If a private enterprise is insolvent, does owner have to submit request for initiation of bankruptcy process in Vietnam?

If a private enterprise is insolvent, does owner have to submit request for initiation of bankruptcy process in Vietnam?

Pursuant to Article 5 of the Law on Bankruptcy 2014 stipulates that 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, according to the above provisions in Vietnam, when your private enterprise becomes insolvent, you must be obliged to file a request for initiation of bankruptcy process.

Are there penalties for owners of private enterprises who fail to submit request for initiation of bankruptcy process in Vietnam?

Pursuant to Article 67 of Decree 82/2020/ND-CP has the following provisions:

A fine ranging from VND 1,000,000 to VND 3,000,000 shall be imposed on the owner of a private enterprise, the president of the board of directors of a joint-stock company, the president of the members' council of a multiple  member limited liability company, the owner of a single-member limited liability company, a general partner of a partnership or the legal representative of the enterprise or cooperative does not file a request for initiation of bankruptcy process when the entity is insolvent.

According to this Article, when your business is insolvent but you do not file a request for initiation of bankruptcy process in Vietnam, you may be fined from VND 1,000,000 to VND 3,000,000.

Best Regards!