PROCEDURES FOR PARTICIPATION IN THE SETTLEMENT OF THE PETITION TO INITIATE THE BANKRUPTCY PROCESS FOR ENTERPRISES IN VIETNAM
In the previous article, we have introduced and guided the process of drafting and submitting a Petition to initiate the bankruptcy process for enterprises in Vietnam. Please refer to the below link:
In this article, we continue to share our experiences on procedures for participation in the settlement of the Petition to initiate the bankruptcy process after the petitioner makes the payment of the bankruptcy charges and bankruptcy fee advance and the Court accepts the Petition to initiate the bankruptcy process.
1. The meeting before initiating the bankruptcy process
Within 30 days from the acceptance of accepts the Petition to initiate the bankruptcy process, the Judge will issue the Decision on the initiation of the bankruptcy process or the refusal to initiate the bankruptcy process.
Within that time limit, if necessary, the Judge may convene a meeting which is attended by the petitioner, the chairman or legal representative of the enterprise forced to file for bankruptcy, and other relevant individuals and organizations to examine the proof of insolvency of the enterprise.
2. The Decision on the initiation of bankruptcy process or Decision on the refusal to initiate the bankruptcy process
In case there is no ground proving the insolvency of the enterprise, the Judge will issue the Decision on the refusal to initiate the bankruptcy process. At that time, the petitioner will be reimbursed for the bankruptcy fee advance.
In case the enterprise is insolvent, the Judge will issue the Decision on the initiation of the bankruptcy process.
The Decision on the initiation of bankruptcy process or Decision on the refusal to initiate bankruptcy process will take effect from the date on which it is issued and be sent to the petitioner, the enterprise forced to file for bankruptcy within 03 working days from the day on which it is issued.
3. The request for reconsidering the Decision on the initiation of bankruptcy process or Decision on the refusal to initiate the bankruptcy process
Within 07 working days from the receipt of the Decision on the initiation of bankruptcy process or Decision on the refusal to initiate bankruptcy process, the involving parties may request the Court to reconsider the Decision.
At that time, the Court must send the dossier on the case to the Superior Court for settlement. The Superior Court will arrange a meeting and may summon other people to clarify unclear issues, if necessary. At the end of the meeting, the Superior Court may issue the following decisions: (i) To uphold the Decision on the initiation of bankruptcy process or the refusal to initiate bankruptcy process; (ii) To cancel the Decision on the refusal to initiate bankruptcy process and request the Court issuing the Decision to decide the initiation of the bankruptcy process; or (iii) To cancel the Decision on the initiation of the bankruptcy process.
The above decisions issued by the Superior Court are final and enforceable.
4. Activities and assets of the enterprise after the Decision on the initiation of the bankruptcy process is issued
After the Decision on the initiation of the bankruptcy process is issued, the enterprise keeps running the business operation but under the supervision of the Judge and Asset management officers, and/or Asset management enterprises.
Besides, the insolvent entity is prohibited from some activities as follows: (i) Dispersing and hiding assets; (ii) Paying the unsecured debts, except the unsecured debts incurred after the initiation of the bankruptcy process and the employees’ salaries that are noticed to the Asset management officers and/or Asset management enterprises; (iii) Renouncing the right over debt claim; (iv) Making an unsecured debt into a secured or partly-secured debt with collateral which are assets of the enterprise. In case the enterprise enters into any transaction prohibited, such transaction is invalid and handled under regulations of the law.
Simultaneously, within 30 days from the receipt of the Decision on initiation of the bankruptcy process, the enterprise must make an inventory of its assets and send the inventory of valuated assets to the Court. If necessary, the enterprise must send a written request for an extension to the Judge but not more than 2 times, each extension is at most 30 days.
5. The compilation of lists of creditors
Within 30 days from the day on which the Court issue the Decision on initiation of the bankruptcy process, the creditors must send a debt claim and the attached documents and evidence to the Asset management officer and/or Asset management enterprise.
Within 15 days from the deadline for sending the debt claim, the Asset management officer and Asset management enterprise must compile a list of creditors.
6. The Creditors’ meeting
Within 20 days from the end of the inventory of assets or from the day on which the list of creditors is compiled (depending on whether the inventory of assets ends before or after the compilation of lists of creditors), the Judge must convene a Creditors’ meeting. Accordingly, the Judge must send notices to the people having the right and obligation to participate in the Creditors’ meeting at least 15 days before the opening date of the meeting.
The Creditors’ meeting will be conducted on time and at the location stated in the Summon and must comply with the following procedures:
(i) The Creditors’ meeting open: The Asset management officer and Asset management enterprise will check the absence and presence of the participants in the Creditors’ meeting and identification cards of the participants.
(ii) Presentation: The parties will present their opinions on solutions, purposes in turn, and grounds of the request for the initiation of the bankruptcy process.
(iii) Passing the Resolution of the Creditors’ meeting:
The Creditors will vote to pass a Resolution containing one of the following contents: (a) Proposal to suspend the handling of the request for initiation of the bankruptcy process; (b) Proposal to allow the enterprise to resume its business operation; or (c) Proposal to declare the enterprise bankrupt.
The Resolution of the Creditors’ meeting will be passed when more than half of the unsecured creditors attend and representatives of at least 65% of the unsecured debts approve.
In case the Resolution of the Creditors’ meeting is not passed, the Court will declare the enterprise bankrupt.
7. The request for reconsideration of the Resolutions of the Creditors’ meeting
Within 03 working days from the organization of the Creditors’ meeting, the Court will send the Resolution to the people having the right and obligation to attend the Creditors’ meeting.
In case of any disagreement on the Resolution of the Creditors’ meeting, within 05 working days from receiving it, the people having the right and obligation to attend the Creditors’ meeting are entitled to send a request to the Executive Judge of the Court to reconsider it. The Executive Judge may issue one of the following decisions: (i) To disapprove the request, or (ii) To reorganize the Creditors’ meeting.
8. Decisions issued by the Court
Depending on each Resolution of the Creditors’ meeting is passed, the Court will consider and issue Decisions accordingly, in particular as follows:
(i) Suspension of the implementation of the bankruptcy process:
If the enterprise is solvent, the Court will issue the Decision on the suspension of the implementation of the bankruptcy process and send it to the petitioner and the creditors within 03 working days from its issuance.
(ii) Application of the plan to resume the enterprise’s business operation:
Within 30 days from the day on which the Resolution proposing to allow the enterprise to resume the enterprise’s business operation is passed, the enterprise must send the plan to resume its business operation to the Judge, creditors, Asset management officer, and Asset management enterprise for consideration and such plan must be passed by the Creditors’ meeting.
In case the Creditors’ meeting issues the Resolution passing the plan to resume the enterprise’s business operation, the Judge will issue the Decision on recognition of the Resolution and send it to the enterprise and the creditors within 07 working days from its issuance.
At that time, the enterprise will run the business operation under the plan to resume its business operation and under the supervision of the Asset management officers and/or Asset management enterprises.
(iii) Declaration of the enterprise bankruptcy:
Within 15 days from the receipt of the Resolution proposing to declare the enterprise bankrupt passed by the Creditors’ meeting, the Court will consider and issue the Decision on the declaration of the enterprise bankruptcy.
The Decision takes effect from the date of its issuance and is notified to the petitioner, the enterprise, and the creditors within 10 working days from the date of its issuance.
In addition, in case the Creditors’ meeting proposes to apply the plan to resume the enterprise’s business operation, but the enterprise fails to make/fails to implement such plan within the prescribed time limit or the Creditors’ meeting does not pass such plan, the Court will also issue the Decision on the declaration of the enterprise bankruptcy.
Within 05 working days from the day on which the Decision on the declaration of the enterprise bankruptcy is issued by the Court, the civil execution authority will carry out the procedures for enforcing it.
Above is our legal share of procedures for participation in the settlement of the Petition to initiate the bankruptcy process for enterprises at Courts. We hope that this article can help you better understand and take notes about these procedures to protect your legitimate rights and interests when participating in the settlement of bankruptcy process cases.
Best regards.
TNTP & Associates International Law Firm