THE PROCESS OF DRAFTING AND SUBMITTING A PETITION TO INITIATE THE BANKRUPTCY PROCESS FOR ENTERPRISES IN VIETNAM
When an enterprise falls into insolvency and is unable to continue to operate, it can be forced to initiate the bankruptcy process. Accordingly, the enterprise does not declare bankruptcy on its own but must request the Court to issue a decision to declare bankruptcy. In addition, other subjects also have the right to request the Court to initiate the bankruptcy process for the enterprise. At that time, the enterprise or these subjects need to draft and submit the Petition to initiate the bankruptcy process for enterprises (“Petition”) under the regulations of law. In this article, we share our experience in the process of drafting and submitting this Petition.
1. The subjects who submit the Petition
Under the regulations of law, the subjects who have the right or obligation to submit the Petition include the following:
(i) Creditors of unsecured debts or partly-secured debts:
They are entitled to submit the Petition after 03 months from the payment due date for the debts which the enterprise does not pay.
(ii) Employees and representatives of the Trade Union:
Employees and representatives of the Trade Union are entitled to submit the Petition after 03 months from the day on which the enterprise must perform the obligation to pay salaries and other debts to the employees.
(iii) Legal representatives of the enterprise; the Owner of the private enterprise, the President of the Board of Directors of the joint-stock company, the President of the Member Assembly of the multi-member limited liability company, the Owner of the single limited liability company, or the General partners of the partnership:
They are obliged to submit the Petition when the enterprise is insolvent, i.e. the enterprise has failed to meet the debt liability for 03 months from the deadline for payment
(iv) Shareholders or groups of shareholders owning at least 20% of ordinary shares for at least 06 consecutive months; and/or shareholders or groups of shareholders owning less than 20% of ordinary shares for at least 06 consecutive months mentioned in the company’s Charter:
They are entitled to submit the Petition when the enterprise is insolvent.
Accordingly, the petitioner should note the above regulations to determine his/her right or obligation to submit the Petition and perform the right or obligation under the conditions prescribed by the law.
2. Drafting the Petition
The Petition must contain the main contents specified by the law. Accordingly, the Petition must state the contents of date; the name of the People’s Court in charge of bankruptcy settlement; information of the petitioner; information of the enterprise requested to initiate the bankruptcy process. When advising on the selection of asset management officers and/or asset management enterprises, the Petition must contain the name and address of such asset management officers and/or asset management enterprises.
At the same time, depending on the subject submitting the Petition, the petitioner should note some specific contents when drafting the Petition as follows:
(i) Petitions submitted by the creditors must state the due debt and be attached with the proof of due debts;
(ii) Petitions submitted by the employees or the representatives of the Trade Union must state the total amount of outstanding salaries and other debts which are due and be attached with proof of such salaries and other due debts;
(iii) Petitions submitted by the subjects mentioned in Item 1 (iii) must state grounds for the request to initiate the bankruptcy process and be attached with the following documents:
– A financial statement of the insolvent enterprise of the recent 03 years. In case the insolvent enterprise has been established less than 03 years, the financial statement shall cover all the operation time;
– An explanation for the insolvency; a report on results of the recovering attempts of the enterprise, which is failed to remedy the insolvency;
– A detailed list of assets and their locations of the enterprise
– A list of creditors and debtors with their respective name, address, loans, and debts which are secured, partly-secured and/or unsecured and due or not due;
– Documents related to the establishment of the enterprise;
– The results of the valuation for the remaining assets (if any).
(iv) Petitions submitted by shareholders or groups of shareholders of the joint-stock company must state grounds for the request to initiate the bankruptcy process and be attached with the documents mentioned in Item 2 (iii).
Accordingly, the petitioner needs to determine his/her status as the subject of right or obligation to submit the Petition to draft it and attach it with documents and evidence specified by the law. This helps the petitioner avoid the case that the Petition is requested to amend, supplement, or is returned by the Court, which prolongs the settlement of the request to initiate the bankruptcy process.
3. The submission of the Petition
3.1. Methods of the Petition submission
The petitioner can submit the Petition and the attached documents and evidence to the competent Court by two following methods: (i) Direct submission at the Court, (ii) Sending to the Court by post.
Accordingly, the day of the Petition submission is counted from the day on which the People’s Court receives it or the day on the postmark.
3.2. Results of the Petition submission
After receiving the Petition, depending on each case, the Court may issue one of the following decisions: (i) To notify the bankruptcy charges and bankruptcy fee advance and accept to handle the Petition; (ii) To request the petitioner to amend or supplement the Petition; (iii) To transfer the Petition to the competent court; or (iv) To return the Petition to the petitioner.
If the Petition is valid, the Judge will notify the Petitioner of the payment of bankruptcy fees and bankruptcy advance. Within 15 days from the receipt of the notification, the petitioner must make the payment as follows: (a) Pay the civil execution authorities the bankruptcy charges; (b) Send the bankruptcy fee advance to the bank account held by the Court.
Accordingly, the Court will accept to handle the Petition when receiving the receipts of the payment of the bankruptcy charges and the bankruptcy fee advance. In case the bankruptcy charges and bankruptcy fee advance are exempt, the Petition will be accepted to handle from the day on which the Court receives the Petition.
Thus, the payment of bankruptcy charges and bankruptcy fee advance is a condition for the acceptance of the Petition. The Petitioner should note the time limit for paying bankruptcy charges and bankruptcy fee advance and accordingly make the payment so as not to fall into the case where the Petition is returned due to failure of such payment.
Above is our legal share on the process of drafting and submitting a Petition to initiate the bankruptcy process for enterprises at Courts. We hope that the article can help you better understand this process and draft and submit the Petition when requesting the Court to initiate the bankruptcy process for the enterprise effectively and under the regulations of law.
TNTP & Associates International Law Firm