Restructuring Enterprises Through Debt Trading: Is It Debt Collection?
According to Clause 1 Article 6 of the Investment Law 2020 (Effective from January 1, 2021), the law specifies the prohibited business lines. To be specific:
- Trading in narcotic substances specified in Appendix I of the Investment Law 2020;
- Trading in liquid chemicals and minerals specified in Appendix II of the Investment Law 2020;
...
- Debt collection services.
Thus, from 2021, debt collection services will be banned.
Here, debt collection services differ from debt trading activities. Debt collection services fundamentally do not involve buying or selling debts, but rather receiving remuneration according to the creditor's request. On the other hand, in debt trading activities, the debt trading company will decide to buy the debt after negotiating and reaching an agreement with the representative agency of the debt owner and obtaining the negotiation results with the creditors of the restructured enterprise.
The law does not prohibit debt trading activities. In the context of enterprise restructuring through debt trading, it will be carried out based on the consensus principle between the representative agency of the restructured enterprise with the Debt Trading Company or the creditors participating in the restructuring (establishing a memorandum of agreement between the parties).
The Debt Trading Company has the right to independently negotiate to buy debts with the creditors and propose a plan to restructure the enterprise in accordance with legal regulations (Article 4 Circular 69/2018/TT-BTC).
Sincerely!
