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LAW ON BUSINESS BANKRUPTCY

No. 21/2004/QH11 dated 15/6/2004 

This law contains provisions regulating business bankruptcy.

CHAPTER I

General Provisions

Article 1

This law shall be applicable to businesses of all forms of ownership which are established and operated under the law of the Socialist Republic of Vietnam at the time of bankruptcy.

The government provides detailed provisions for the implementation of this law in respect of businesses which directly serve the national defense, provides securities and important public services.

Article 2

A bankrupted business means a business which still faces financial difficulties or losses in its operation and is unable to pay its debts which are due and payable even after it has exhausted necessary financial measures in respect of its business.

Article 3

In this law, the following terms shall have the meanings ascribed to them hereunder:

1.Secured creditor means a creditor holding a security over the property of the debtor for a debt due to him from the debtor.

2.Partly secured creditor means a creditor holding a security over the property of the debtor which is less in value than the debt due to him from the debtor.

3.Unsecured creditor means a creditor who is not holding a security over the property of the debtor for a debt due to him from the debtor.

4.Legal representative of a business means a person who is vested with the authority by the owner of the business to represent the business in accordance with the law.

Article 4

1.The People's Court of the provinces and cities under central authority (hereinafter referred to as the Court) and the People's Supreme Court shall be the bodies vested with the jurisdiction to hear and declare business bankruptcy.

2.The Chamber of Execution of the Department of Justice and the General Department of Management and Execution of Civil Judgments of the Ministry of Justice are the bodies vested with the jurisdiction to implement the court's decision to declare business bankruptcy.

Article 5

The People's Inspection Institution shall act in accordance with the law in the determination of business bankruptcy.

Article 6

The voluntary conciliation between the creditors and the business debtors, the matter of security or re-purchases of the debts of the business involving in bankruptcy shall be heard in priority before the date the court issues a decision to proceed with a bankruptcy petition.

CHAPTER II

Procedures for the Application and Petition Requesting the Declaration of Business Bankruptcy

Article 7

1.If within thirty (30) days upon the receipt of a payment of debt notice, the debtor still has not complied with the notice then the unsecured or partly secured creditor shall have the right to lodge a petition at the court where its main business office is located requesting the declaration of business bankruptcy in respect of the debtor's business.

2.A business bankruptcy petition shall clearly specify:

(a)Name and address of the applicant.

(b)Name and address of the main office of the business sought to be declared bankrupt.

3.The petition must be accompanied by a copy of the payment of debt notice, relevant papers and documents evidencing the business's inability to pay its debts which are due and payable.

4.The applicant must pay a fee in advance in accordance with the law.

Article 8

In cases where the business employer has been unable to pay wages for its laborers for three consecutive months, the Union's representative or the labourer's representative (where a union organization has not been established) shall have the right to lodge a petition at the court where the main office of the business is located requesting the declaration of business bankruptcy with respect to the business of the employer.

After lodging the petition, the Union's representative or the labourer's representative (where a Union organization has not been established) shall be deemed to be the creditor and shall not be compelled to pay a fee in advance as required by point 4 of article 7 of this law.

Article 9

1. In cases where after the application of all appropriate measures to overcome financial difficulties and in order to pay its debts which are due and payable including the delaying of payments of debts and the business is still unable to pay its debts which are due and payable then the owner or the legal representative of the business must lodge a petition at the court where its main office is located requesting the declaration of business bankruptcy with respect to its business.

2. A bankruptcy petition must clearly specify:

(a)name and address of the main office of the business, name of the owner or name of the legal representative of the business;

(b)the measures which have been taken by the business to overcome its difficulties but which have not successfully cured the business's inability to pay its debts which are due and payable;

(c)the petition shall be accompanied by:

- a list of all creditors;

- the amount of money owed to each creditor;

- addresses of the creditors;

- a report on the responsibilities of the director and members of the Board of Management with respect to the business's inability to pay its debts which are due and payable;

- a report on the circumstances of the business six months prior to its inability to pay its debts which are due and payable;

- a summing up report on the financial year of the last two years. If the business has been operating for less than two years then a summing up financial report on the whole period of its operation;

- related accounting files.

3.The applicant of a business bankruptcy petition shall be liable to pay a fee in advance in accordance with the law.

Article 10

In the resolving of disputes relating to businesses, if the court discovers that a business may be involved in bankruptcy it shall notify the creditors and owner of the business of such matter so that they may lodge a bankruptcy petition against the business.

Article 11

The applicant of a bankruptcy petition shall be responsible for the contents of the application and attached documents and information.

The owner or the legal representative of the business and the applicant of a bankruptcy petition shall have the obligation to supply adequate evidence and necessary information as requested by the court in the process of a bankruptcy proceeding and shall be responsible for the accuracy of such evidence and information.

Article 12

The court where the bankruptcy petition is lodged shall record each petition in its book and issue the applicant with a notification of the receipt of his/her petition and attached documents.

Within seven days upon the receipt of a bankruptcy petition, the court shall notify the business against which the petition is lodged of such matter in writing. The notification shall include a copy of the petition and attached documents.

Within ten (10) days upon the receipt of the above-mentioned notification, the business against which the bankruptcy petition is lodged shall forward the court a report on its ability to pay debts. In case, where the business is unable to pay its debts which are due and payable, it shall forward the court the reports and information as stipulated under point (b) and (c) of part 2 of article 9 of this law.

Article 13

Within thirty (30) days upon the receipt of a bankruptcy petition, the Chief Justice of the Economic Court of the People's Court of provinces and cities under central authority (hereinafter referred to as the provincial Economic Court) shall consider the petition together with related documents and information. If it is considered that there is no sufficient evidence against the business the court shall decide not to proceed with the bankruptcy petition. Such decision must clearly specify the reasons upon which the decision is made and shall be notified to the applicant of the petition and the business debtor. Within fifteen (15) days upon the receipt of the decision of the Chief Justice of the provincial Economic Court, the applicant of the petition and the business debtor shall have the right to appeal against the decision to the Presiding Justice of the provincial People's Court.

Within seven days upon the receipt of the complaint against the decision of the Chief Justice of the provincial Economic Court the Presiding Justice of the provincial People's Court shall make one of the following decisions:

1.To affirm the decision of the Chief Justice of the provincial Economic Court.

2.To set aside the decision of the Chief Justice of the provincial Economic Court and order that the decision be reconsidered.

Within seven days from the date of the Presiding Justice of the provincial People's Court made the above order, the Chief Justice of the provincial Economic Court must issue a new decision. Such decision must be notified to the Presiding Justice of the provincial People's Court and the parties involved.

If within fifteen (15) days upon the receipt of the new decision of the Chief Justice of the Economic Court the parties involved still wish to lodge a further complaint then within the seven days, the Presiding Justice of the provincial People's Court shall consider and determine the complaint. This final decision by the Presiding Justice of the provincial People's Court shall be of full force and effect.

Article 14

The fee level for a business bankruptcy proceeding shall be determined by the court in accordance with the Law on Fees.

CHAPTER III

I. Procedures for Bankruptcy a Petition Decision to proceed with a bankruptcy petition

Article 15

Within thirty (30) days upon the receipt of a bankruptcy petition or after seven days from the date the Chief Justice of the provincial People's Court made a decision pursuant to part 2 of article 13 of this law, if it is considered that there is sufficient evidence, the Chief Justice of the Economic Court shall decide to proceed with the bankruptcy petition. This decision shall clearly specify the reasons upon which the decision to proceed with the bankruptcy petition is reached, the time at which the business debts are prohibited from being dealt with, name of the judge responsible for the bankruptcy proceeding and names of the officers appointed to the Property Management Team.

Depending on the nature of each matter, the Chief Justice of the provincial Economic Court shall appoint a judge or a team of three judges (hereinafter referred to as the Judge) and a Property Management Team to deal with the bankruptcy proceeding. In cases where a team of three judges are appointed to the proceeding then one particular judge will be selected as the responsible judge.

The Property Management Team shall consist of:

- the officers of the provincial Economic Court;

- the executive officer of the Chamber of Execution of the Department of Justice;

- the creditor's representative;

- the business debtor's representative;

- the Union's representative or the labourer's representative (in cases where no Union organization has been established); and

- experts from financial institutions, provincial banks and other specialized industries.

The Property Management Team shall be led by an officer of the provincial Economic Court.

The Presiding Justice of the People's Supreme Court shall provide regulations on the working system of the team of three judges and the government shall provide regulations on the organization and operation of the Property Management Team after reaching mutual agreement with the People's Supreme Court.

The decision to proceed with a bankruptcy petition shall be published in the local newspaper where the main office of the business against which the petition is lodged is located and in the Daily Central newspaper in three consecutive issues.

Article 16

1.The Judge hearing a bankruptcy proceeding shall have the following duties and powers:

(a)To collect documents and evidence enabling the opening of a file in respect of a bankruptcy petition;

(b)To supervise and inspect the operation of the members of the Property Management Team;

(c)In necessary cases to determine the application of temporary emergency measures in accordance with the law in order to protect the property of the business debtor;

(d)To organize and preside over the creditors conference;

(e)To make determination on the temporary suspension or the termination of a bankruptcy proceeding;

(f)To declare business bankruptcy.

2. During the process of a business bankruptcy proceeding if the court discovers a sign of unlawful breach on the part of the business debtor, the Judge shall furnish the People's Inspection Institution with relevant documents for the consideration as to whether or not a criminal proceeding should be initiated against the business debtor.

3. The Judge shall be responsible before the Presiding Justice of the provincial People's Court in the implementation of his or her duties and powers.

Article 17

The Property Management Team shall have the following duties and powers:

1. To make up a list of the property of the business in debt;

2. To supervise and inspect the management of the property of the business. In necessary cases, to propose to the Judge the application of temporary emergency measures in order to protect the remaining property of the business;

3. To gather a list of all creditors and the amount of money owed to each creditor.

The Property Management Team shall be responsible before the Judge in the implementation of their duties and powers.

Article 18

1. During the process of a bankruptcy proceeding, the Director and the members of the Board of Management of the business in debt shall still bear the responsibility in respect of the trading result of the business. Every business activity of the business shall continue as usual but it shall be subject to the supervision and inspection of the Judge and the Property Management Team.

2. Upon the receipt of the court's decision to proceed with a bankruptcy petition, the business against which the petition is lodged shall be prohibited from doing the following:

(a)To conceal and disperse the property of the business;

(b)To mortgage, pledge, assign and sell the property of the business or to discharge secured debts without written consent from the Judge;

(c)To settle any unsecured debts of the business. Any debt which results from the operation of the business after the court's decision to proceed with a bankruptcy proceeding against the business shall be settled in accordance with the provisions of article 23 of this law.

(d)To abandon or reduce its right to demand the debts owed to it;

(e)To create security over the debts which were not previously secured;

(f)To sell or convert its shares or to assign the ownership of the property of the business.

Article 19

Property of a business shall consist of all properties which are owned or managed by the business (with respect to the business of the State), within which there are:

1.Fixed assets and current assets of the business;

2.Money or assets contributed to the capital of the business, joint venture, business association with individuals, other businesses or organizations;

3.Money or assets of the business which are currently being borrowed or possessed by other individuals and business organizations;

4.Properties which are being leased or loaned by the business;

5.All property rights.

The property of a private business shall consist of all properties belonging to the owner of the business which are not directly used in the operation of the business.

Article 20

After the court's decision to proceed with a bankruptcy petition, the Judge shall request the owner or the legal representative of the business against which the bankruptcy petition is lodged to propose on the conciliation measures and solutions for the re-organization of the operation of the business. The time limit for the re-organization of the operation of the business shall be determined by the creditors conference but it shall not exceed two years from the date the creditors conference adopted the proposed conciliation measures.

The proposed conciliation measures and solutions for the re-organization of the operation of the business shall consist of the detailed methods, plans and time limit on the payment of debts to creditors and salaries to the laborers.

The proposed conciliation measures and solutions for the organization of the operation of the business shall be forwarded to the Judge within sixty (60) days upon his or her request. At the end of this time limit, of no proposed conciliation measures have been forwarded to the Judge he or she shall determine to declare business bankruptcy and organize a creditors conference to discuss the arrangement on the distribution of the remaining assets of the business.

Article 21

Within sixty (60) days from the first date the court's decision to proceed with a bankruptcy petition was published in the local newspaper and the Daily Central newspaper, all creditors shall forward the court with a payment of debt notice. The notice shall clearly specify the amount of debt which are payable by the business debtor; ascertain due and undue debts, secured and unsecured debts and shall be accompanied by documents and evidence proving the amount of debt owed.

Article 22

Within fifteen (15) days from the date the time limit for a payment of debt notice has expired, the Property Management Team shall complete a list of creditors and the amount of debt owed to each one (herein after referred to as the list of creditors). Such list of creditors shall clearly specify the amount of money owed to each creditor and ascertain secured and unsecured debts, due and undue debts and shall be publicly posted at the provincial Court, the main office and the branches of the business within ten (10) days. Within this time limit, the creditors and the business debtor shall have the right to lodge a complaint to the Judge against the list of the creditors. The Judge shall consider the complaint and if there is evidence of errors he or she shall make appropriate amendments to the list.

At the end of this time limit the Property Management Team shall close the list of creditors and the creditors who failed to send a payment of debt notice to the court are deemed to have lost their rights to participate in the creditors conference.

Article 23

As from the point of time there all debts are prohibited from being settled, the business shall not be liable to pay interests on the debts. All debts which are yet to be due shall be deemed to be due but interests shall not be calculated in respect of the period of which the debts are yet to be due.

During a bankruptcy proceeding, new debts which result from the operation of the business and salary to the laborers of the business shall be settled under the supervision of the Judge.

II. The Creditors' Conference

Article 24

The creditors conference shall have the following duties and powers:

1.To consider and adopt the proposed conciliation measures and solutions for the re-organization of the operation of the business;

2.To discuss and propose to the Judge on the distribution of the remaining assets of the business if there has been no conciliation measures put forward by the business debtor or where the proposed conciliation was put forward by the business debtor it was not adopted by the creditors conference.

Article 25

Individuals, businesses and organizations whose name appeared on the list of creditors are the members of the creditors conference.

A creditor may authorize another person to attend the creditors conference on his behalf in writing. The duly authorized person shall have same rights and obligations as the creditor.

Only unsecured and partly secured creditors have the right to vote at the creditors' conference.

The Union's representative or the labourer's representative (where no Union organization has been established) shall have the right to attend the creditors' conference but he or she shall have no voting right except where the circumstances provided for under article 8 of this law applies.

Article 26

The guarantor of the business debtor after payment of debt on behalf of the business debtor shall become an unsecured creditor of the business. He or she shall have the same rights and obligations as other unsecured creditors, shall be able to attend the creditors' conference and shall have a right in the distribution of the value of the remaining assets of the bankrupted business in accordance with a rate equivalent to the amount of debt paid to the creditors of the business by the guarantor.

The creditors whose debts have been partly settled by the guarantor of the business shall have the right to participate in the distribution of the value of the remaining assets of the business in accordance with a rate equivalent to the amount of debt still owed to the creditors.

Article 27

Within thirty (30) days from the date the list of creditors is closed the Judge shall convene and preside over the creditors' conference. Notice of the creditors' conference must be sent to the members and the participants of the conference at least fifteen (15) days before the opening of the conference. The notice of the creditors' conference shall be accompanied by a copy of the proposed conciliation measures and solutions for the re-organization of the operation of the business.

Article 28

The owner or the legal representative of the business must be present at the creditors' conference to explain the proposed conciliation measures and solutions for the re-organization of the operation of the business and to respond to the matters put forward at the conference. In cases where the owner or the legal representative of the business are unable to attend the creditors' conference for legitimate reasons, he or she must authorize another person to attend the conference on his/her behalf in writing. The duly authorized person shall have the same rights and obligations as the owner or the legal representative of the business. In case where the owner of a private business is dead his/her legal successor shall attend the creditors' conference on his/her behalf.

Article 29

A creditors' conference shall only be valid if more than half of the number of creditors representing at least two third (2/3) of the total amount of the unsecured debts are present at the conference.

A record of the proposed conciliation measures and solutions for the re-organization of the operation of the business shall only be valid if it is adopted by more than half of the number of creditors representing at least two third (2/3) of the total amount of the unsecured debts. Such record shall clearly specify the matters which have been agreed upon and shall bear the signatures of the Judge and the creditors present at the conference.

Pursuant to the record of conciliation, the Judge shall make determination on the temporary suspension of the bankruptcy proceeding. All agreements which are the subject of the record of conciliation shall be binding on all creditors and the business debtor.

Article 30

A creditors' conference may be postponed once if:

There is less than half of the number of creditors representing less than two thirds (2/3) of the total amount of unsecured debts are present at the conference;

The majority of the creditors present at the conference vote in favor of postponing the conference.

Article 31

1.Within thirty (30) days from the date the creditors' conference is postponed, the Judge must reconvene and preside over the creditors' conference. Notice of the conference shall be published once in the local newspaper and the Daily Central newspaper and shall be sent to the members and the participants of the conference at least fifteen (15) days before the opening of the conference. This conference shall only be valid if more than one half of the number of creditors representing at least two thirds (2/3) of the total amount of the unsecured debts are present.

The decision to adopt the proposed conciliation measures and solutions for the re-organization of the operation of the business at the conference shall be legally valid if it is approved by a number of creditors present at the conference who represent at least two thirds (2/3) of the total amount of the unsecured debts.

All agreements which are the subject of the record of conciliation of the conference shall be binding on all creditors and the business debtor.

2.If a creditors' conference is not valid due to the attendance of less than the number of creditors as required by point 1 of this article the judge shall decide to suspend the bankruptcy proceeding and such decision shall be published in the local newspaper and the Daily Central newspaper in three consecutive issues.

Article 32

The contents of the creditor's conference shall be sufficiently recorded in the minutes of the conference. The minutes of the conference shall bear the signatures of the Judge, the court clerk, the owner or the legal representative of the business and the creditors present at the conference.

Article 33

The Judge shall determine the acknowledgment of the record of the conciliation measures and solutions for the re-organization of the operation of the business adopted at the conference and the temporary suspension of the bankruptcy proceeding. The Judge shall cause the publication of such decisions in the local newspaper and the Daily Central newspaper in three consecutive issues.

Article 34

The owner or the legal representative of the business shall be responsible for the implementation of the proposed solutions for the re-organization of the operation of the business in accordance with the plan and time limit adopted by the creditors' conference.

The creditors shall have the obligation to implement the agreements which have been reached at the creditors' conference and shall supervise the business debtor in the implementation of such agreements.

Article 35

If within the time limit for re-organizing the business, effective results are achieved through the trading of the business and the business is able to implement all its obligations according to the plan which has been adopted by the creditor's conference and no creditors have lodged any complaints to the court against the business, the owner of the business shall have the right to request the Judge to suspend the bankruptcy proceeding against his business. The Judge shall make a determination on the suspension of the bankruptcy proceeding and shall cause the publication of such decision in the local newspaper and the Daily Central newspaper in three consecutive issues.

III. Declaration of Business Bankruptcy

Article 36

The Judge shall make the decision to declare business bankruptcy in the following circumstances:

1.The owner or the legal representative of the business do not come up with the proposed conciliation measures and solutions for the re-organization of the operation of the business in accordance with the provisions of article 20 of this law;

2.The owner or the legal representative of the business is unable to implement the provisions of article 28 of this law;

3.The creditors' conference has not adopted the proposed conciliation measures and solutions for the re-organization of the operation of the business.

4.At the expiration of the time limit for re-organizing the operation of the business no effective results have been achieved through the trading of the business and the creditors request for the declaration of bankruptcy against the business;

5.Within the time limit for re-organizing the business, the business have officially breached the agreements reached at the creditor's conference and the creditors request for the declaration of bankruptcy against the business;

6.During the process of a bankruptcy proceeding against a private business the owner of the business goes into hiding or is dead and his legal successor refuses his or her inheritance or when the owner of the business has no legal successor.

Article 37

A decision to declare business bankruptcy shall have the following contents:

1.Name of the court and the Judge hearing the bankruptcy proceeding;

2.Date and the number of the bankruptcy petition;

3.Name and address of the business which has been declared bankrupt;

4.Date of the declaration of business bankruptcy;

5.Reasons for the declaration of business bankruptcy;

6.Arrangement on the distribution of the value of the assets of the business;

The decision to declare business bankruptcy shall be sent to the creditors, the bankrupted business and the People's Inspection Institution of the same rank.

Article 38

During the process of a bankruptcy proceeding, the Judge shall make a determination on the protection of the pledged or mortgaged property of the business and shall organize for the valuation of such property. If the value of the pledged or mortgaged property is insufficient to settle the debt of a secured creditor then such creditor shall have the same right as other unsecured creditors in the distribution of the value of the remaining assets of the business. If the value of the pledged or mortgaged property is greater than the amount of debt owed to a secured creditor, the difference in value shall become part of the remaining assets of the bankrupted business.

Article 39

The distribution of the value of the remaining assets of the business shall be subject to the following order of priorities:

1.Fees and expenses required in a bankruptcy proceeding as determined by the law;

2.Unpaid wages, termination of employment allowances and social insurance as determined by the law and other rights pursuant to a collective or individual labor agreement;

3.Liabilities on tax;

4.Payments of debts owed to the creditors whose names appear on the list of creditors:

(a)If the value of the remaining assets of the bankrupted business is sufficient to cover the debts of all creditors then each creditor shall be paid in full the amount owed to him or her;

(b)If the value of the remaining assets of the bankrupted business is insufficient to cover the debts of all creditors them each creditor shall be paid proportionately.

5.If the value of the remaining assets of the bankrupted business exceeds the total amount of debts owed to all creditors then the difference in value shall belong to:

(a) the owner of the business in the case of private businesses;

(b) the members of the company in the case where the business is a company;

(c) the government budget in the case of government businesses.

Article 40

1.Within thirty days (30) from the date of the court's decision to declare business bankruptcy, the creditors and the bankrupted business shall have the right to lodge a complaint against the decision to the People's Inspection Institution of the same rank who has the power to object against such decision. If at the expiration of this time limit there has been no complaint and objection against the court's decision to declare business bankruptcy then such decision shall be of full force and effect.

In case where there is a complaint and objection against the court's decision to declare business bankruptcy then within five days upon the receipt of the objection from the People's Inspection Institution, the Judge who made the decision to declare business bankruptcy shall forward the bankruptcy file to the Court of Appeal of the People's Supreme Court.

2.Within sixty (60) days upon the receipt of the bankruptcy file, a team of three judges appointed by the Chief Justice of the Court of Appeal of the People's Supreme Court shall hear the objection against the decision to declare bankruptcy of the court of the first instance. The decision of the Court of Appeal of the People's Supreme Court shall be the final decision.

Article 41

At least ten (10) days from the date the court's decision to declare business bankruptcy becomes of full force and effect the Judge shall cause for the publication of such decision in the local newspaper and the Daily Central newspaper in three consecutive issues.

A copy of the decision to declare business bankruptcy shall be forwarded to:

(a)the Chamber of Execution of the Department of Justice;

(b)the creditors and the bankrupted business;

(c)the People's Inspection Institution, financial and labor institutions of the same rank;

(d)the body responsible for the issuance of a license to establish a business.

In respect of the Chamber of Execution of Civil Judgments, a copy of bankruptcy shall be accompanied by necessary documents for the implementation of such decision.

The Judge of the provincial Economic Court shall supervise on the passing of assets and relevant papers and documents of the business between the Property Management Team and the Property Settlement Team.

CHAPTER IV

Implementation of the Court's Decision to Declare Business Bankruptcy

Article 42

1.The implementation of the court's decision to declare business bankruptcy shall be within the jurisdiction of the Chamber of Execution of the Department of Justice where the main office of the bankrupted business is located.

2.The Chairman of the Chamber of Execution shall designate an executive officer responsible for the implementation of the court's decision to declare business bankruptcy, make determination on the establishment of the Property Settlement Team and inspect and supervise the affairs of the Property Settlement Team.

3.The composition of the Property Settlement Team shall consist of:

(a)the executive officer and the officers of the Chamber of Execution;

(b)the representatives of financial and banking institutions of the same rank;

(c)the creditors' representatives and the Union's representative or the laborers' representatives where no Union organization has been established;

(d)the representative of the bankrupted business.

The members of the Property Management Team may be designated to the Property Settlement Team. The Head of the Property Settlement Team shall be the executive officer of the Chamber of Execution.

The government shall provide regulations on the organization and operation of the Property Settlement Team.

Article 43

The executive officer responsible for the implementation of the court's decision to declare bankruptcy shall have the following duties and powers:

1.To make determination on the recovery and auctions of the property of the bankrupted business;

2.To implement the arrangement on the distribution of the assets of the business in accordance with the Judge's decision to declare business bankruptcy;

3.To impose a blockage on the bank accounts of the bankrupted business presently existing at various banks and open new bank accounts for the deposit of the money received from the recovery of the debts owed to the bankrupted business and from the auctions of the property of the bankrupted business.

The executive officer responsible for the implementation of the court's decision to declare business bankruptcy shall be responsible before the Chairman of the Chamber of Execution in the implementation of his duties and powers.

Article 44

The Property Settlement Team shall have the following duties and powers:

1.To accept the passing on of the assets and relevant papers and documents from the Property Management Team;

2.To recover and manage all the assets, papers and accounting books of the bankrupted business;

3.To discover and request the responsible executive officer for the recovery of the assets or the value of the assets or the difference in value of the assets of the bankrupted business which were illegally sold or transferred in accordance with article 45 of this law. The Property Settlement Team shall recover the above-mentioned assets or the value of the assets and the difference in value of such assets pursuant to the decision of the responsible executive officer;

4.Pursuant to the decision of the executive officer, the Property Settlement Team shall organize for the auctions of the property of the bankrupted business. The auctions of the property must be certified by a State witness. If the property auctioned is in the form of a complete equipment it must be sold as a whole except where no sale can be made on the complete equipment as a whole then parts of the complete equipment may be sold separately. The organization of the auctions of the property and the determination on the use of the land of the bankrupted business must be in accordance with the law;

5.To deposit all the money received by the business in the newly opened bank account;

6.To implement the settlement of debts pursuant to the Judge's decision to declare business bankruptcy.

Article 45

1.The executive officer shall propose to the court the recovery of the assets and the value of the assets or the difference in value of the assets of the business if within six months prior to the date a bankruptcy petition was lodged against the business, the business has been involved in the following breaches:

(a)any form of disbursement of the assets of the business;

(b)the settlement of undue debts;

(c)the abandonment of its right to payment of the debts owed to it;

(d)the conversion of unsecured debts to secured debts;

(e)the selling of the assets of the business with a price less than its actual value.

2.Prior to the recovery of the assets or the difference in value of the assets of the bankrupted business, the Property Settlement Team has the responsibility to produce the court's decision to the parties involved in the proceeding and to clearly explain to them the reasons for such recovery. All disputes on the recovery of the assets or the difference in value of the assets of the business shall be determined by the court.

Article 46

Within thirty (30) days from the date a business is declared bankrupt, an owner of the assets which are leased and loaned to the bankrupted business for its operation shall produce the ownership certificate and the lease or loan agreement in respect of those assets to the executive officer in order to retrieve back his/her property.

In cases where the bankrupted business have already paid its rent in advance but the term of the lease has not expired then the owner of the assets shall only be able to retrieve back his property after he has refunded the business the amount of rent in respect of the remaining term of the lease. The Property Settlement Team shall form such refunds as part of the remaining assets of the business.

Article 47

During the implementation process of the court's decision to declare business bankruptcy, the parties involved shall have the right to lodge a complaint to the Chairman of the Chamber of Execution of the Department of Justice. Within seven days upon the receipt of the complaint, the Chairman shall consider, determine and respond to the complaint. If the complainant does not agree with the decision of the Chairman of the Chamber of Execution of the Department of Justice he or she shall have the right to lodge a further complaint against such decision to the Chairman of the General Department of Management and Execution of Civil Judgments of the Ministry of Justice. Within thirty (30) days upon the receipt of the complaint, the Chairman of the General Department of Management and Execution of Civil Judgments shall make one of the following decisions:

1.To confirm the decision of the Chairman of the Chamber of Execution of the Department of Justice.

2.To set aside the decision of the Chairman of the Chamber of Execution of the Department of Justice and order him to redetermine the complaint.

Article 48

At the end of the settlement process, the Chairman of the Chamber of Execution shall make a decision to terminate the implementation of the court's decision to declare business bankruptcy. This decision shall be sent to the body responsible for the registration of the bankrupted business so that it can expunge the name of the bankrupted business out of the business registration book.

CHAPTER V

Dealing with Breaches

Article 49

1.Any person who involves in the following breaches, depending on the degree of seriousness shall be administratively punished and subject to payment of damages or criminal prosecution in accordance with the law:

(a)the carrying out of activities prohibited under article 18 of this law or engaging in other fraudulent conducts during the process of a bankruptcy proceeding;

(b)the making of threats or other form of coercion forcing the business debtor to lodge a bankruptcy petition;

(c)intentionally causing damages or destroying the property of the business.

2.If the Judge, members of the Property Management Team, the executive officer and the members of the Property Settlement Team during the process of a bankruptcy proceeding violates any provisions of this law and other provisions of the law, depending on the degree of seriousness shall be disciplined or subject to criminal prosecution in accordance with the law.

Article 50

1.The Director, the Chairman and the members of the Board of Management of a bankrupted business shall be prohibited from undertaking such positions at any other business within one to three years from the date the business was declared bankrupt.

2.The Director, the Chairman and the members of the Board of Management of a bankrupted business shall not be subject to point 1 of this article under the following circumstances:

(a)the business is bankrupted due to force majeure as determined by the government;

(b)the Director, the Chairman and the members of the Board of Management are not directly responsible for the grounds upon which the bankruptcy is found;

(c)the Director or the Chairman of the Board of Management have voluntarily lodged a bankruptcy petition against the business in accordance with the law and have fully paid the creditors of the business.

CHAPTER VI

Implementing Provisions

Article 51

This law shall be applicable to a bankruptcy proceeding against businesses which involves foreign individuals and organizations except where an International Treaty which has been entered by the Socialist Republic of Vietnam provides otherwise.

Article 52

This law shall be of full force and effect as from 1 July 1994.

All previous provisions inconsistent with this law are hereby repealed.

The Government, the People's Supreme Court and the People's Inspection Institution shall provide for the detail implementation of this law.

This law has been passed by IX legislature, session No. 4 of the National Assembly of the Socialist Republic of Vietnam on 30 December 1993.

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Edited and posted up by Lawyer Nguyen Thi Thoa