Vietnam: 03 cases in which the starting price of bad debt must be appraised

03 cases in which the starting price of bad debt must be appraised

There are 03 cases in which the starting price of bad debt must be appraised. Firstly, bad debts are purchased by the Vietnam Asset Management Company (VAMC) at book value using special bonds, which, when determining the starting price for auction, VAMC could not reach an agreement with the debt-selling credit institution on the starting price. Secondly, bad debts are purchased by VAMC at market value. Thirdly, the collateral of the bad debt, when determining the starting price for auction, VAMC could not agree with the guarantor on the starting price.

Decree No. 61/2017/ND-CP of Vietnam’s Government also specifies the use of valuation results to determine the starting price of bad debts and collateral assets of bad debts.

In cases where the starting price of bad debts and collateral for bad debts must be appraised, VAMC decides the starting price of bad debts and collateral for bad debts at the first auction according to the principle that the starting price is not lower than the price of the bad debt, security assets of bad debts according to valuation results.

In case the auction of bad debts or collateral assets of bad debts fails: For auctions of bad debts purchased at market value, VAMC decides the starting price of the bad debts. In case VAMC decides to reduce the starting price, each reduction must not exceed 10% of the starting price of the previous unsuccessful auction.

For auctions, bad debts are purchased at book value with special bonds, in case the auction continues, VAMC will renegotiate with the credit institution selling the debt on the starting price of the bad debt. Within 7 working days from the date of decision to continue the auction if no agreement can be reached with the credit institution to sell the debt, VAMC decides the starting price of the bad debt. In case VAMC decides to reduce the starting price, each reduction must not exceed 10% of the starting price of the previous unsuccessful auction.

For auctioning collateral assets of bad debts, in case the auction continues, VAMC will renegotiate with the securing party on the starting price of the collateral assets. Within 7 working days from the date of decision to continue the auction if no agreement can be reached with the securing party, VAMC decides the starting price of the secured asset. In case VAMC decides to reduce the starting price, each reduction must not exceed 10% of the starting price of the previous unsuccessful auction.

Auction Council

Regarding the Bad Debt Auction Council and collateral for bad debts, Decree No. 61/2017/ND-CP clearly states: VAMC decides to establish a Bad Debt Auction Council, collateral for bad debts for bad debts, collateral for bad debts of great value (bad debt or collateral for bad debt with high value is bad debt or collateral for bad debt of VAMC with starting price of VND 100 billion or more).

The bad debt and collateral auction council consists of three or more members, including: 1 VAMC leadership representative is the Chairman of the Council, 1 auctioneer, 1 credit institution representative selling debt (in case of auction of bad debts, security assets of bad debts are purchased at book value with special bonds), Representatives of relevant units under VAMC and other members (if any).

The activities of the Bad Debt Auction Council and collateral assets of bad debt must comply with two principles. Firstly, the auction conducted by the Bad Debt and Collateral Auction Council must have at least two-thirds of the Council members in attendance.

Second, the Bad Debt Auction Council works on the principle of concentration, collective discussion and majority decision through voting or secret ballot. In case the voting results or number of votes are equal, the Chairman of the Council has the final decision.

Decree No. 61/2017/ND-CP of Vietnam’s Government takes effect from July 01, 2017.

Source: Thoi bao ngan hang

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