Vietnam: What are the regulations on the sequence of redistribution of assets when a two member limited liability company goes bankrupt?
- Who is obligated to submit written requests for initiation of bankruptcy process for a two member limited liability company in Vietnam?
- Which agency is competent in bankruptcy settlement for a two member limited liability company in Vietnam?
- What are the regulations on the sequence of redistribution of assets when a two member limited liability company goes bankrupt?
Who is obligated to submit written requests for initiation of bankruptcy process for a two member limited liability company in Vietnam?
Pursuant to Article 5 of the 2014 Law on Bankruptcy of Vietnam stipulating the applicant to submit written requests for initiation of bankruptcy process as follows:
Eligibility and liability to submit written requests for initiation of bankruptcy process
1. 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..
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.
Thus, for a two member limited liability company, the person who is obliged to submit written requests for initiation of bankruptcy process is:
- The legal representative of each two member limited liability company is liable to send a written request for initiation of bankruptcy process when the entity is insolvent.
- President of the Member assembly of any multi-member limited liability company is liability to submit a written request for initiation of bankruptcy process when the entity is insolvent.
Vietnam: What are the regulations on the sequence of redistribution of assets when a two member limited liability company goes bankrupt?
Which agency is competent in bankruptcy settlement for a two member limited liability company in Vietnam?
Pursuant to Article 8 of the 2014 Law on Bankruptcy of Vietnam stipulating the competence in bankruptcy settlement for two member limited liability companies as follows:
Competence in bankruptcy settlement of the People’s Court
1. The People’s Court of central-affiliated cities and provinces (hereinafter referred to as 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:
a) There are overseas assets or involving entities.
b) The insolvent entity has branches and/or representative offices located in district and/or cities of various provinces;
c) The insolvent entity has real estate in district and/or cities of various provinces;
d) 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.
2. The district People’s Court has the competence in bankruptcy settlement for enterprises and cooperatives of which the headquarters are located in the district and for the cases not mentioned in Clause 1 of this Article.
3. The Supreme People’s Court shall provide guidance on implementing this Article.
Thus, the district People’s Court has the competence in bankruptcy settlement for enterprises and cooperatives of which the headquarters are located in the district and for the cases not mentioned in Clause 1 above.
What are the regulations on the sequence of redistribution of assets when a two member limited liability company goes bankrupt?
Pursuant to Article 54 of the 2014 Law on Bankruptcy of Vietnam stipulating the sequence of redistribution of assets for a bankrupt two-member limited liability company 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.
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.
Note:
- The remaining amount of the asset value after every payment prescribed in Clause 1 this Article has been made shall belong to the subjects prescribed in Clause 2.
- 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.
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