08 solutions to resume the business operation for insolvent business in Vietnam

08 solutions to resume the business operation for insolvent business in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. What is an insolvent business?

According to Clause 1, Article 4 of the Law on Bankruptcy 2014, an insolvent enterprise or insolvent cooperative (hereinafter referred to as insolvent entity) is an enterprise or a cooperative having failed to meet the debt liability for 03 months from the deadline for repayment.

2. The solutions to resume the business operation in Vietnam

Specifically, in Clause 2, Article 88 of the Law on Bankruptcy 2014, the solutions to resume the business operation include:

(1) Capital mobilization;

(2) Debt relief, debt moratorium;

(3) Changing products and goods;

(4) Technological innovation;

(5) Reorganization of governing board, merging or separating the production division;

(6) Selling share to the creditors and others;

(7) Selling or lending the assets;

(8) Other solutions under the regulations of the law.

3. Deadline for implementation of plans to resume business operations in Vietnam

The deadline for implementation of a plan to resume the business operation of an insolvent entity is prescribed in the Resolution of the creditors’ meeting agreeing the plan to resume the business operation.

If the creditors’ meeting cannot specify the deadline implementation of a plan to resume the business operation of an insolvent entity, such plan shall be implemented within 03 years from the day on which the creditors’ meeting agrees such plan.

(Article 89 of the Law on Bankruptcy 2014)

4. Regulations on announcement of insolvency of enterprises or cooperatives in Vietnam

According to Article 6 of the Law on Bankruptcy 2014, announcement of insolvency of enterprises or cooperatives is as follows:

- Any individual, agency or organization realizing that any enterprise or a cooperative is insolvent is liable to send a written notification to those mentioned in Article 5 of the Law on Bankruptcy 2014.

+ Any creditor of unsecured debts or partly-secured debts is entitled to send a written request for initiation of bankruptcy process after 03 months from the payment due date for the debts which the enterprise or cooperative does not pay..

+ Any employee, internal Trade Union (or the superior Trade Union if the internal Trade Union is not established) is entitled to send a written request for initiation of bankruptcy process after 03 months from the day on which the entity have to pay salaries and other debts to the employees.

+ The legal representative of each enterprise or cooperative is liable to send a written request for initiation of bankruptcy process when the entity is insolvent.

+ The owner of any private enterprise, the President of the Board of Directors of any joint-stock company, President of the Member assembly of any multi-member limited liability company, the owner of any single limited liability company or any general partner of any partnership is liability to submit a written request for initiation of bankruptcy process when the entity is insolvent.

+ Any shareholder or any group of shareholders owning at least 20% of ordinary shares for at least 06 consecutive months is entitled to file a written request for initiation of bankruptcy process when the joint-stock company is insolvent.

Any shareholder or any group of shareholders owning less than 20% of ordinary shares for at least 06 consecutive months is entitled to file a written request for initiation of bankruptcy process when the joint-stock company is insolvent if it is mentioned in the company’s charter.

+ Any member of any cooperative or any legal representative of any cooperative which is a member of the cooperative union is entitled to file a written request for initiation of bankruptcy process when the entity is insolvent.

- The notifying entities must ensure the precision of the notification. In case any entity intentionally notifies false information resulting in causing damage to the enterprise or cooperative, the entity must pay the compensation and have the liability for the damage.

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