What is cost of bankruptcy? Procedure for paying the bankruptcy advance in Vietnam

What is cost of bankruptcy?

Pursuant to the Law on Bankruptcy 2014, cost of bankruptcy is an amount of money paid for bankruptcy settlement, including the payments for services provided by asset management officers and asset management enterprise, audit, publication and other expenditures according to the regulations of the law.

Bankruptcy advance is an amount of money decided by the People’s Court in order to make announcement and pay an advance to asset management officers and asset management enterprises.

The cost of bankruptcy is covered by the value of the assets of the insolvent entities.

The requesters must pay the bankruptcy advance except the requesters mentioned in Clause 2 of Article 5 and Point a of Clause 1 of Article 105 of the Law on Bankruptcy 2014.

The People’s Court shall appoint asset management officers and/or asset management enterprises to sell a number of assets of an insolvent entity in order to ensure the cost of bankruptcy. The valuation and sale of the assets shall comply with Articles 122, 123 and 124 of the Law on Bankruptcy 2014.

People’s Court shall decide the bracket of the bankruptcy advance for each specific case according to the regulation of the Law, and decide the return of the advance, except the cases in which the petitioners violated as mentioned in Clause 4 of Article 19 of the Law on Bankruptcy 2014.

What is cost of bankruptcy? Procedure for paying the bankruptcy fee and bankruptcy advance in Vietnam (Internet image)

Procedure for paying the bankruptcy fee and bankruptcy advance in Vietnam

Procedure for paying the bankruptcy fee and bankruptcy advance in Vietnam are carried out according to Article 38 of the Law on Bankruptcy 2014 as follows:

- Within 03 working days from the receipt of the satisfactory written request for initiation of bankruptcy process, People’s Court must estimate an amount of the bankruptcy advance and inform the requester in order for him/her to make the payment.

If there is a request for negotiation, the requester shall be notified of the bankruptcy fee and bankruptcy advance in accordance with Clause 3 Article 37 of the Law on Bankruptcy 2014.

- Within 15 days from the receipts of the request for paying the bankruptcy fee and bankruptcy advance, the requester must make the payment as follows:

+ Pay the civil execution authorities the bankruptcy fee;

+ Send the advance of bankruptcy fee to the bank account held by the People’s Court.

Eligibility and liability to submit written requests for initiation of bankruptcy process

Pursuant to Article 5 of the Law on Bankruptcy 2014, eligibility and liability to submit written requests for initiation of bankruptcy process are as follows:

- 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.

Mai Thanh Loi

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