What is Bankruptcy Protection?

Chapter 11 Bankruptcy Protection is a concept within U.S. bankruptcy law that refers to a business that has lost its ability to pay its creditors and faces bankruptcy, initiating legal procedures with the Court to seek “bankruptcy protection”, aiming to help the business, based on the Court’s decision, postpone debt repayment while designing and implementing a restructuring and recovery plan for itself.

Chapter 11 bankruptcy protection is described as "bankrupt but not dead", "Chapter 11 bankruptcy protection is the secret weapon of the American economy",......

Chapter 11 bankruptcy protection is stipulated in Chapter 11 of the United States Bankruptcy Code. A business filing for bankruptcy protection under Chapter 11 means creating an opportunity for the business to recover its production and business activities to resolve financial problems. The business filing for bankruptcy protection continues to operate under the supervision of the Court. If the business recovery is successful, the business will escape the risk of bankruptcy, repay its debts to creditors, and continue its business activities.

In Vietnam, the Bankruptcy Law does not feature bankruptcy protection as in the United States, but a procedure somewhat similar to bankruptcy protection is the business recovery procedure stipulated in Chapter 7 of the Bankruptcy Law 2014. The provisions of the business recovery procedure allow a business that has lost its ability to pay to develop a plan and carry out recovery of production and business activities under the supervision of a Judge, creditors, Trustee, management enterprise, and asset liquidation enterprise. If the recovery is successful, the business escapes the risk of bankruptcy and can repay its debts, but if unsuccessful, the business will go bankrupt.

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