Vietnam: Principles of handling debts when selling a wholly state-owned enterprise

Principles of handling debts when selling a wholly state-owned enterprise (Illustration)

Specifically, Decree 128/2014/ND-CP stipulates that enterprises to be sold or with parts to be sold are responsible for reconciling, confirming, and recovering all debts due for collection before the sale; and mobilizing all resources to pay off debts due for payment or negotiating with creditors to handle debts before the sale. Therefore, for remaining debts receivable and debts payable, the handling will depend on whether the purchase agreement includes debt succession or not, based on the following principles:

• In cases where the buyer commits to inheriting the debts and the creditors agree to transfer the debts to the buyer, the buyer will be responsible for paying off the debts payable and recovering the debts receivable as committed; the commitment to inherit the debts receivable and payable must be recorded in the enterprise sale contract and notified in writing to the creditors, debtors to the enterprise, and other related parties;
• In cases where the buyer does not commit to inheriting the debts or the creditors do not agree to transfer the debts to the buyer, the enterprise to be sold has the responsibility to handle these debts in accordance with current state regulations on handling outstanding debts. If these debts have not been fully handled according to state regulations on handling outstanding debts, they will be handled according to the regulations on handling debts as per the procedures for converting 100% state-owned enterprises into joint stock companies before determining the enterprise value.

Additionally, for advanced payments to suppliers of goods and services such as: rent, land lease, purchase money, labor costs, they must be reconciled with the contracts and the quantity of goods and services supplied to be accounted into the enterprise value.

For more details, see Decree 128/2014/ND-CP effective from March 1, 2015.

Ty Na

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