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CAMBODIA

JURISDICTION: CAMBODIA

Jay Cohen [email protected] With thanks to international intern Cassandra Allen

The Bankruptcy System in Cambodia

The bankruptcy system in Cambodia is governed by the 2007 Insolvency Law, which applies to all businesses (including natural persons operating sole proprietorships).

Welcome to the fifth edition of Baker & McKenzie's quarterly Asia Pacific Financial Services & Regulatory Newsletter.

The High Court has sanctioned a scheme of arrangement between a Vietnamese company and certain of its creditors; the first time a Vietnamese company has taken advantage of this restructuring process in England.

Background

On 8 October 2013, the Supreme Court of Vietnam released the most recent draft of the new Law on Bankruptcy ("Draft Bankruptcy Law"). The Draft Bankruptcy Law is now open for comments and, once passed by the National Assembly, will replace the current Law on Bankruptcy 2004 ("Current Bankruptcy Law").

The Draft Bankruptcy Law appears generally to be a positive step in Vietnam's efforts to improve the efficiency of the bankruptcy process and efforts to enhance the credibility of the legal framework for restructuring.

Conduct of Bankruptcy Proceedings

On June 12, 2018, the Ministry of Justice, the Supreme People’s Procuracy, and the Supreme People’s Court of Vietnam issued Joint Circular No. 07/2018/TTLT-BTP-VKSNDTC-TANDTC, on coordination in the enforcement of court decisions on bankruptcy. Joint Circular 07 comes into force on August 1, 2018.

The Prime Minister of Vietnam recently issued Decision No. 242, approving Vietnam's Restructuring Plan of the insurance business market until 2020, oriented towards 2025 (Plan) following the final proposal of the Ministry of Finance (MOF)'s Insurance Supervisory Authority of Vietnam.1

Most people think that bankruptcy is bad and try to avoid it. However, bankruptcy is a powerful legal tool and if using it the right way, it can solve your problems, whether you are a creditor or a debtor. 

If you are a creditor, why should you file for bankruptcy?

The Law on Enterprise and Law on Investment that took effect in 2015 introduced refreshing changes to Vietnam’s investment and business landscape. Designed to stimulate and better facilitate foreign investments in the country, the two new laws have since given rise to several implementing regulations that expound on important subjects such as foreign ownership up to 100% in listed companies, private public partnerships, trade, and representative offices.

1.1. If you are a creditor

Creditors often file normal lawsuits to collect the debts instead of using bankruptcy proceedings, because:

On 26 June 2015, Vietnam loosened foreign ownership limits (FOL) in public companies by the adoption of Decree 60/2015 (Decree 60).