Summary
Bankruptcy in Vietnam applies to enterprises (including foreign invested enterprises), co operatives and co operative unions (hereafter collectively referred to as enterprises). Unlike certain countries, this does not apply to individuals.
Bankruptcy Law
Bankruptcy procedures are governed by the Law on Bankruptcy No. 51/2014/QH13 which came into effect on 1 January 2015:
Law No. 47/2010/QH12 on credit institutions has been amended pursuant to Law No. 17/2017/QH14 (“Amended Law”) passed by the National Assembly. The Amended Law came into effect on 15 January 2018.
The Amended Law provides grounds for special control by the State Bank of Vietnam (“SBV”) against underperforming credit institutions which:
have failed to maintain liquidity requirements;
have accumulated losses exceeding 50% of the charter capital and reserve funds as recorded in the latest audited financial statements;
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:
The Law on Bankruptcy 2014 (“New Law”) was officially approved at the 7th session of the XIII National Assembly.
The New Law expands its scope by clearly providing provisions on orders, application procedures and handling and opening of bankruptcy procedures; determination of property obligations and measures to preserve property in bankruptcy procedures; conditions and procedures for restoration of business operation, procedures for property liquidation and bankruptcy declaration and execution of judges’ decisions on bankruptcy.
On 18 March 2014, the State Bank of Vietnam (SBV) issued Circular No. 09/2014/TT-NHNN (Circular 09) to amend and supplement a number of articles in Circular No. 02/2013/TT-NHNN regulating the classification of debt, the establishment and levels of risk reserves, and the use of reserves for dealing with risks during the operation of credit institutions and foreign bank branches.