Regulations to Know When Handling Secured Assets for Small and Medium Enterprises

Handling secured assets is one of the risk management measures of the Credit Guarantee Fund for Small and Medium Enterprises (hereafter abbreviated as the Credit Guarantee Fund) for the debts of guaranteed entities at the Credit Guarantee Fund after the Fund has fulfilled its guarantee obligations as stipulated in Decree 34/2018/ND-CP.

Specifically, small and medium enterprises whose secured assets are subject to handling by the Credit Guarantee Fund are evaluated in accordance with Article 13 of Circular 57/2019/TT-BTC as follows:

Illustrative image (source: internet)

- Regarding the subjects for evaluation of handling secured assets: Customers who encounter risks due to any of the cases stipulated in Article 7 of this Circular or according to the agreement between the Credit Guarantee Fund and the customer in the Mandatory Debt Contract and the guarantor in the Mandatory Debt Security Contract, if available.- Regarding the evaluation conditions: The Credit Guarantee Fund is authorized to handle the secured assets to recover the debt when:

- The subjects eligible for the evaluation of handling secured assets as mentioned above.- The customer's debt has been restructured, postponed, or had interest wiped out, or has not been restructured, postponed, or had interest wiped out, but the Credit Guarantee Fund assesses that even if these measures are applied, the customer will still not be able to repay the principal debt to the Credit Guarantee Fund as committed.

- Handling the discrepancy between the amount recovered from handling secured assets and the book value of the debt (after deducting the costs as per legal regulations):

- In cases where the amount recovered from handling secured assets is higher than the book value of the debt: The Credit Guarantee Fund will handle the surplus according to the agreement between the Credit Guarantee Fund and the customer in the Mandatory Debt Contract and the guarantor in the Mandatory Debt Security Contract, if available;- In cases where the amount recovered from handling secured assets is less than the book value of the debt: The Credit Guarantee Fund is responsible for continuously monitoring and recovering the remaining debt (principal, interest) according to regulatory policies or considering applying other risk management measures as stipulated in this Circular.

- In cases where the secured asset secures both the loan and the guaranteed amount, the handling of the secured asset is performed according to the agreement between the Credit Guarantee Fund and the guarantee receiver as stipulated in Clause 3, Article 33 of Decree 34/2018/ND-CP of the Government of Vietnam.

More details can be found in Circular 57/2019/TT-BTC, which came into effect on October 15, 2019.

Thu Ba

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