Are transactions of giving assets before Decision on the initiation of bankruptcy process considered invalid in Vietnam?

Are transactions of giving assets before Decision on the initiation of bankruptcy process considered invalid in Vietnam?

Pursuant to Clause 1, Clause 2, Article 59 of the Law on Bankruptcy 2014 has the following provisions:

1. A transaction of the insolvent entity which is made within 06 months prior to the day on which the People’s Court gives the Decision on the initiation of bankruptcy process shall be considered invalid in the following cases:

a) The asset transfer does not apply market prices;

b) Unsecured debts are converted into debts secured wholly or partly against assets of the debtor;

c) The payment or offsetting is beneficial for a creditor whose debt is undue, or the amount offset against is larger than the due debt;

d) Assets are given to other entities;

dd) The transaction does not serve the business operation of the entity;

e) The transaction is meant for dispersing the entity’s assets.

2. A transaction of the insolvent entity, which is prescribed in Clause 1 this Article, made with relevant entities within 18 months prior to the day on which the People’s Court gives the Decision on the initiation of bankruptcy process shall be considered invalid.

Thus, transactions of giving assets made within 6 months or 18 months prior to the Decision on the initiation of bankruptcy process will be considered invalid in Vietnam.

What are procedures for declaring transactions invalid in Vietnam?

Pursuant to Article 60 of the Law on Bankruptcy 2014, procedures for declaring transactions invalid are as follows:

1. Within 10 working days from the day on which the asset management officers and/or asset management enterprises and/or the involving entities request for declaring a transaction invalid or the People’s Court detects a transaction prescribed in Clause 1 and Clause 2 Article 59 of this Law, the People’s Court shall make one of the following decisions:

a) Reject the request of the asset management officers and/or asset management enterprises and/or the involving entities.

b) Declare the transaction invalid, cancel the preservation measures and handle the results of the invalid transaction according to the regulation of the Law.

2. The Decision on declaring the transaction invalid shall take effect from the day on which it is made.

3. Within 05 working days from the receipt of the Decision on declaring the transaction invalid, the insolvent entity and its contracting party may send a written request to the executive judge of the People’s Court in order to reconsider such Decision.

4. Within 07 working days from the receipt of the request for reconsidering the Decision on declaring the transaction invalid, the executive judge of the People’s Court given the Decision shall make one of the following decisions:

a) Reject the request for reconsidering the Decision on declaring the transaction invalid;

b) Cancel the Decision on declaring the transaction invalid. Any dispute shall be settled according to Chapter X of this Law.

5. Within 07 working days from the receipt of the Decision prescribed in Point b Clause 1 this Article, the civil execution authorities are responsible for implementing the Decision according to the regulation of the Law on civil execution.

Best Regards!