No: …../2014/QH13
Draft 3
25/10/2013 / SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
Ha Noi, day XX month YY year 2014
BANKRUPTCY LAW
Pursuant to the 1992 Constitution of the Socialist Republic of Vietnam, which was amended and supplemented under Resolution No. 51/2001/QH10 of December 25, 2001 of the 10th National Assembly, the 10th session;
This Law provides for bankruptcy of enterprises, cooperatives.
Chapter I
GENERAL PROVISIONS
Article 1.Regulation scope
This Law prescribes the conditions and the filing of petition for the opening of bankruptcy proceedings; the determination of property obligations and measures to preserve property in bankruptcy proceedings; the conditions and procedures for restoration of business operation, the procedures for bankruptcy declaration and property liquidation, the rights, obligations and responsibilities of the petitioners for opening of bankruptcy proceedings, of the enterprises and cooperatives which are under requestof opening bankruptcy proceedingsand of the participants in the settlement of requests for opening bankruptcy proceedings.
Article 2.Subjects of application
This Law applies to enterprises, cooperatives which are established and operate in compliance with the law, specifically:
1. Enterprises in compliance with the provisions hereof, including: limited liability companies, joint-stock companies, partnerships and private enterprises which are incorporated in compliance with the Law on Enterprises, the Law on Insurance Business, the Law on Credit Institutions, the Law on Securities and other law provisions;
2. Cooperatives in compliance with the provisions hereof, including: cooperatives, unions of cooperatives which are incorporated in compliance with the Law on Cooperatives.
Article 3.Enterprises, cooperatives which fall into the state of bankruptcy
Enterprises, cooperativesfall into the state of bankruptcy when they do not repay their due unscured or partly secured debtsat creditors’ requestsshall be regarded as falling into the state of bankruptcy.
Article 4. Rights, obligations to file a petition for the opening of bankruptcy proceedings
1. Two options:
- Option 1: Creditorsshall have the rights to file a petition for the opening of bankruptcy proceedings against enterprises, cooperativeswhen such enterprises, cooperativeshave not fulfilled their repayment obligations for their due debts within three months since the date of creditors’ requests.
- Option 2: Creditors shall have the rights to file a petition for the opening of bankruptcy proceedings against enterprises, cooperatives when such enterprises, cooperatives have not fulfilled their repayment obligations for their due debts of VND 200 million or more within three months since the date of creditors’ requests.
2. The owners of private enterprises, owners of one-member limited liability companies, partnership members shall be obligated to file a petition for the opening of bankruptcy proceedingswhen the enterprises fall into the state of bankruptcy.
Legal representativesof joint-stock companies, limited liability companieswith two or more members shall be obligatedto file a petition for the opening of bankruptcy proceedingsafter the General Shareholders’ meeting, Members’ Counciladopt the decision on filing a petition for the opening of bankruptcy proceedings. The adoption of the decision on filing a petition for the opening of bankruptcy proceedingsshall be in compliance withthe Company charter. Where it is not provided for in the Company charter, the adoption of the decision on filinga petition for the opening of bankruptcy proceedingsshall be in compliance witha decision of the Members’ Councilwith regard to limited liability companieswith two or more members, General Shareholders’ meetingwith regard to joint-stock companies; where a joint-stock companyhas convened General Shareholders’ meetingsbut failed to organize one, the Company’s Board of Directorsshall adopt the decision on filing a petition for the opening of bankruptcy proceedings.
3. Shareholdersor groups of shareholdersof joint-stock companies, in accordance with the Company charter, shall have the rightto file a petition for the opening of bankruptcy proceedingsupon recognizing that the joint-stock companieshave fallen into the state of bankruptcy. Where it is not provided for in the Company charter, the filing of a petition for the opening of bankruptcy proceedingsshall be in compliance with a resolution of the General Shareholders’ meetings. Where it is not provided for in the Company charterand a General Shareholders’ meeting cannot be convened, theshareholdersor groups of shareholdersowning 20percentof common shares or more for at least six consecutive months shall have the right to file a petition for the opening of bankruptcy proceedings.
4. The legal representativesof cooperatives shall be obligated to file a petition for the opening of bankruptcy proceedingsupon recognizing that the cooperatives have fallen into the state of bankruptcy.
5. Laborersor representatives of laborers, trade union representatives shall have the rightto file a petition for the opening of bankruptcy proceedingsagainst enterprises, cooperativeswhen the enterprises, cooperativeshave failed to make salary payment and other due obligations within three consecutive months to laborers.
6. Credit institutionsshall be obligated to file a petition for the opening of bankruptcy proceedingsafter the State Bank of Vietnam issued a written note on the termination of special control or a written note on the termination of applying or not applying measures to restore liquidity but the credit institution still fall into the state of bankruptcy.
Article 5.Notification on enterprises, cooperatives falling into the state of bankruptcy
1. While performing their functions and tasks, if realizing that enterprises or cooperatives fall into the state of bankruptcy, the Courts, Procuracies, Execution Agencies, inspectorates;State management agencies in finance, banking, securities, insurance, auditing, and other agencies and organizations shall be responsible to notify in writing the persons with rights and obligations to file petitions for opening of bankruptcy proceedings so that they consider the filing of petitions for opening of bankruptcy proceedings.
2. The notifying agencies must bear responsibility for the truthfulness of such notification.
Article 6. Effect of the Bankruptcy Law
1. The Bankruptcy Law and other law provisions shall apply when settling the bankruptcy of enterprises, cooperatives operating in the territory of the Socialist Republic of Vietnam, no matters whether the assets of enterprises, cooperatives are inside or outside Vietnam’s territory, except otherwise provided for by international agreements which the Socialist Republic of Vietnam has signed or acceded to.
2. Where there appears the difference between the provisions of the Bankruptcy Law and the provisions of other laws on the same matters, the provisions of the Bankruptcy Law shall apply.
Article 7.Interpretation of terms and phrases
In this Law, the terms and phrases below shall be construed as follows:
- Creditors include secured creditors, partially secured creditors, and unsecured creditors.
- Secured creditors mean creditors who have debts secured with properties of enterprises, cooperatives or the third persons.
- Partially secured creditorsmean creditors who have debts secured with properties of enterprises, cooperatives or the third persons and the value of the security property is lower than such debts.
- Unsecured creditors mean creditors whose debts are not secured with properties of enterprises, cooperatives or the third persons.
- Legal representatives of enterprises, cooperatives include the representatives at law and the representatives under authorization.
- Trustee is the person managing the property, monitoring and administering thebusiness activities in case oforganization of enterprises or cooperatives which are under request for the opening of bankruptcy proceedings and performing other rights and obligations in compliance with this Law.
- Fee for the filing of petition for the opening of bankruptcy proceedings (bankruptcy fee) means the amount of money payable by the petitioner for the opening of bankruptcy proceedings when the Court processes the petition for the opening of bankruptcy proceedings.
- Bankruptcy charge is the amount to pay forthe Trustee's remuneration and other expensesin dealing with the request for the opening of bankruptcy proceedings.
- Bankruptcy charge advance is the estimated amount to pay for the Trustee's remunerationand other expenses as decided by the Court.
- Participants in the bankruptcy proceedings include the petitioner for the opening of bankruptcy proceedings, the enterprise or cooperative under request for the opening of bankruptcy proceedings, other creditors or debtors, and other persons in compliance with this Law.
1. Individuals, organisations and authorities managing and storing evidences, within their duties and powers, have responsibility to fully provide the participants in the bankruptcy proceedings, the Trustee, the Court, the Procuracy, and the Executor with documents and evidences of the bankruptcy case within fifteen days since the date of receiving the request.
2. Where it is not possible to provide the documents and the evidences, they must notify in writing the requesters and clearly explain the reasons of not providing the evidences. Where they fail to provide documents and evidences in a sufficient and timely manner at the requst of the Court, the Procuracy, they, depending on the degree of violations, shall be treated in compliance with the law.
Article 9. Equality in terms of rights and obligations in bankruptcy proceedings
All people are equal before the law and the Court, without any discrimination of ethnicity, gender, social background, belief, religion, educational background, and occupation. The Court is responsible to facilitate the exercise of their rights and obligations in compliance with the law.
Article 10.The courts' jurisdiction
The people's courts of the provinces and centrally-run cities (hereinafter referred collectively to as the provincial-level people's courts) have the competence to carry out bankruptcy proceedings for enterprises, cooperatives, which have registered for their enterprises, cooperatives in such provinces/cities.
Article 11.Duties and authorities of judges carrying out the bankruptcy proceedings
1. Bankruptcy case proceeded by a Court shall be handled by a judge, or a Judges’ Team comprising of three judges where necessary.
Where a Judges’ Team carries out the bankruptcy proceedings, a Judge shall be assigned the role of team leader. The working regulations of the Judges’ Team shall be determined by the Chief Judge of the Supreme Court.
2. The Judge has the following duties and authority:
a) Gather documents and evidences to create the file for handling the request for opening bankruptcy proceedings in case of necessity;
b) Review, approve, decide the appointment of trustee;
c) Decide on recognition of agreementsof the participants in the bankruptcy proceedings as requested by them;
d) Decide on whether to open bankruptcy proceedings or not;
đ) Supervise and examine activities of the Trustee;
e) Request the Trusteeto report on their activities and request them to implement their works in accordance with law and regulation ;
g) Issue decision on the application of provisional emergency measures to preserve the properties of enterprises, cooperatives as stipulated by law;
h)Take measures to prohibit from leaving their residence, to request relevant authorities to escort the representatives of the enterprises or cooperatives falling into the state of bankruptcy in compliance with the law;
i) Issue decision on postponement of the handling of request for bankruptcy declaration;
k) Declare enterprise/cooperative bankruptcy;
l) Make other decisions in the undertaking bankruptcy proceedings in accordance with the law.
m) Issue administrative sanctions in accordance with law and regulation;
n) Proposerelevant authorities to handle criminal acts found in the process in accordance with law and regulations.
3. In processing the petition for the opening of the bankruptcy proceedings, the Judge shall consult previous bankruptcy declaration decisions of similar cases. The determination of previous bankruptcy declaration decisions shall be decided by the Judges’ Council of the Supreme People’s Court.
4.In the course of carrying out the bankruptcy proceedings, if detecting criminal signs, the judges shall supply documents (the copies) to the people's procuracies of the same level for considering the institution of lawsuits according to criminal procedures while proceeding with the bankruptcy proceedings according to the provisions of this Law.
5. The judges are accountable to their chief judges and the law for the performance of their tasks and the exercise of their powers.
6. The Supreme People's Court shall take the lead, in coordination with the Supreme People's Procuracy and Ministry of Justicetoguide the implementation of this Article.
Article 12. Trustee’s Required qualifications
- A lawyer granted with a Trustee’ Certificate may be appointed as a trustee by the Court.
- The Government shall provide for the qualifications, conditions, and procedures to grant Trustee’ Certificates and the State management of Trustees.
Article 13. Authority and duties of Trustee
1. The trustee shall have the following authority and duties:
a) Administrate the properties of the enterprises and cooperatives which are requested for opening bankruptcy proceedingsas stipulated by this law.
b) Receive remuneration for trustee services as provided by law.
c) Comply with Professional Ethic Code.
d) Handle the request for opening bankruptcy proceedingsin an objective and timely manner and in accordance with the law.
dd) Have duty of confidentiality of the bankruptcy case that itprocesses, except to report to the relevant authorities as stipulated by law.
e) Organising meetings of creditors;
g) Monitoring and administering the business operations in the organization, restructuring of enterprises, cooperatives.
h) In case of necessity, hiring and remunerating assistants, accountants, attorneys and other professionals that may be necessary to assist the trustee in performing its function;
i) Appointing the legal representatives of the enterprises, cooperatives where they do not have their legal representatives;
k) Proposingthe judge to apply provisional emergency measures to preserve the properties of the debtor in case of necessity;
l) Proposing the judge to apply administrative sanctions or transfer the case to the police to handle in accordance with the law in case there are criminal sights;
m)Proposing the Judge to request the individuals, organisations, authorities to provide documents and evidences;
n) Processing required activities to administer the property and business operations of the enterprises, cooperatives when opening the bankruptcy proceedingsin compliance with the law, specifically as follows:
n1) Preparing lists of creditors, debtors, all existing property and business records of the enterprises, cooperativeswhen opening the bankruptcy proceedings;
n2) Obtaining information concerning the debtors, assets, liabilities and past transactionsof the enterprises, cooperatives;
n3) Examining contracts that are not fully performed with a view to deciding whether to continue performance or reject;
n4) Dealing with laborers’ rights and entitlements in enterprises, cooperativesfalling into the state of bankruptcy;
n5) Taking part in liquidation, auction of the property of the insolvent enterprises, cooperatives;
n6) Hiring individuals or organisations to protect the debtor’s assets;
n7) Handing-over the assets and relate documents to the executor;
n8) Collecting money and assets of the debtor.
2. The trustee has to frequently and periodically report on the performance of its powers and duties as requested by the Judge and resonsible before the judge and the law for the performance of its powers and duties.
3. The Supreme Court takes the lead and coordinate with the Supreme People’s Procuracy and the Ministry of Justice to provide detailed guidelines for this Article.
Article 14. Duties, authority of the Executor implementing the court’s decision on declaration of bancruptcy
1) The executor has the following duties and authority:
a) To implement the execution decision of the decisions on declaration of bankruptcy;
b) To receive the assets and related documents and materials to be hand-over from the trustee and related parties
c) To sell, auction the assets of the bankrupt enterprises, cooperatives according to the court’s decision and to deposit the proceeds into a new account opened with a bank.
d) To divide assets of the bankrupt enterprises, cooperatives in compliance with this Law;
dd)To execute other decisions of the Judge during the bankruptcy proceedings.
2. The Executor shall perform the duties and exercise the authority prescribed in compliance with the law on execution of civil judgments, other relevant law provisions and take responsibility before law for the performance of their tasks and the exercise of their powers.
Article 15. Right, obligations of participants in the bankruptcy proceedings
1. Participants in the bankruptcy proceedings shall have obligations to strictly comply with the requests by the Judge, Prosecutor, Executor, and Trustee in compliance with the law on bankruptcy.
2. When participating in the bankruptcy proceedings, participants in the bankruptcy proceedings shall have the following rights and obligations:
a.Providing documents, evidence, proof to protect their lawful rights and interests;
b.Requesting individuals, agencies, and organizations who are keeping and managing the documents, evidence to provide such documents, evidence in order to submit to the Court;
c.Requesting the Trustee, the Court to verify and collect documents, evidence which they are not able to do so or requesting the Court, the Trustee to summon the witnesses, to request for assessment, evaluation, or price appraisal;
d.Knowing and recording, copying the documents, evidence submitted by other participants in the bankruptcy proceedings or collected by the Court;
e.Requesting the Court to decide on the application, changing, and removing of interim relief;
f.Reaching an agreement on the resolving of the petition for bankruptcy declaration; participating in the mediation conducted by the Court;
g.Receiving eligible notices to exercise their rights and obligations;
h.Self-protecting or asking for others to protect their lawful rights and interests;
i.Participating in the Creditors' meetings;
j.Requesting to replace the Trustee according to this Law;
k.Providing opinions and voting at Creditors' meetings;
l.Requesting the Trustee to include the creditors and debtors into the List of creditors and debtors participating the Creditors' meetings;
m.Proposing to the Trustee issues related to the management of bankruptcy property, reclaiming of property;
n.Being entitled to provided with the Court decision;
o.Showing up as per the invitations of the Trustee and subpoenas of the Court and abiding by the Court decisions during the processing of the petition for the opening of bankruptcy proceedings;