2018 17 September

Vietnam Legal Update: Bankruptcy Settlement Procedures

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The Ministry of Justice, the Supreme People’s Procuracy and the Supreme People’s Court issued Joint Circular No. 07/2018/TTLT-BTP-VKSNDTC-TANDTC dated 12 June 2018, on cooperation in enforcement of court’s decisions on bankruptcy settlements (“Joint Circular 07”), which came into effect on 1 August 2018. Joint Circular 07 sets forth new guidelines on cooperation in the procedures for enforcement of court’s decisions on bankruptcy settlements. Key new provisions include guidelines on enforcement of court’s decision on a bankruptcy settlement and asset valuation and sales consequent to a people’s court’s decision on a bankruptcy settlement, among other things. By clearly providing relevant deadlines, procedures, rights and obligations of relevant bodies, Joint Circular 07 improves coordination between the people’s court, the civil judgment enforcement agency and relevant organizations/individuals such that bankruptcies and insolvency processes can be more efficient.

PROCEDURES FOR ENFORCEMENT OF COURT’S DECISIONS ON BANKRUPTCY SETTLEMENTS

1. Enforcement deadlines

The Civil Judgment Enforcement Agency (“CJEA”) issues decisions on the temporary suspension or suspension of judgment enforcement. The CJEA must, within a deadline of five working days from the date of receipt of the court’s notice of acceptance of a petition to open bankruptcy proceedings, issue a decision on the temporary suspension of enforcement of a judgment against the insolvent enterprise’s assets. If the court decides not to initiate the bankruptcy process or decides to suspend the bankruptcy process after it has been initiated and the CJEA has issued a decision on temporary suspension or permanent suspension, the CJEA has five working days from receipt of such court’s decision to issue the revocation of a decision of temporary suspension or permanent suspension of judgment enforcement and issue a decision on resuming the judgment execution.

Guidelines on judgment enforcement where the bankrupt enterprise that is a judgment creditor (beneficiary of another legally effective judgment) are also articulated. If the judgment creditor enterprise is declared bankrupt then the CJEA will continue to enforce such legal effective judgments in accordance with law. The enforcement officer must give notice of the enforcement result to the asset management officer, asset management and bankrupt enterprise, and the judge in order to divide the collected assets.

The head of the CJEA must issue a decision on judgment enforcement and assignment of an enforcement officer within three working days of the date of receipt of the court’s decision on a bankruptcy settlement. The enforcement officer then has the authority to do the following:

(i)              To enforce the bankrupt enterprise’s civil obligations associated with its assets;

(ii)            To enforce the bankrupt enterprise to perform or not to perform certain tasks as decided in the bankruptcy declaration decision;

(iii)           To seize assets of the bankrupt enterprise;

(iv)           To transfer the assets to the purchasers who are permitted to buy such assets as prescribed in the Law on Civil Judgment Enforcement; and

(v)            To request the asset management officer or the asset management and bankrupt enterprise appointed by the judge, to liquidate the remaining assets of the bankrupt enterprise.

2.  Asset sales

When an enforcement officer conducts a coercive debt collection against a bankrupt enterprise that requires valuation or revaluation, or the sale of assets, the process for such valuation or revaluation, or the sale of assets shall be carried out as prescribed in the Law on Civil Judgment Enforcement. However, when an asset management officer or an asset management and bankrupt enterprise liquidates the remaining assets of a bankrupt enterprise, the process for such valuation or revaluation, or the sale of assets shall be carried out as prescribed in the Law on Bankruptcy. The enforcement officer shall decide, according to the Law of Bankruptcy, whether to revalue the assets in a case of liquidation of assets, with associated expenses from revaluation being paid from the value of assets of the bankrupt enterprise.

A judge may decide to sell the assets of the bankrupt enterprise after the initiation of the bankruptcy process, in order to secure sufficient funds to cover the bankruptcy costs. If the assets have not been sold until the declaration of bankruptcy by the judge, and the case is transferred to the CJEA for enforcement thereafter, the enforcement officer will organize the valuation and auction of the assets in accordance with Articles 122 and 123 of the Law on Bankruptcy.  


DFDL Contacts

Jerome Buzenet
Partner; Managing Director,
DFDL Vietnam
jerome.buzenet@dfdl.com

Dao Thanh Thuy
Senior Legal Adviser,
DFDL Vietnam
thuy.dao@dfdl.com


The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.


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