a district, town, or city within the province (hereinafter referred to as the District People's Court) that the Provincial People's Court takes over for resolution due to the complex nature of the case.

The District People's Court has the jurisdiction to resolve bankruptcy cases for enterprises or cooperatives headquartered in a district, town, or city within that province and not falling under the circumstances specified in Clause 1 of this Article.

III. Bankruptcy Petition by Creditors

When requesting the People's Court to initiate bankruptcy proceedings, the creditor stipulated in Clause 1, Article 5 of Law on Bankruptcy must file a bankruptcy petition.

The bankruptcy petition must include the following main contents:

a) Date, month, and year;

b) Name of the People's Court with jurisdiction to resolve the bankruptcy;

c) Name and address of the petitioner;

d) Name and address of the enterprise or cooperative subject to the bankruptcy petition;

e) Due and payable debt.

Evidence proving the due and payable debt must be attached to the petition.

In case of a proposal to appoint an administrator, a property management and liquidation enterprise, the bankruptcy petition shall clearly state the name and address of the administrator, property management and liquidation enterprise.

IV. Bankruptcy Petition by Employees and Trade Union Representatives

1. When requesting the People's Court to initiate bankruptcy proceedings, the employee or trade union representative stipulated in Clause 2, Article 5 of Law on Bankruptcy must file a bankruptcy petition.

2. The bankruptcy petition must include the following main contents:

a) Date, month, and year;

b) Name of the People's Court with jurisdiction to resolve the bankruptcy;

c) Name and address of the petitioner;

d) Name and address of the enterprise or cooperative subject to the bankruptcy petition;

e) Total amount of salary and other debts due that the enterprise or cooperative has failed to pay to the employee.

Evidence proving the due salary and other debts must be attached to the petition.

3. In case of a proposal to appoint an administrator, a property management and liquidation enterprise, the bankruptcy petition shall clearly state the name and address of the administrator, property management and liquidation enterprise.

4. From the date of filing the petition, the employee or trade union representative has the rights and obligations of a creditor as prescribed by Law on Bankruptcy.

V. Bankruptcy Petition by Insolvent Enterprises and Cooperatives

1. Enterprises and cooperatives as stipulated in Clause 3 and Clause 4, Article 5 of Law on Bankruptcy must file a bankruptcy petition.

2. The bankruptcy petition must include the following main contents:

a) Date, month, and year;

b) Name of the People's Court with jurisdiction to resolve the bankruptcy;

c) Name and address of the enterprise or cooperative;

d) Name and address of the petitioner;

e) Grounds for requesting the initiation of bankruptcy proceedings.

3. The bankruptcy petition must be accompanied by the following documents:

a) Financial statements of the enterprise or cooperative for the most recent three years. In case the enterprise or cooperative has been established and operating for less than three years, the financial statements of the enterprise or cooperative for the entire period of operation shall be enclosed;

b) Explanation of the causes leading to insolvency; report on the results of implementing measures to recover the enterprise or cooperative, which still failed to overcome insolvency;

c) Detailed list of assets and locations of assets of the enterprise or cooperative;

d) List of creditors and debtors, clearly stating the name and address of each creditor and debtor, the amount of debt, secured, unsecured, and partially secured loans, due or not yet due;

e) Documents related to the establishment of the enterprise or cooperative;

f) Results of valuation and appraisal of the remaining assets (if any).

4. In case of a proposal to appoint an administrator, a property management and liquidation enterprise, the bankruptcy petition shall clearly state the name and address of the administrator, property management and liquidation enterprise.

5. Persons stipulated in Clause 3 and Clause 4, Article 5 of Law on Bankruptcy who fail to file for bankruptcy when the enterprise or cooperative becomes insolvent shall be held liable before the law. In the event of damage arising after the time of insolvency due to the failure to file for bankruptcy, compensation shall be paid.

VI. Methods of Filing a Bankruptcy Petition

1. A person requesting the initiation of bankruptcy proceedings must submit the petition and accompanying documents and evidence to the competent People's Court by one of the following methods:

a) Submitting directly to the People's Court;

b) Sending to the People's Court by post.

2. The date of filing the bankruptcy petition is calculated from the date the People's Court receives the petition or the date of the postmark at the place of sending.

VII. Handling of Bankruptcy Petitions

1. Within 03 working days from the date of assignment, the Judge shall review the petition and proceed as follows:

a) If the bankruptcy petition is valid, the Judge shall notify the petitioner to pay the bankruptcy fee and advance bankruptcy expenses, except in cases where such payment is not required;

b) If the bankruptcy petition lacks the contents prescribed in Articles 26, 27, 28, or 29 of Law on Bankruptcy, the Judge shall notify the petitioner to amend and supplement the petition;

c) Transfer the bankruptcy petition to the competent People's Court if it falls under the jurisdiction of another People's Court;

d) Return the bankruptcy petition.

2. Notification of the handling of the bankruptcy petition must be in writing and sent to the petitioner and the insolvent enterprise or cooperative.

VIII. Acceptance of Bankruptcy Petitions

The People's Court accepts a bankruptcy petition upon receiving the receipt for payment of the bankruptcy fee and the receipt for payment of the advance bankruptcy expenses. In cases where the bankruptcy fee and advance bankruptcy expenses are not required, the acceptance time is calculated from the date the People's Court receives the valid bankruptcy petition.

IX. Decision to Commence or Not Commence Bankruptcy Proceedings

1. Within 30 days from the date of accepting the bankruptcy petition, the Judge must issue a decision to commence or not commence bankruptcy proceedings, except as provided in Article 105 of Law on Bankruptcy.

2. The Judge shall issue a decision to commence bankruptcy proceedings when the enterprise or cooperative is insolvent.

3. If necessary, before issuing a decision to commence bankruptcy proceedings, the Judge may convene a meeting with the participation of the petitioner, the business owner or legal representative of the enterprise or cooperative subject to the bankruptcy petition, and relevant individuals and organizations to review and verify the grounds for proving the insolvency of the enterprise or cooperative.

4. The decision to commence bankruptcy proceedings must include the following main contents:

a) Date, month, and year;

b) Name of the People's Court; full name of the Judge conducting the bankruptcy proceedings;

c) Date and acceptance number of the bankruptcy petition; name and address of the petitioner;

d) Name and address of the insolvent enterprise or cooperative;

e) Time and place for creditors to declare their claims and the legal consequences of failure to declare.

5. The People's Court shall issue a decision not to commence bankruptcy proceedings if it finds that the enterprise or cooperative does not fall under the circumstances specified in Clause 2 of this Article.

In this case, the petitioner shall be refunded the advance bankruptcy expenses; the request for the insolvent enterprise or cooperative to fulfill its obligations regarding the assets that have been suspended as prescribed in Article 41 of Law on Bankruptcy shall continue to be resolved.

6. The decision to commence or not commence bankruptcy proceedings takes effect from the date of issuance.

 

The information contained in this article is general and intended only to provide information on legal regulations. DB Legal will not be responsible for any use or application of this information for any business purpose. For in-depth advice on specific cases, please contact us.

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