Conditions and procedures for bankruptcy of enterprises

1. Subjects filing bankruptcy petitions

The following entities have the right and obligation to file a request to open an enterprise bankruptcy procedure:

• Firstly, the subject has the right to file a claim:

  • Creditor.

  • Employees in case the enterprise cannot pay salaries and other debts to employees.

  • Owners of state-owned enterprises.

  • Shareholders of joint stock companies.

  • General partners of the partnership enterprise.

• Secondly, the subject is obliged to file a bankruptcy petition

  • Are businesses falling into bankruptcy. When realizing that an enterprise is in a state of bankruptcy, the business owner or the legal representative of the enterprise is obliged to file a petition to initiate bankruptcy proceedings.

2. Conditions for enterprises to go bankrupt

In order for an enterprise to go bankrupt, it must meet the following conditions:

• Enterprises are insolvent.

• There is a court's effective decision declaring the enterprise bankrupt.

3. Enterprise bankruptcy procedures

Step 1: Submit a petition 

• An enterprise files a bankruptcy petition by itself or one or more creditors file a bankruptcy petition with a competent people's court. A petition for bankruptcy must include the contents specified in Articles 26, 27, 28, 29 of  Law on Bankruptcy 2014.

• Submission form:

  • Filed directly at the People's Court.

  • Send to the People's Court by post.

Step 2: Processing and settling bankruptcy petitions

• Assign a judge to settle the case within 03 working days from the date of receiving the petition.

• The judge is assigned to handle the bankruptcy petition within 03 working days from the date of assignment.

• Acceptance of petitions: The People's Courts shall accept the petitions for initiation of bankruptcy proceedings upon receipt of receipts for payment of bankruptcy fees and receipts of advance payment of bankruptcy costs.

If the bankruptcy fee or bankruptcy advance is not required to be paid, the time of acceptance shall be counted from the date the People's Court receives a valid petition for initiation of bankruptcy proceedings.

• Initiation of bankruptcy proceedings: Within 30 days from the date the Court accepts the application, the judge must issue a decision to open or not to initiate bankruptcy proceedings.

Step 3: Convene a meeting of creditors

• The time limit for the judge to convene the conference of the creditors is 20 days from the end of the inventory of assets in case the inventory of assets ends after the making of the list of creditors or from the date of ending the making of the list of creditors. list of creditors in case the inventory of assets is finished before the making of the list of creditors.

• The creditors' meeting has the right to issue a resolution containing one of the following conclusions:

  • To propose to suspend the settlement of the request for opening bankruptcy proceedings if the enterprise or cooperative is no longer insolvent.

  • Proposing the application of measures to restore business operations to enterprises and cooperatives.

  • Proposal to declare bankruptcy of enterprises and cooperatives.

• In case the meeting of creditors issues a resolution requesting the application of measures to restore business operations, the enterprise or cooperative shall resume business operations according to the procedures specified in Law on Bankruptcy 2014.

• In case the creditors' conference issues a resolution declaring bankruptcy of the enterprise or cooperative, the court shall issue a decision declaring the company bankrupt and the enterprise or cooperative must execute the decision declaring bankruptcy of the Court.

4. Legal basis

• Law on Enterprises 2020.

• Law on Bankruptcy 2014.