On June 19, 2014, the National Assembly passed the Law No. 51/2014/QH13 on Bankruptcy with a number of new and important contents.
Firstly, unsecured creditors and partially secured creditors may file petitions for initiation of bankruptcy procedures in case indebted enterprises or cooperatives fail to perform the obligation to pay debts within 3 months after such debts become due.
Employees, grassroots trade unions or immediate higher-level trade unions in enterprises or cooperatives where no grassroots trade union has been established may file petitions for initiation of bankruptcy procedures in case such enterprises or cooperatives fail to perform the obligation to pay salaries or other due debts to employees within 3 months after their obligation becomes due.
The Law also prescribes that the district-level people’s courts have the jurisdiction to settle bankruptcy of enterprises and cooperatives headquartered in their districts, towns or provincial cities while in the current regulations, the district-level people’s courts only have the jurisdiction to settle bankruptcy of cooperatives;
People’s courts of provinces or centrally run cities have the jurisdiction to settle bankruptcy of enterprises which have made business or enterprise registration or of cooperatives which have made business or cooperative registration in such provinces or centrally run cities and fall into the cases of bankruptcy involves assets located abroad or bankruptcy procedure participants reside abroad;
The insolvent enterprise or cooperative has branches and representative offices in different districts, towns and provincial cities; the insolvent enterprise or cooperative has real estate in different districts, towns and provincial cities; and the case of bankruptcy falls under the jurisdiction of a people’s court of district, town or provincial city but is complex and is picked up by a provincial-level people’s court for settlement.
Transactions of insolvent enterprises or cooperatives which are conducted within 6 months before people’s courts issue decisions to initiate bankruptcy procedures are deemed invalid if they are involved in the transfer of assets not at market prices; to convert unsecured debts into ones secured or partially secured with assets of enterprises or cooperatives; payments or clearing beneficial for one creditor for an undue debt or larger than a due debt; donation of assets; not for business operation of enterprises or cooperatives and for the purpose of dispersing assets of enterprises or cooperatives.
At the same time, the bankruptcy procedures are applicable to credit institutions at the first time. Within that, the credit institution that has the obligation to file a petition for initiation of bankruptcy procedures; in case the credit institution fails to do so, the State Bank of Vietnam shall file a petition for initiation of bankruptcy procedures against the credit institution.
This Law takes effect on January 01, 2015.
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