Cases required appraisal of the starting price for non-performing loans and collateral assets of non-performing loans in Vietnam

Cases required appraisal of the starting price for non-performing loans and collateral assets of non-performing loans in Vietnam​(Image from Internet)

1. Cases required appraisal of the starting price for non-performing loans and collateral assets of non-performing loans in Vietnam

Cases required appraisal of the starting price for non-performing loans and collateral assets of non-performing loans in Vietnam according to Article 4 of Decree 61/2017/ND-CP are as follows:

- Non-performing loan purchased by the Asset Management Company at book value using special bonds where, upon determining the initial price for auction, the Asset Management Company fails to reach an agreement with the creditor institution selling the debt concerning the initial price.

- Non-performing loan purchased by the Asset Management Company at market value.

- Collateral for non-performing loan where, upon determining the initial price for auction, the Asset Management Company fails to reach an agreement with the guarantor concerning the initial price.

2. Regulations on using price appraisal results to determine the initial price of non-performing loan, collateral for non-performing loan in Vietnam

The use of price appraisal results to determine the initial price of non-performing loan, collateral for non-performing loan according to Article 7 of Decree 61/2017/ND-CP is as follows:

- When appraisal of the initial price of non-performing loan, collateral for non-performing loan is required according to the stipulations of Article 4 of Decree 61/2017/ND-CP, the Asset Management Company decides the initial price for the first auction sale ensuring that the initial price is not lower than the price derived from the appraisal results.

- In case the auction sale of non-performing loan and collateral for non-performing loan stipulated in Clause 1, Article 7 of Decree 61/2017/ND-CP is unsuccessful:

+ For the auction sale of non-performing loan purchased by the Asset Management Company at market value, the Asset Management Company decides the initial price of the non-performing loan. If a price reduction is decided, each reduction must not exceed 10% of the initial price of the previous unsuccessful auction;

+ For the auction sale of non-performing loan purchased by the Asset Management Company at book value using special bonds, if a repeated auction is pursued, the Asset Management Company renegotiates with the creditor institution selling the debt about the initial price of the non-performing loan. Within 07 working days from the decision to continue the auction sale, if no agreement is reached with the creditor institution, the Asset Management Company decides the initial price of the non-performing loan. If a price reduction is decided, each reduction must not exceed 10% of the initial price of the previous unsuccessful auction;

+ For the auction sale of collateral for non-performing loan, if a repeated auction is pursued, the Asset Management Company renegotiates with the guarantor regarding the initial price of the collateral. Within 07 working days from the decision to continue the auction sale, if no agreement is reached with the guarantor, the Asset Management Company decides the initial price of the collateral. If a price reduction is decided, each reduction must not exceed 10% of the initial price of the previous unsuccessful auction.

3. Rights and obligations of the non-performing loan and Collateral Auction Council in Vietnam 

The rights and obligations of the non-performing loan and Collateral Auction Council in Vietnam according to Article 11 of Decree 61/2017/ND-CP are as follows:

- The non-performing loan and Collateral Auction Council has the following rights:

+ To disqualify participants from the auction and draw up records for individuals or organizations participating in the auction that disrupt proceedings, conspire, collaborate to suppress prices or engage in other actions affecting the object's fairness and truthfulness;

+ To stop the auction and report to the authority establishing the Council for measures when violations in the auction process or conduct among organizers seeking to suppress prices are detected;

+ To select the auction method prescribed in Clause 1, Article 40 of the 2016 Property Auction Law to auction the assets;

+ Other rights as stipulated by law.

- The non-performing loan and Collateral Auction Council has the following obligations:

+ Obligations as stipulated under Point d, Clause 2, Article 24 of the 2016 Property Auction Law;

+ To organize and conduct the auction following the Council's operational regulations, auction rules, and relevant law provisions;

+ To bear responsibility for the auction results before the law and the authority establishing the Council;

+ To resolve complaints, denunciations during the auction process; receive and handle within jurisdiction or recommend the authority establishing the Council handle post-auction complaints; to compensate for damages according to legal provisions;

+ To report the auction results and transfer the auction records to the authority establishing the Council after auction conclusion;

+ Other obligations as stipulated by law.

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE