Law on Bankruptcy 2014 and New Beneficial Points for Enterprises (Part 2)

* Allows negotiation between the creditor and the enterprise:

Within 3 working days from the date the People's Court receives a valid request to open bankruptcy proceedings, the insolvent enterprise or cooperative and the requesting creditor have the right to propose in writing to the People's Court to negotiate the withdrawal of the request. The People's Court sets the negotiation time but not more than 20 days from the date of receiving the valid request to open bankruptcy proceedings.

If the parties reach an agreement on withdrawing the request to open bankruptcy proceedings, the People's Court will return the request. If the negotiation fails or the negotiation period expires without negotiation, the People's Court will notify the applicant to pay the bankruptcy fee, advance bankruptcy costs, and proceed with the request to open bankruptcy proceedings. The negotiation between the parties must comply with bankruptcy laws. Previously, this regulation did not exist (Article 37).

* Notification of acceptance of the request to open bankruptcy proceedings:

Within 3 working days from the date of accepting the request, the People's Court must notify in writing the person who filed the request to open bankruptcy proceedings, the insolvent enterprise or cooperative, related agencies, organizations resolving the matter provided by the parties, and the People's Procuracy of the same level about the acceptance of the request to open bankruptcy proceedings.

If the person requesting to open bankruptcy proceedings is the legal representative of the insolvent enterprise or cooperative, the People's Court must notify the creditors provided by the enterprise or cooperative.

Previously: There was no such regulation. This is a new addition concerning the notice of acceptance of the request to open bankruptcy proceedings (Article 40).

* Notification of the decision not to open bankruptcy proceedings:

The decision not to open bankruptcy proceedings of the People's Court must be sent to the applicant, the enterprise or cooperative subject to the request to open bankruptcy proceedings, and the People's Procuracy of the same level.

The deadline for sending and notifying the decision to open or not to open bankruptcy proceedings is 3 working days from the date the People's Court issues the decision. Previously, only the notification of the decision to open bankruptcy proceedings was regulated, and not the decision not to open bankruptcy proceedings (Article 43).

* New regulations on determining interest on debts:

From the date of the decision to open bankruptcy proceedings, debts continue to accrue interest according to the agreement but temporarily halt interest payments. If the judge issues a decision to suspend bankruptcy procedures according to Article 86 of this Law, or suspend rehabilitation procedures after the enterprise or cooperative has completed a business rehabilitation plan, the temporary suspension of interest payments ends, and the parties continue to pay interest as agreed.

For new debts arising after the opening of bankruptcy proceedings until the declaration of bankruptcy, interest on such debts is determined according to the agreement but not against the law.

From the date of the decision to declare the enterprise or cooperative bankrupt, the debts do not continue to accrue interest. Previously, this issue was not specifically regulated, resulting in inconsistency in determining interest on debts, hence not ensuring the rights and obligations of the parties during the bankruptcy procedure (Article 52).

* Transactions deemed invalid:

Transactions of an insolvent enterprise or cooperative conducted within 6 months before the date the People's Court decides to open bankruptcy proceedings are deemed invalid if they fall into one of the following cases: Transactions related to the transfer of assets not at market prices. Converting unsecured debts into secured or partially secured debts by the assets of the enterprise or cooperative. Payments or offsets favoring a creditor for an undue debt or with an amount larger than the due debt. Giving away assets. Transactions beyond the business activities of the enterprise or cooperative. Other transactions aiming to disperse the assets of the enterprise or cooperative.

Transactions of an insolvent enterprise or cooperative executed with related parties mentioned below within 18 months before the date the People's Court decides to open bankruptcy proceedings are deemed invalid: Parent company, manager of the parent company, and individual with authority to appoint managers of the subsidiary. Subsidiary to the parent company; enterprise established by the cooperative. Individual or group capable of influencing the decisions of the enterprise or cooperative's management. Managers of the enterprise or cooperative. Spouse, biological parents, adoptive parents, biological children, adopted children, siblings of the manager or of the member, shareholder holding dominant capital or shares. Authorized representative of the individuals mentioned above. Group agreeing to cooperate in acquiring capital contributions, shares, or benefits in the company or to influence the company's decision-making. Enterprises where the mentioned individuals hold sufficient ownership to influence the decision-making body of that enterprise (Article 59).

(To be continued)

Source: Binh Phuoc Online

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