Compare bankruptcy of enterprises and credit institutions in Vietnam? What are the regulations on the sequence of redistribution of assets of enterprises and credit institutions?
Compare bankruptcy of enterprises and credit institutions in Vietnam?
Similarities:
- Termination of the existence and operation of the enterprise/credit institution.
- Bankruptcy of enterprises and bankruptcy of credit institutions have bankruptcy procedures, including basic steps such as: Filing a petition and opening bankruptcy procedures; business recovery; liquidate assets, debts and declare bankruptcy.
- Subjects of settlement: All people's courts of provinces and centrally run cities (hereinafter referred to as provincial-level People's Courts) have the competence to settle bankruptcy for enterprises/credit institutions which conduct business registration in that province.
- Method of asset liquidation: All through an intermediary who is an asset administrator or an asset management and liquidation enterprise decided by the Court.
Differences:
Criteria | Bankruptcy of enterprises | Bankruptcy of credit institutions |
Definition | Bankruptcy is a legal status of an insolvent entity that is declared bankrupt by the People’s Court. (In other words, Bankruptcy of enterprises is a state in which an enterprise, due to a loss of business, is completely unable to pay its due debts and is forced by a court, according to statutory procedures, to make decisions to force enterprises to liquidate assets to pay debts to creditors.) (Clause 2 Article 4 of the 2014 Law on Bankruptcy of Vietnam) | After the State Bank issues a document on termination of special control or a document on the termination or non-application of solvency restoration measures, if the credit institution remains in the state of bankruptcy, it shall file a request for a court to open procedures for settlement of bankruptcy declaration requests under the bankruptcy law. (Article 155 of the 2014 Law on Credit Institutions of Vietnam) |
Causes
| An enterprise is recognized as bankrupt when simultaneously satisfying two conditions: + The enterprise has become insolvent to pay due debts within 03 months from the date of payment due date. + The enterprise is declared bankrupt by the People's Court. (Pursuant to Article 4 of the 2014 Law on Bankruptcy of Vietnam) | A credit institution is considered bankrupt when: + The State Bank of Vietnam has issued a document not to apply or terminate the application of measures to restore solvency or terminate the application of special control; + After the State Bank of Vietnam has issued the above document, the credit institution is still unable to pay the due debts at the request of the creditor. (Article 155 of the 2014 Law on Credit Institutions of Vietnam) |
Persons with the right and obligation to file a bankruptcy petition | - Owner of a private business. - Chairman of the Board of Directors of the joint-stock company. - Chairman of the Members' Council of a limited liability company with two or more members. - Owner of a one-member limited liability company. - General partners of a partnership company. - Unsecured creditors, partially secured creditors. - Employees, grassroots trade unions, and direct superior trade unions in places where grassroots trade unions have not been established. - Legal representative of the enterprise - Shareholder or group of shareholders owning 20% or more of ordinary shares for at least 06 consecutive months. (Article 5 of the 2014 Law on Bankruptcy of Vietnam) | - Unsecured or partially secured creditor of a credit institution; - Employees working in credit institutions; - Owners of state credit institutions, shareholders of joint-stock credit institutions. - The legal representative of a credit institution is obliged to file a request to open bankruptcy proceedings when realizing that his/her organization is in a state of bankruptcy. - In case a credit institution fails to file a request for initiation of bankruptcy proceedings, the State Bank of Vietnam shall file a request for initiation of bankruptcy proceedings against such credit institution. (Article 98 of the 2014 Law on Bankruptcy of Vietnam) |
Creditor's Conference | The time limit for the judge to convene a creditors' meeting is 20 days from the end of the inventory of assets in case the inventory of assets ends after the making of the list of creditors or from the date of finishing the making of the list of creditors. creditors in case the inventory of assets ends before the list of creditors is made, except for cases where a meeting of creditors is not required as prescribed in Article 105 of the 2014 Law on Bankruptcy of Vietnam | The judge shall decide to convene a meeting of creditors when the State Bank of Vietnam has issued a document on the non-application of measures to restore solvency of the credit institution. |
Special loan repayment |
Each credit institution eligible to request a special loan from the State bank of Vietnam and other credit institutions under the regulations of the law on credit institutions that is declared bankrupt must repay such special loan to the State bank of Vietnam and other credit institutions before its assets are redistributed in accordance with the regulations in Article 101 of this Law. (Article 100 of the 2014 Law on Bankruptcy of Vietnam) | |
Decision to declare bankruptcy | When the creditors' meeting fails: + Within 15 days after receiving the report on the results of the meeting of the creditors' meeting, the People's Court shall issue a decision declaring the enterprise or cooperative bankrupt. After the resolution of the creditors' meeting: + Within 15 days from the date of receipt of the resolution of the creditors' conference requesting bankruptcy declaration as prescribed at Point c, Clause 1, Article 83 of the Law on Bankruptcy 2014, the People's Court shall consider and decide to declare bankruptcy. bankruptcy of enterprises and cooperatives. + After the meeting of creditors passes a resolution containing the application of procedures to restore business operations but falls into one of the following cases, the People's Court shall issue a decision declaring that the enterprise or cooperative is insolvent. Product: a) The enterprise or cooperative fails to develop a plan to restore business operations within the time limit prescribed by the Law b) The meeting of creditors does not approve the plan to restore business operations of the enterprise or cooperative; c) The enterprise or cooperative fails to implement the plan to restore business operations. (Article 106 of the 2014 Law on Bankruptcy of Vietnam and Article 107 of the 2014 Law on Bankruptcy of Vietnam)
| The People’s Court shall issue a Decision to declare a credit institution bankrupt within 30 days from the day on which the asset management officer and asset management enterprise completely make the list of creditors and debtors and the inventory of assets of the credit institution. |
Compare bankruptcy of enterprises and credit institutions in Vietnam? What are the regulations on the sequence of redistribution of assets of enterprises and credit institutions?
What are the regulations on the sequence of redistribution of assets of enterprises?
Pursuant to Article 54 of the 2014 Law on Bankruptcy of Vietnam stipulating as follows:
Sequence of redistribution of assets
1. When the judge gives the Decision on the declaration of bankruptcy, the assets of the insolvent entity shall be redistributed in the following sequence:
a) Cost of bankruptcy
b) The unpaid salaries, severance pay, social insurance and medical insurance to employees, other benefits according to the labor contracts and collective bargaining agreements;
c) Debts incurred after the initiation of bankruptcy which are used for resuming the business operation.
d) Financial obligations to the Government; unsecured debts payable to the creditors on the list of creditors; secured debts which are not paid because the value of collateral is not enough to cover such debts.
2. The remaining amount of the asset value after every payment prescribed in Clause 1 this Article has been made shall belong to:
a) Members of the cooperative;
b) Owners of the private enterprises;
c) Owners of the single member limited companies;
d) Members of multi-member limited liability companies, shareholders of the joint-stock companies;
dd) members of the partnerships;
3. If the value of the assets of the insolvent entity is not enough to make the payment as prescribed in Clause 1 this Article, the entities given the same priority shall be paid in proportion to the debt.
Thus, when the judge gives the Decision on the declaration of bankruptcy, the assets of the insolvent entity shall be redistributed in the following sequence:
- Cost of bankruptcy
- The unpaid salaries, severance pay, social insurance and medical insurance to employees, other benefits according to the labor contracts and collective bargaining agreements;
- Debts incurred after the initiation of bankruptcy which are used for resuming the business operation.
- Financial obligations to the Government; unsecured debts payable to the creditors on the list of creditors; secured debts which are not paid because the value of collateral is not enough to cover such debts.
The remaining amount of the asset value after every payment has been made shall belong to:
- Members of the cooperative;
- Owners of the private enterprises;
- Owners of the single member limited companies;
- Members of multi-member limited liability companies, shareholders of the joint-stock companies;
- Members of the partnerships;
Note: If the value of the assets of the insolvent entity is not enough to make the payment as prescribed in Clause 1 Article 54 of the 2014 Law on Bankruptcy of Vietnam, the entities given the same priority shall be paid in proportion to the debt.
What are the regulations on the sequence of redistribution of assets of credit institutions?
Pursuant to Article 101 of the 2014 Law on Bankruptcy of Vietnam stipulating as follows:
Sequence of distribution of assets
1. The redistribution of the assets of a credit institution shall follow this following sequence:
a) Bankruptcy fee;
b) Unpaid salaries, severance pay, social insurance, medical insurance of the employees and other benefits under their labor contracts and collective bargaining agreements;
c) Deposits, amounts that the deposit insurers must pay to the depositors at the credit institution declared bankrupt under the regulations of the law on deposit insurance and instructions of the State bank of Vietnam;
d) Financial obligations to the State; unsecured debts payable to the creditors on the list of creditors; secured debts that are unpaid because the value of the collateral cannot afford the debts.
2. The remaining amount after the debts are paid off by the value of the assets of the credit institution as prescribed in Clause 1 this Article shall be given to:
a) Cooperatives that are members of the credit institution;
a) Single member limited liability company that is the owner of the credit institution;
c) Multi-member limited liability companies that contribute capital to the credit institution; joint-stock companies that are the shareholder in the credit institution.
3. If the value of the assets is not sufficient for the payment in accordance with the regulations in Clause 1 this Article, the entities in an order of priority shall be paid at a rate in proportion to the debts.
Thus, the redistribution of the assets of a credit institution shall follow this following sequence:
- Bankruptcy fee;
- Unpaid salaries, severance pay, social insurance, medical insurance of the employees and other benefits under their labor contracts and collective bargaining agreements;
- Deposits, amounts that the deposit insurers must pay to the depositors at the credit institution declared bankrupt under the regulations of the law on deposit insurance and instructions of the State bank of Vietnam;
- Financial obligations to the State; unsecured debts payable to the creditors on the list of creditors; secured debts that are unpaid because the value of the collateral cannot afford the debts.
The remaining amount after the debts are paid off by the value of the assets of the credit institution as prescribed in Clause 1 this Article shall be given to:
- Cooperatives that are members of the credit institution;
- Single member limited liability company that is the owner of the credit institution;
- Multi-member limited liability companies that contribute capital to the credit institution; joint-stock companies that are the shareholder in the credit institution.
If the value of the assets is not sufficient for the payment in accordance with the regulations in Clause 1 Article 101 of the 2014 Law on Bankruptcy of Vietnam, the entities in an order of priority shall be paid at a rate in proportion to the debts.
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