Bankruptcy Law 2014, Law No. 51/2014/QH13

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ATTRIBUTE Bankruptcy Law 2014

Law No. 51/2014/QH13 dated June 19, 2014 of the National Assembly on Bankruptcy
Issuing body: National Assembly of the Socialist Republic of Vietnam Effective date:
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Official number: 51/2014/QH13 Signer: Nguyen Sinh Hung
Type: Law Expiry date: Updating
Issuing date: 19/06/2014 Effect status:
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Fields: Enterprise

SUMMARY

EMPLOYEES MAY FILE PETITIONS FOR INITIATION OF BANKRUPTCY PROCEDURES WHEN ENTERPRISES FAIL TO PAY SALARIES WITHIN 3 MONTHS

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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Effect status: Known

THEPRESIDENT

 

 

 

No. 11/2014/L-CTN

THE SOCIALIST REPUBLIC OF VIETNAM

Independence - Freedom - Happiness

 

 

Hanoi, June 30, 2014

 

 

ORDER

On the promulgation of law[1]

 

THE PRESIDENT OF THE SOCIALIST REPUBLIC OF VIETNAM

 

Pursuant to Articles 88 and 91 of the Constitution of the Socialist Republic of Vietnam;

Pursuant to Article 91 of the Law on Organization of the National Assembly;

Pursuant to Article 57 of the Law on the Promulgation of Legal Documents,

 

PROMULGATES:

 

The Law on Bankruptcy,

which was passed on June 19, 2014, by the XIIIthNational Assembly of the Socialist Republic of Vietnam at its 7thsession.

 

President of the Socialist Republic of Vietnam
TRUONG TAN SANG

 

THE NATIONALASSEMBLY

No. 51/2014/QH13

THE SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness

 

 

LAW ON BANKRUPTCY[2]

Pursuant to the Constitution of the Socialist Republic of Vietnam;

The National Assembly promulgates the Law on Bankruptcy.

Chapter I

GENERAL PROVISIONS

Article 1.Scope of regulation

This Law prescribes the order and procedures for submission and acceptance of petitions for initiation of bankruptcy procedures, and for initiation of bankruptcy procedures; the determination of property obligations and measures to preserve property in the course of bankruptcy settlement; the procedures for business restoration, the declaration of bankruptcy and enforcement of decisions on declaration of bankruptcy.

Article 2.Subjects of application

This Law applies to enterprises, cooperatives and unions of cooperatives (below collectively referred to as cooperatives) which are established and operate in accordance with law.

Article 3.Application ofthe Law on Bankruptcy

1. The Law on Bankruptcy applies when the bankruptcy of enterprises and cooperatives established in the territory of the Socialist Republic of Vietnam is settled.

2. Where a treaty to which the Socialist Republic of Vietnam is a contracting party contains provisions different from those of this Law, the provisions of such treaty prevail.

Article 4.Interpretation of terms

In this Law, the terms and expressions below are construed as follows:

1.Insolvent enterprise or cooperativemeans an enterprise or a cooperative that fails to perform the obligation to pay its debts within 3 months after such debts become due.

2.Bankruptcymeans the state of insolvency of an enterprise or a cooperative which is declared bankrupt by a people’s court.

3.Creditorsmeans individuals, agencies and organizations that have the right to request an enterprise or a cooperative to perform the obligation to pay debts. Creditors include unsecured creditors, partially secured creditors and secured creditors.

4.Unsecured creditormeans an individual, agency or organization that has the right to request an enterprise or a cooperative to perform the obligation to pay a debt not secured with assets of the enterprise or cooperative or a third party.

5.Secured creditormeans an individual, agency or organization that has the right to request an enterprise or a cooperative to perform the obligation to pay a debt secured with assets of the enterprise or cooperative or a third party.

6.Partially secured creditormeans an individual, agency or organization that has the right to request an enterprise or a cooperative to perform the obligation to pay a debt secured with assets of the enterprise or cooperative or a third party in case the value of the security assets is lower than that of such debt.

7.Asset management officermeans an individual who practices management and liquidation of assets of an insolvent enterprise or cooperative in the course of bankruptcy settlement.

8.Asset management and liquidation firmmeans an enterprise that practices management and liquidation of assets of an insolvent enterprise or cooperative in the course of bankruptcy settlement.

9.Bankruptcy procedure-conducting personsinclude chief justices of people’s courts, judges; chief procurators of people’s procuracies, procurators; asset management offiers, asset management and liquidation firms; heads of civil judgment enforcement agencies and enforcers in the course of bankruptcy settlement.

10.Bankruptcy procedure participantsinclude creditors; employees; insolvent enterprises and cooperatives; shareholders and groups of shareholders; cooperative members or cooperatives being members of unions of cooperatives; debtors of enterprises and cooperatives and other persons having related benefits and obligations in the course of bankruptcy settlement.

11.Fee for filing petitions for initiation of bankruptcy procedures(below referred to as bankruptcy fee) means a sum of money payable by a bankruptcy procedure initiation petitioner to a people’s court for acceptance of such petition.

12.Bankruptcy expensesmeans sums of money to be paid for the bankruptcy settlement, including asset management officer and asset management and liquidation firm expenses, audit expense, newspaper announcement expense and other expenses prescribed by law.

13.Asset management officer and asset management and liquidation firm expensesmeans sums of money to be paid for the bankruptcy settlement by asset management officers and asset management and liquidation firms.

14.Advanced amount to pay bankruptcy expensesmeans a sum of money decided by a people’s court to be paid in advance for newspaper announcement and asset management officers and asset management and liquidation firms.

Article 5.Persons having the right and obligation to file petitions for initiation of bankruptcy procedures

1. 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.

2. 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.

3. At-law representatives of enterprises or cooperatives have the obligation to file petitions for initiation of bankruptcy procedures when their enterprises or cooperatives fall insolvent.

4. Owners of private enterprises, chairpesons of boards of directors of joint-stock companies, chairpersons of members’ councils of limited liability companies with two or more members, owners of single-member limited liability companies, or partners of partnerships have the obligation to file petitions for initiation of bankruptcy procedures when their enterprises fall insolvent.

5. Shareholders or groups of shareholders holding at least 20% of common shares for at least 6 consecutive months have the right to file petitions for initiation of bankruptcy procedures when their joint-stock companies fall insolvent. Shareholders or groups of shareholders holding under 20% of common shares for at least 6 consecutive months have the right to file petitions for initiation of bankruptcy procedures when their joint-stock companies fall insolvent in cases prescribed in the company charters.

6. Cooperative members or at-law representatives of cooperatives being members of unions of cooperatives may file petitions for initiation of bankruptcy procedures when their cooperatives or unions of cooperatives fall insolvent.

Article 6.Notification of insolvent enterprises and cooperatives

1. When detecting insolvent enterprises or cooperatives, individuals, agencies or organizations shall notify such in writing to persons having the right and obligation to file petitions for initiation of bankruptcy procedures specified in Article 5 of this Law.

2. Notifying individuals, agencies or organizations shall ensure the accuracy of their notifications. Individuals, agencies or organizations that intentionally make false notifications, causing damage to enterprises or cooperatives shall pay compensations for damage and be held responsible before law.

Article 7.Responsibility of related individuals, agencies and organizations to provide documents and evidences

1. Within 15 days after receiving requests of creditors, enterprises, cooperatives, people’s courts, people’s procuracies, asset management officers or asset management and liquidation firms, individuals, agencies and organizations that currently manage and preserve documents and evidences related to cases of bankruptcy shall provide fully and promptly such documents and evidences.

2. Individuals, agencies and organizations that fail to provide documents and evidences under Clause 1 of this Article shall reply in writing, clearly stating the reason. If they refuse to provide documents and evidences without a plausible reason, they shall be handled in accordance with law.

Article 8.Jurisdiction of people’s courts to settle bankruptcy

1. People’s courts of provinces or centrally run cities (below referred to as provincial-level people’s courts) 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 one of the following cases:

a/ The case of bankruptcy involves assets located abroad or bankruptcy procedure participants reside abroad;

b/ The insolvent enterprise or cooperative has branches and representative offices in different districts, towns and provincial cities;

c/ The insolvent enterprise or cooperative has real estate in different districts, towns and provincial cities;

d/ The case of bankruptcy falls under the jurisdiction of a people’s court of district, town or provincial city (below referred to as district-level people’s court) but is complex and is picked up by a provincial-level people’s court for settlement.

2. District-level people’s courts have the jurisdiction to settle bankruptcy of enterprises and cooperatives headquartered in their districts, towns or provincial cities and not falling into the cases specified in Clause 1 of this Article.

3. The Supreme People’s Court shall guide the implementation of this Article.

Article 9.Tasks and powers of bankruptcy procedure-conducting judges

1. To verify and collect documents and evidences related to petitions for initiation of bankruptcy procedures in case of necessity.

2. To decide to initiate or not to initiate bankruptcy procedures.

3. To decide on appointment or change of asset management officers and asset management and liquidation firms.

4. To supervise operation of asset management officers and asset management and liquidation firms.

5. To decide on audit of insolvent enterprises or cooperatives in case of necessity.

6. To decide on sale of insolvent enterprises or cooperatives after initiating the bankruptcy procedures in order to cover bankruptcy expenses.

7. To decide on application of provisional urgent measures in accordance with law.

8. To apply the measure of banning involved persons from leaving their places of residence and request competent agencies to escort representatives of insolvent enterprises or cooperatives in accordance with law.

9. To organize creditors’ meetings.

10. To decide on recognition of resolutions of creditors’ meetings on plans on restoration of business activities.

11. To decide on cessation of bankruptcy procedures.

12. To decide on declaration of bankruptcy of insolvent enterprises or cooperatives.

13. To apply administrative sanctions and request competent agencies to criminally settle bankruptcy cases in accordance with law.

14. To refer to previous decisions on bankruptcy settlement in similar bankruptcy cases under the guidance of the Supreme People’s Court.

15. To refuse to settle bankruptcy in one of the cases specified in Clause 1, Article 10 of this Law.

16. To perform other tasks and exercise other powers in accordance with law.

Article 10.Refusal or change of judges in the course of bankruptcy settlement

1. A judge shall refuse to participate in settling bankruptcy or be changed in the following cases:

a/ He/she is concurrently a bankruptcy procedure participant; a representative or relative of a bankruptcy procedure participant in the same bankruptcy case;

b/ He/she has participated in the bankruptcy procedures as a procurator, an asset management officer, a defense counsel for lawful rights and interests of bankruptcy procedure participants, an examiner or evaluator, a price appraiser or intepreter in the same bankruptcy case;

c/ He/she is in the same group of judges to settle the same bankruptcy case and a relative of other judges in the group;

d/ He/she has participated in issuing the decision on banpruptcy settlement in the same bankruptcy case;

dd/ There is a clear ground to believe that he/she is not impartial while performing his/her duty.

2. The change of judges shall be decided by chief justices of people’s courts. In case a judge in charge of bankruptcy is a chief justice, the change of this judge shall be decided by a immediate higher-level people’s court. The chief justice’s decision on change of a judge is the final one.

Article 11.Individuals and enterprises practicing asset management and liquidation

Individuals and enterprises that may practice asset management and liquidation in the course of bankruptcy settlement include:

1. Asset management officers;

2. Asset management and liquidation firms.

Article 12.Practice conditions of asset management officers

1. The following persons may be granted certificates to practice as asset management officers:

a/ Lawyers;

b/ Auditors;

c/ Persons who possess a bachelor degree in law, economics, accounting, finance or banking and have at least 5 years’ experience in their professional fields.

2. Conditions for a person to practice as an asset management officer:

a/ Having full civil act capacity;

b/ Having good ethical quality and sense of responsibility, and being upright, honest and impartial;

c/ Possessing an asset management officer practice certificate.

3. The Government shall stipulate in detail the grant of asset management officer practice certificates and state management of asset management officers.

Article 13.Asset management and liquidation firms

1. The following types of enterprise may practice asset management and liquidation in the course of bankruptcychuannccc settlement:

a/ Partnerships;

b/ Private enterprises.

2. Conditions for an enterprise to practice asset management and liquidation:

a/ A partnership that has at least two partners being asset management officers or its general director or director being an asset management officer;

b/ A private enterprise that has its owner being an asset management officer and concurrently its director.

3. The Government shall stipulate in detail the asset management and liquidation and state management of asset management and liquidation firms.

Article 14.Individuals who may not practice asset management and liquidation

1. Cadres, civil servants, public employees; officers, professional soldiers and defense workers in agencies and units of the People’s Army; professional officers and non-commissioned officers in agencies and units of the People’s Public Security.

2. Persons who are being examined for penal liability; convicted persons who have not had their convictions remitted; persons who are subject to the administrative handling measure of consigning into compulsory education establishments or compulsory detoxication facilities.

3. Persons who have lost their civil act capacity or have their civil act capacity restricted.

Article 15.Revocation of asset management officer practice certificates

1. A person who has been granted an asset management officer practice certificate and falls into one of the following cases shall have his/her certificate revoked:

a/ He/she is a cadre, civil servant or public employee; an officer, a professional soldier or defense worker in an agency or unit of the People’s Army; a professional officer or non-commissioned officer in an agency or unit of the People’s Public Security.

b/ He/she has been convicted and his/her sentence has taken legal effect;

c/ He/she has his/her lawyer or auditor practice certificate revoked;

d/ He/she has been changed under Points a and b, Clause 1, Article 46 of this Law in at least two bankruptcy cases.

2. The Government shall stipulate in detail the revocation of asset managemente officer practice certificates.

Article 16.Rights and obligations of asset management officers and asset management and liquidation firms

1. To manage assets, supervise business operations, conduct liquidation of assets of insolvent enterprises and cooperatives, which cover:

a/ Verifing, collecting and managing documents and evidences related to the operation of such enterprises or cooperatives;

b/ Making lists of assets, creditors and debtors;

c/ Preserving assets; preventing the sale or transfer of assets without permission of judges; preventing the dispersion of assets; maximizing the asset value of such enterprises or cooperatives upon the sale and liquidation of assets;

d/ Supervising the business operation of such enterprises or cooperatives in accordance with law;

dd/ Hiring individuals and organizations to perform jobs in accordance with law;

e/ Proposing to judges the sale of assets of such enterprises or cooperatives to cover bankruptcy expenses;

g/ Selling assets under decisions of judges to cover bankruptcy expenses;

h/ Organizing the asset valuation and liquidation in accordance with this Law; reporting to civil judgment enforcement agencies and notifying related bankruptcy procedure participants of the assignment of individuals and organizations to conduct the liquidation of assets;

i/ Remitting proceeds into accounts initiateed by people’s courts and competent civil judgment enforcement agencies at banks.

2. To represent enterprises or cooperatives in case such enterprises or cooperatives have no at-law representatives.

3. To report on the status of assets, liabilities and operation of enterprises or cooperatives, and participate in the elaboration of plans on rehabilitation of business operation of insolvent enterprises or cooperatives.

4. To request judges to:

a/ Collect documents and evidences;

b/ Declare transactions invalid and decide to recover illegally sold or transferred assets of enterprises or cooperatives;

c/ Apply provisional urgent measures; apply administrative sanction; forward dossiers to agencies with criminal handling competence in accordance with law.

5. To enjoy remuneration and perform the professional liability insurance responsibility in accordance with law.

6. To report on the performance of their tasks and the exercise of their powers as requested by judges and civil judgment enforcement agencies; to be anwerable to judges and civil judgment enforcement agencies and held responsible before law for the performance of their tasks and the exercise of their powers.

Article 17.Tasks and powers of civil judgment enforcement agencies

1. To enforce decisions on application of provisional urgent measures, decisions to declare transactions invalid, decisions on bankruptcy declaration and other decisions in accordance with this Law.

2. To request asset management officers and asset management and liquidation firms to conduct the asset valuation and liquidation; to conduct the asset liquidation in the cases specified in Clause 4, Article 121 of this Law.

3. To supervise operation of asset management officers and asset management and liquidation firms upon the liquidation of assets of bankrupt enterprises or cooperatives; to request asset managemet officers and asset management and liquidation firms to report on the asset liquidation.

4. To propose people’s courts to change asset managemet officers and asset management and liquidation firms in the course of liquidation of assets of bankrupt enterprises or cooperatives under Article 46 of this Law.

5. To divide assets of enterprises or cooperatives under decisions of people’s courts.

6. To decide to terminate the enforcement of decisions to declare enterprises or cooperatives bankrupt.

7. To perform other rights and exercise other powers in accordance with the law on judgment enforcement.

Article 18.Rights and obligations of bankruptcy procedure participants

1. To fulfill requests of judges, asset management officers, asset management and liquidation firms and civil jugdment enforcement agencies in accordance with the bankruptcy law.

2. To provide documents and evidences related to the bankruptcy settlement.

3. To request individuals, agencies and organizations that are keeping and managing documents and evidences to provide such documents and evidences related to their lawful rights and interests for submission to courts.

4. To request judges, asset management officers and asset management and liquidation firms to verify and collect documents and evidences which they cannot verify and collect or invite expert examination, valuation and appraisal of prices of assets; to request judges to decide on audit of insolvent enterprises or cooperatives; to request judges to summon witnesses.

5. To know and record or copy documents and evidences produced by other bankruptcy procedure participants or collected by judges.

6. To request the application, change or cancellation of provisional urgent measures.

7. To receive valid notices for exercise of their rights and performance of their obligations.

8. To protect themselves or ask others to protect their lawful rights and interests.

9. To attend creditors’ meetings.

10. To request change of asset management officers and asset management and liquidation firms under Article 46 of this Law.

11. To request asset management officers and asset management and liquidation firms to add creditors and debtors to the lists of creditors and debtors.

12. To propose asset management officers and asset management and liquidation firms to recover sums of money and assets of debtors.

13. To be present as requested by asset management officers and asset management and liquidation firms or under summons of people’s courts, and abide by decisions of people’s courts in the course of bankruptcy settlement.

14. To participate in the asset management and liquidation as requested by judges, civil judgment enforcement agencies, asset management officers or asset management and liquidation firms.

15. To request review of decisions of people’s courts in accordance with this Law.

16. In case individuals participating in bankruptcy procedures die, their lawful heirs shall exercie the rights and perform the obligations under this Article.

Article 19.Rights and obligations of persons filing petitions for initiation of bankruptcy procedures

1. Rights and obligations of bankruptcy procedure participants prescribed in Article 18 of this Law.

2. To propose to people’s courts names of asset management officers and asset management and liquidation firms before bankruptcy procedures are initiated.

3. To pay the bankruptcy fee and advance bankruptcy expenses, except when they are not required to do so.

4. To be honest in filing petitions for initiation of bankruptcy procedures.

Article 20.Rights and obligations of insolvent enterprises and cooperatives

1. Rights and obligations of bankruptcy procedure participants prescribed in Article 18 of this Law.

2. To raise their opinions on the acceptance or rejection of part or the whole claims of persons filing petitions for initiation of bankruptcy procedures.

3. To publicly notify decisions on initiation of bankruptcy procedures upon receiving such decisions.

Article 21.Supervision of law observance in the course of bankruptcy settlement

1. People’s procuracies shall supervise the law observance in the course of bankruptcy settlement and exercise the rights to file requests, recommendations or protests in accordance with this Law.

2. People’s procuracies shall attend meetings to examine their recommendations or protests; supervise people’s courts’ decisions on bankruptcy settlement.

Article 22.Bankruptcy fee

Persons filing petitions for initiation of bankruptcy procedures shall pay a bankruptcy fee in accordance with the law on court fees and charges. Persons filing requests specified in Clause 2, Article 5 and Point a, Clause 1, Article 105 of this Law are not required to pay a bankruptcy fee.

Article 23.Bankruptcy expenses and advanced amount to pay bankruptcy expenses

1. Bankruptcy expenses shall be paid with the value of assets of insolvent enterprises or cooperatives.

2. Persons filing petitions for initiation of bankruptcy procedures shall advance an amount to pay bankruptcy expenses, except those specified in Clause 2, Article 5 and Point a, Clause 1, Article 105 of this Law.

3. People’s courts shall assign asset management officers and asset management and liquidation firms to sell some assets of insolvent enterprises or cooperatives to cover bankruptcy expenses. The valuation, revaluation and sale of assets must comply with Articles 122, 123 and 124 of this Law.

4. People’s courts shall decide on levels of bankruptcy expenses to be advanced or paid on a case-by-case basis in accordance with law and decide on refund of advanced amounts to pay bankruptcy expenses, except when persons filing petitions for initiation of bankruptcy procedures violate the provision of Clause 4, Article 19 of this Law.

Article 24.Asset management officer and asset management and liquidation firm expenses

1. Asset management officer and asset management and liquidation firm expenses shall be calculated based on time spent, efforts made and results of tasks performed by these officers and firms.

2. The Government shall stipulate in detail asset management officer and asset management and liquidation firm expenses.

Article 25.Requests for, provision and notification of documents in the bankruptcy settlement

People’s courts, people’s procuracies, civil judgment enforcement agencies, asset management officers and asset management and liquidation firms have the obligation to request, provide and notify documents to bankruptcy procedure participants in accordance with this Law and the civil procedure law.

Chapter II

PETITIONS FOR INITIATION OF BANKRUPTCY PROCEDURES AND ACCEPTANCE THEREOF

Article 26.Petitions of creditors for initiation of bankruptcy procedures

1. When requesting people’s courts to initiate bankruptcy procedures, creditors specified in Clause 1, Article 5 of this Law shall file written petitions.

2. A petition for initiation of bankruptcy procedures must have the following principal contents:

a/ Date of making;

b/ Name of the people’s court with jurisdiction to settle bankruptcy;

c/ Name and address of the filer;

d/ Name and address of the enterprise or cooperative for which bankruptcy procedures are requested to be initiated;

dd/ Due debts.

Enclosed with the petition must be evidences to prove due debts.

3. In case there is a proposal on appointment of an asset management officer or asset management and liquidation firm, the petition for initiation of bankruptcy procedures must clearly state the name and address of such asset management officer or asset management and liquidation firm.

Article 27.Petitions of employees and trade union representatives for initiation of bankruptcy procedures

1. When requesting people’s courts to initiate bankruptcy procedures, employees and trade union representatives specified in Clause 2, Article 5 of this Law shall file written petitions.

2. A petition for initiation of bankruptcy procedures must have the following principal contents:

a/ Date of making;

b/ Name of the people’s court with jurisdiction to settle bankruptcy;

c/ Name and address of the filer;

d/ Name and address of the enterprise or cooperative for which bankruptcy procedures are requested to be initiated;

dd/ Total salaries and other due debts not yet paid by the enterprise or cooperative to employees.

Enclosed with the petition must be evidences to prove such salaries and due debts.

3. In case there is a proposal on appointment of an asset management officer or asset management and liquidation firm, the petition for initiation of bankruptcy procedures must clearly state the name and address of such asset management officer or asset management and liquidation firm.

4. From the date of petition filing, employees and trade union representatives have the rights and obligations of creditors in accordance with this Law.

Article 28.Petitions of insolvent enterprises and cooperatives for initiation of bankruptcy procedures

1. Enterprises or cooperatives specified in Clauses 3 and 4, Article 5 of this Law shall file petitions for initiation of bankruptcy procedures.

2. A petition for initiation of bankruptcy procedures must have the following principal contents:

a/ Date of making;

b/ Name of the people’s court with the jurisdiction to settle bankruptcy;

c/ Name and address of the enterprise or cooperative;

d/ Name and address of the person filing the petition;

dd/ Grounds for requesting the initiation of bankruptcy procedures.

3. A petition for initiation of bankruptcy procedures shall be enclosed with the following papers and documents:

a/ Financial statements of the enterprise or cooperative for the last three years. In case the enterprise or cooperative has been established and operating for less than 3 years, the petition shall be enclosed with its financial statements for the entire period of its operation;

b/ A written explanation about the cause of the insolvency; a report on results of the implementation of measures to rehabilitate the enterprise or cooperative which could not remedy the state of insolvency;

c/ A detailed list of assets of the enterprise or cooperative and their locations;

d/ A list of creditors and a list of debtors, clearly stating names and addresses of creditors, debtors, due or undue debts and loans which are secured, unsecured or partially secured;

dd/ Papers and documents related to the establishment of the enterprise or cooperative;

e/ Results of appraisal of prices and valuation of remaining assets (if any).

4. In case there is a proposal on appointment of an asset management officer or asset management and liquidation firm, the petition for initiation of bankruptcy procedures must clearly state the name and address of such asset management officer or asset management and liquidation firm.

5. Persons specified in Clauses 3 and 4, Article 5 of this Law who fail to file petitions for initiation of bankruptcy procedures when enterprises and cooperatives become insolvent shall be held responsible before law. In case of damage caused by failure to file petitions for initiation of bankruptcy procedures after enterprises or cooperatives become insolvent, they shall pay compensations.

Article 29.Petitions of shareholders or groups of shareholders of joint-stock companies, cooperative members or cooperatives being members of unions of cooperatives for initiation of bankruptcy procedures

1. When requesting people’s courts to initiate bankruptcy procedures, shareholders or groups of shareholders of joint-stock companies, cooperative members or at-law representatives of cooperatives being members of unions of cooperatives specified in Clauses 5 and 6, Article 5 of this Law shall file written petitions.

2. A petition for initiation of bankruptcy procedures must have the contents specified in Clause 2, Article 28 of this Law and be enclosed with documents (if any) specified in Clauses 3 and 4, Article 28 of this Law.

Article 30.Methods of filing petitions for initiation of bankruptcy procedures

1. Persons making petitions for initiation of bankruptcy procedures shall submit their petitions and enclosed documents and evidences to people’s courts with jurisdiction to settle bankruptcy by either of the following methods:

a/ Filing directly with people’s courts;

b/ Sending by post to people’s courts.

2. Filing date is the date when the people’s court receives the petition or date of postmark of the sending post office.

Article 31.Assignment of judges to settle petitions for initiation of bankruptcy procedures

1. Within 3 working days after receiving a petition for initiation of bankruptcy procedures, the chief justice of a people’s court shall assign a judge or a team of 3 judges to settle the petition.

2. The Chief Justice of the Supreme People’s Court shall issue the working regulation of teams of judges mentioned in Clause 1 of this Article.

Article 32.Handling of petitions for initiation of bankruptcy procedures

1. Within 3 working days after being assigned, a judge shall examine the petition for initiation of bankruptcy procedures and handle it as follows:

a/ In case the petition is valid, the judge shall notify the person filing the petition to pay a bankruptcy fee and advance bankruptcy expenses, except when such person is not required to do so;

b/ In case the petition does not fully have the contents specified in Article 26, 27, 28 or 29 of this Law, the judge shall notify the person filing the petition to modify or supplement it;

c/ To forward the petition to another people’s court with jurisdiction if the petition falls under the jurisdiction of such people’s court;

d/ To return the petition.

2. Notices of handling of petitions for initiation of bankruptcy procedures must be in writing and sent to persons that have filed such petitions and insolvent enterprises or cooperatives.

Article 33.Forwarding of petitions for initiation of bankruptcy procedures to people’s courts with jurisdiction and settlement of requests for review of petition forwarding

1. People’s courts that handle petitions under Point c, Clause 1, Article 32 of this Law shall forward petitions for initiation of bankruptcy procedures and enclosed documents and evidences to people’s courts with jurisdiction to settle bankruptcy and notify such to persons that have filed such petitions.

2. Within 3 working days after receiving a decision on petition forwarding, the person that has filed the petition or the people’s court to which the petition is forwarded may request the chief justice of the immediate higher-level people’s court to review the petition forwarding.

3. Within 3 working days after receiving a request, the chief justice of the immediate higher-level people’s court shall settle the request for review of the petition forwarding. The decision of the chief justice of the immediate higher-level people’s court is the final one.

Article 34.Notification of modification or supplementation of petitions for initiation of bankruptcy procedures

If petitions for initiation of bankruptcy procedures do not fully have the contents specified in Articles 26, 27, 28 and 29 of this Law, people’s courts shall notify such to the filers for modification or supplementation. The time limit for modification or supplementation of petitions is prescribed by people’s courts but must not exceed 10 working days after persons having filed such petitions are notified. In special cases, people’s courts may prolong the time limit to no more than 15 days.

Article 35.Return of petitions for initiation of bankruptcy procedures

1. A people’s court shall decide to return a petition for initiation of bankruptcy procedures in the following cases:

a/ The filer is not the one specified in Article 5 of this Law;

b/ The filer fails to modify or supplement the petition under Article 34 of this Law;

c/ Another people’s court has initiated bankruptcy procedures for the insolvent enterprise or cooperative;

d/ The filer withdraws the petition under Clause 2, Article 37 of this Law;

dd/ The filer fails to pay a bankruptcy fee or advance an amount to pay bankruptcy expenses, except when he/she is not required to do so.

2. Decisions of people’s courts on return of petitions for initiation of bankruptcy procedures must clearly state the reason for return. Within 3 working days after issuing these decisions, people’s courts shall send them to the filers and the same-level people’s procuracies.

Article 36.Requests for review, recommendations about return of petitions for initiation of bankruptcy procedures

1. Within 3 working days after receiving the people’s court’s decision on return of a petition for initiation of bankruptcy procedures, a person requesting the initiation of bankruptcy procedures may request the review of such decision, while the same-level people’s procuracy may file recommendations about the decision on return of such request with the chief justice of the people’s court having issued the decision.

2. Within 3 working days after receiving a request for review or a recommendation about the decision on return of the petition for initiation of bankruptcy procedures, the chief justice of the people’s court having issued the decision shall issue either of the following decisions:

a/ Decision to uphold the decision on return of the petition for initiation of bankruptcy procedures;

b/ Decision to cancel the decision on return of the petition for initiation of bankruptcy procedures and accept the request or recommendation in accordance with this Law.

3. Within 5 working days after receiving a decision on handling of the request for review or the recommendation about the decision on return of the petition for initiation of bankruptcy procedures, the person requesting the initiation of bankruptcy procedures may request the review while the people’s procuracy may file a recommendation with the chief justice of the immediate higher-level people’s court for consideration and handling.

4. Within 7 working days after receiving a request for review or a recommendation about the return of the petition for initiation of bankruptcy procedures, the chief justice of the immediate higher-level people’s court shall issue either of the following decisions:

a/ Decision to uphold the decision on return of the petition for initiation of bankruptcy procedures;

b/ Decision to cancel the decision on return of the petition for initiation of bankruptcy, and request the people’s court to accept the request or recommendation procedures in accordance with this Law.

5. The decision of the chief justice of the immediate higher-level people’s court on handling of the request for review or the recommendation is the final one. Such decision must be sent to the requester, the same-level people’s procuracy, the people’s procuracy having filed the recommendation and the people’s court having issued the decision on return of the petition.

Article 37.Negotiations between creditors filing petitions for initiation of bankruptcy procedures and insolvent enterprises or cooperatives

1. Within 3 working days after people’s courts receive valid petitions for initiation of bankruptcy procedures, insolvent enterprises or cooperatives and creditors having filed such petitions may request in writing these people’s courts for negotiation on withdrawal of petitions.

People’s courts shall set a time limit for negotiation which must not exceed 20 days after receiving a valid petition for initiation of bankruptcy procedures.

2. In case parties can reach agreement on withdrawal of the petition for initiation of bankruptcy procedures, the people’s court shall return the petition.

3. In case the negotiation fails or no negotiation is carried out by parties before the time limit for negotiation expires, the people’s court shall notify the person having filed the petition for him/her to pay a bankruptcy fee or advance bankruptcy expenses and accept the petition in accordance with this Law.

4. The negotiation between parties under this Article must not contravene the bankruptcy law.

Article 38.Procedures for payment of the bankruptcy fee and advance payment of bankruptcy expenses

1. Within 3 working days after receiving a valid petition for initiation of bankruptcy procedures, a people’s court shall estimate bankruptcy expenses to be advanced and notify them to the petitioner for payment of the bankruptcy fee and advance payment of bankruptcy expenses.

In case of a proposal on negotiation, the sending of a notice to the petitioner for initiation of bankruptcy procedures for payment of the bankruptcy fee and advance payment of bankruptcy expenses must comply with Clause 3, Article 37 of this Law.

2. Within 15 days after receiving a notice of payment of the bankruptcy fee and advance payment of bankruptcy expenses, the petitioner for initiation of bankruptcy procedures shall:

a/ Pay the bankruptcy fee to the civil judgment enforcement agency;

b/ Pay in advance bankruptcy expenses into the bank account opened by the people’s court.

Article 39.Acceptance of petitions for initiation of bankruptcy procedures

People’s courts shall accept petitions for initiation of bankruptcy procedures when receiving receipts of payment of the bankruptcy fee and advance payment of bankruptcy expenses. In case payment of the bankruptcy fee and advance payment of bankruptcy expenses are not required, the date of accceptance is the date when a people’s court receives a valid petition for initiation of bankruptcy procedures.

Article 40.Notification of acceptance of petitions for initiation of bankruptcy procedures

1. Within 3 working days after accepting a petition, a people’s court shall notify in writing the acceptance of the petition to the petitioner, insolvent enterprise or cooperative, agencies and organizations currently settling cases and matters related to the insolvent enterprise or cooperative, and same-level people’s procuracy.

In case the petitioner for initiation of bankruptcy procedures is the at-law representative of the insolvent enterprise or cooperative, the people’s court shall notify such to creditors notified by the enterprise or cooperative.

2. In case the petitioner is not the insolvent enterprise or cooperative, within 15 days after being notified by the people’s court, the insolvent enterprise or cooperative shall produce to the people’s court papers and documents specified in Clause 3, Article 28 of this Law.

Article 41.Suspension of the settlement of requests for performance of the property obligation by insolvent enterprises and cooperatives

Within 5 working days after a people’s court accepts a bankruptcy case, the performance of the property obligation by the insolvent enterprise or cooperative shall be suspended as follows:

1. The civil judgment enforcement agency shall suspend the enforcement of property-related civil judgments against the insolvent enterprise or cooperative, except the judgment or decision forcing this enterprise or cooperative to pay compensation for life, health or honor or pay salaries to employees. The suspension must comply only with the law on civil judgment enforcement;

2. The people’s court or arbitration shall suspend the settlement of a civil, business, commercial or labor case related to the property obligation in which the enterprise or cooperative is a party. The procedures for suspension must comply only with the civil procedure and commercial arbitration laws.

The people’s court shall separate and suspend the settlement of the civil part in a criminal or administrative case related to the property obligation in which the enterprise or cooperative is a party. Procedures for separation and suspension must comply with the criminal procedure and administrative procedure laws;

3. Competent agencies and organizations shall suspend the handling of security assets of enterprises or cooperatives for secured creditors.

In case security assets are likely to be destroyed or have their value considerably decreased, they shall be handled under Clauses 2 and 3, Article 53 of this Law.

Chapter III

INITIATION OF BANKRUPTCY PROCEDURES

Article 42.Decisions to initiate or not to initiate bankruptcy procedures

1. Within 30 days after accepting a petition for initiation of bankruptcy procedures, a judge shall issue a decision to initiate or not to initiate bankruptcy procedures, except the case specified in Article 105 of this Law.

2. Judges shall issue decisions to initiate bankruptcy procedures when enterprises or cooperatives fall insolvent.

3. In case of necessity, before issuing a decision to initiate bankruptcy procedures, a judge may hold a meeting with the participation of the petitioner, the owner or lawful representative of the enterprise or cooperative for which bankruptcy procedures are requested to be initiated, and related persons and organizations to consider and examine evidences proving that the enterprise or cooperative is insolvent.

4. A decision to initiate bankruptcy procedures must have the following principal contents:

a/ Date of issuance;

b/ Name of the people’s court; full name of the judge to carry out bankruptcy procedures;

c/ Acceptance date and number of the petition for initiation of bankruptcy procedures; name and address of the petitioner;

d/ Name and address of the insolvent enterprise or cooperative;

dd/ Time and places of declaration by creditors and legal consequences of failure to make declaration.

5. If finding that the enterprise or cooperative does not fall into the case specified in Clause 2 of this Article, the people’s court shall issue a decision not to initiate bankruptcy procedures.

In this case, the petitioner for initiation of bankruptcy procedures shall be refunded the advanced amount for bankruptcy expenses; request the insolvent enteprise or cooperative to resume performing the property obligation already suspended under Article 41 of this Law.

6. A decision to initiate or not to initiate bankruptcy procedures takes effect on the date of its issuance.

Article 43.Notification of decisions to initiate or not to initiate bankruptcy procedures

1. A people’s court’s decision to initiate bankruptcy procedures shall be sent to the petitioner, insolvent enterprise or cooperative, creditors, same-level people’s procuracy, civil judgment enforcement agency, tax office, business registration office of the locality where the enterprise or cooperative is headquartered and published on the national enterprise registration portal, website of the people’s court and 2 consecutive issues of a newspaper of the locality where the insolvent enterprise or cooperative is headquartered.

2. A people’s court’s decision not to initiate bankruptcy procedures shall be sent to the petitioner, enterprise or cooperative for which bankruptcy procedures are requested to be initiated and same-level people’s procuracy.

3. The time limit for sending and notification of a decision to initiate or not to initiate bankruptcy procedures is 3 working days after the people’s court issues such decision.

Article 44.Settlement of requests for review of or protests against decisions to initiate or not to initiate bankruptcy procedures

1. Within 7 working days after receiving a decision to initiate or not to initiate bankruptcy procedures, a bankruptcy procedure participant may request review of, while the same-level people’s procuracy may protest against, such decision.

2. Right after receiving a review request or protest, the people’s court that has issued the decision to initiate or not to initiate bankruptcy procedures shall send the dossier of the bankruptcy case to the immediate higher-level people’s court for settlement.

3. Within 3 working days after receiving the dossier of the bankruptcy case enclosed with the request for review or protest, the immediate higher-level people’s court shall appoint a group of 3 judges to consider and settle the review request or protest and send the dossier of the bankruptcy case to the same-level people’s procuracy.

4. Within 5 working days after receiving the dossier of the bankruptcy case sent by the people’s court, the same-level people’s procuracy shall return the dossier to the people’s court.

5. Within 5 working days after receiving the dossier of the bankruptcy case returned by the same-level people’s procuracy, the group of judges shall hold a meeting for considering and settling the review request or protest.

6. A meeting of the group of judges shall be attended by the people’s procuracy and have a minutes recorded by the people’s court clerk. In case of necessity, other persons may be invited to the meeting to provide more information on unclear issues.

7. The group of judges may issue one of the following decisions:

a/ Decision to uphold the decision to initiate or not to initiate bankruptcy procedures;

b/ Decision to cancel the decision not to initiate bankruptcy procedures and assign the people’s court that has issued the decision not to initiate bankruptcy procedures to consider and issue a decision to initiate bankruptcy procedures;

c/ Decision to cancel the decision to initiate bankruptcy procedures and notify such to the people’s court that has issued the decision to initiate bankruptcy procedures and bankruptcy procedure participants.

8. The decision of the group of judges is the final one and legally effective.

9. The Chief Justice of the Supreme People’s Court shall issue the working regulation of groups of judges settling requests for review of and protests against decisions to initiate or not to initiate bankruptcy procedures.

Article 45.Appointment of asset management officers and asset management and liquidation firms

1. Within 3 working days after issuing a decision to initiate bankruptcy procedures, a judge shall appoint an asset management officer or asset management and liquidation firm.

2. Grounds for appointment of an asset management officer or asset management and liquidation firm:

a/ To be-appointed person possesses a certificate for practicing as an asset management officer; asset management and liquidation firm has a practice certificate;

b/ The appointment of an asset management officer or asset management and liquidation firm is proposed by the petitioner for initiation of bankruptcy procedures;

c/ To be-appointed asset management officer or asset management and liquidation firm has no interest related to the bankruptcy case;

d/ The settlement of the petition for initiation of bankruptcy procedures requires such appointment;

dd/ To be-appointed asset management officer or asset management and liquidation firm is not a relative of a bankruptcy procedure participant.

3. A document on appointment of an asset management officer or asset management and liquidation firm must have the following principal contents:

a/ Date;

b/ Names and addresses of creditors and insolvent enterprise or cooperative;

c/ Name and address of the appointed asset management officer or asset management and liquidation firm;

d/ Summary of the petition for initiation of bankruptcy procedures;

dd/ Grounds for appointment of the asset management officer or asset management and liquidation firm;

e/ Advanced amount to pay asset management officer or asset management and liquidation firm expenses;

g/ Specific tasks and powers of the asset management officer or asset management and liquidation firm;

h/ Signature of the judge and seal of the people’s court.

Article 46.Change of asset management officers and asset management and liquidation firms

1. An asset management officer or asset management and liquidation firm may be changed under the judge’s decision in the following cases:

a/ He/she/it breaches his/its obligations prescribed in this Law;

b/ There is a ground to believe that he/she/it is not impartial while performing his/her/its tasks;

c/ Aforce majeurecircumstance renders him/it unable to perform his/her/its tasks.

2. A decision on change of an asset management officer or asset management and liquidation firm must be in writing, clearly stating the handling of advanced amount to pay expenses for the changed asset management officer or asset management and liquidation firm, and promptly sent to the asset management officer or asset management and liquidation firm and bankruptcy procedure participants.

3. Within 3 working days after receiving a decision on change of the asset management officer or asset management and liquidation firm, bankruptcy procedure participants and asset management officer or asset management and liquidation firm may file a request for review of the decision with the chief justice of the people’s court with jurisdiction to settle bankruptcy.

4. Within 3 working days after receiving a request for review of the decision on change of the asset management officer or asset management and liquidation firm, the chief justice of the people’s court shall consider and issue either of the following decisions:

a/ Decision to reject the request for review of the decision on change of the asset management officer or asset management and liquidation firm;

b/ Decision to cancel the decision on change of the asset management officer or asset management and liquidation firm.

5. The decision of the chief judge of the people’s court mentioned in Clause 4 of this Article is the final one.

6. In case of change specified at Points a and b, Clause 1 of this Article, the asset management officer or asset management and liquidation firm shall refund the whole advanced amount to pay asset management officer or asset management and liquidation firm expenses. In case of change specified at Point c, Clause 1 of this Aricle, the asset management officer or asset management and liquidation firm may have expenses for performed jobs paid.

7. Within 3 working days after the decision on his/her/its change is issued, the changed asset management officer or asset management and liquidation firm shall hand over performed jobs to the new one.

8. Asset management officers and asset management and liquidation firms that are changed in the cases specified at Points a and b, Clause 1 of this Article or fail to hand over performed jobs under Clause 7 of this Article shall, depending on the nature and severity of their violations, be administratively sanctioned or examined for penal liability. If causing damage, they shall pay compensation in accordance with law.

Article 47.Business operation of enterprises and cooperatives after decisions on initiation of bankruptcy procedures are issued

1. After decisions on initiation of bankruptcy procedures are issued, enterprises or cooperatives shall still continue their business operation but submit to supervision by judges and asset management officers or asset management and liquidation firms.

2. If seeing that at-law representatives of enterprises or cooperatives are incapable of performing management or these enterprises or cooperatives show signs of violation specified in Clause 1, Article 48 of this Law, judges shall issue decisions on change of at-law representatives of such enterprises or cooperatives at the request of the creditors’ meeting or asset management officers or asset management and liquidation firms.

Article 48.Prohibited activities of enterprises and cooperatives after decisions on initiation of bankruptcy procedures are issued

1. After decisions on initiation of bankruptcy procedures are issued, enterprises or cooperatives shall be prohibited from:

a/ Hiding, dispersing or donating their assets;

b/ Paying unsecured debts, except those arising after bankruptcy procedures are initiated and salaries are paid to employees of enterprises or cooperatives under Point c, Clause 1, Article 49 of this Law;

c/ Waiving the right to claim debts;

d/ Converting unsecured debts into debts secured or partially secured with assets of enterprises or cooperatives.

2. All transactions specified in Clause 1 of this Article are invalid and shall be handled under Article 60 of this Law.

Article 49.Supervision of operation of enterprises and cooperatives after decisions on initiation of bankruptcy procedures are issued

1. After decisions on initiation of bankruptcy procedures are issued, enterprises or cooperatives shall report to asset management officers or asset management and liquidation firms before:

a/ Conducting activities related to the borrowing, pledge, mortgage, guarantee, purchase, sale, transfer or lease of assets; sale or conversion of shares; transfer of asset ownership;

b/ Terminating the performance of valid contracts;

c/ Paying debts arising after the bankruptcy procedures are initiateed; paying salaries to their employees.

2. Reports may be made directly or sent by registered or unregistered mail, e-mail, facsimile or telex.

3. Within 3 working days after receiving reports of enterprises or cooperatives, asset management officers or asset management and liquidation firms shall send to these enterprises or cooperatives replies of whether or not they are permitted to conduct the activities specified in Clause 1 of this Article and be held responsible for their replies. Asset management officers or asset management and liquidation firms shall report on their replies to judges.

4. Activities specified in Clause 1 of this Article which are conducted without consents of asset management officers or asset management and liquidation firms shall be stopped while the original state shall be restored and consequences remedied in accordance with law.

Article 50.Judicial mandate in the bankruptcy settlement

1. In the course of bankruptcy settlement, a people’s court may decide to mandate another people’s court to recover assets or take testimonies of bankruptcy procedure participants, conduct on-spot appraisal or valuation of assets or take other measures to collect documents and evidences related to the bankruptcy case.

2. A decision on judicial mandate must clearly state names and addresses of bankruptcy procedure participants related to the mandate and specific mandated jobs.

3. The people’s court receiving the mandate decision shall perform the mandated jobs within 30 days after the receipt and notify in writing performance results to the people’s court that has issued the mandate decision. In case the mandate is impossible, it shall notify such in writing to the people’s court that has issued the mandate decision, clearly stating the reason for the impossibility of the mandate.

Chapter IV

PROPERTY OBLIGATIONS

Article 51.Valuation of property obligations

1. A property obligation of an enterprise or a cooperative which is established before the people’s court issues a decision on initiation of bankruptcy procedures shall be valued at the time of issuance of such decision.

2. A property obligation of an enterprise or a cooperative which is established after the people’s court issues a decision on initiation of bankruptcy procedures shall be valued at the time of issuance of the decision on bankruptcy declaration.

3. In case the property obligation mentioned in Clauses 1 and 2 of this Article is not monetary one, the people’s court shall monetize such property obligation.

Article 52.Determination of interests on debts

1. After decisions on initiation of bankruptcy procedures are issued, interests on debts shall be further charged as agreed upon but payment thereof may be suspended.

If judges issue decisions to cease bankruptcy procedures under Article 86 of this Law or cease procedures for resumption of business operation under Point a, Clause 1, Article 95 of this Law, the payment of interests will no longer be suspended and the parties shall continue to pay interests as agreed upon.

2. Interests on new debts arising after the initiation of bankruptcy procedures until the enterprise or cooperative is declared bankrupt shall be determined under agreements and in accordance with law.

3. From the date of issuance of decisions on declaration of bankruptcy of enterprises or cooperatives, interests on debts shall no longer be charged.

Article 53.Settlement of secured debts

1. After the initiation of bankruptcy procedures, asset management officers or asset management and liquidation firms shall propose to judges the settlement of secured debts which has been suspended under Clause 3, Article 41 of this Law. Judges shall consider the proposal and handle as follows:

a/ In case security assets are used for carrying out procedures for resumption of business operation, security assets shall be handled according to the resolution of the creditors’ meeting;

b/ In case procedures for resumption of business operation are not carried out or security assets are unnecessary for carrying out such procedures, security assets shall be handled within the time limit stated in the contracts, for secured contracts that have become due. For secured contracts that have not become due, before declaring enterprises or cooperatives bankrupt, people’s courts shall cease the performance of these contracts and settle secured debts. The settlement of secured debts must comply with Clause 3 of this Article.

2. In case collaterals are in danger of being destroyed or having their value significantly decreased, asset management officers or asset management and liquidation firms shall propose judges to permit the immediate handling of such security assets under Clause 3 of this Article.

3. The handling of collaterals under Point b, Clause 1 and Clause 2 of this Article shall be conducted as follows:

a/ Collaterals shall be used to pay secured debts arising before people’s courts accept petitions for initiation of bankruptcy procedures;

b/ In case the value of collaterals is not enough to pay debts, unpaid debts shall be paid in the course of liquidation of assets of enterprises or cooperatives. If the value of collaterals is larger than debts, the difference shall be added to the value of assets of enterprises or cooperatives.

Article 54.Order of division of assets

1. When judges issue decisions on bankruptcy declaration, assets of bankrupt enterprises or cooperatives shall be divided to pay in the following order:

a/ Bankruptcy expenses;

b/ Salaries, severance allowances, social insurance and health insurance owed to employees and other benefits under signed labor contracts and collective labor agreements;

c/ Debts arising after the initiation of bankruptcy procedures for resumption of business operation of enterprises or cooperatives;

d/ The financial obligation toward the State; unsecured debts payable to creditors on the list of creditors; secured debts not yet paid for the reason that the value of security debts is insufficient to pay.

2. After fully paying the payable amounts specified in Clause 1 of this Article, the remaining value of assets of enterprises or cooperatives, if any, shall belong to:

a/ Members of cooperatives or member cooperatives of unions;

b/ Owners of private enterprises;

c/ Owners of single-member limited liability companies;

d/ Members of limited liability companies with two or more members or shareholders of joint-stock companies;

dd/ Partners of partnerships.

3. If the value of assets is insufficient to pay the payable amounts specified in Clause 1 of this Article, entities of the same priority rank shall get paid in proportion to debt amounts owed to them.

Article 55.Property obligation in case of joint or guaranteed obligation

1. In case many enterprises or cooperatives have a joint obligation to pay a debt and one or all of them falls/fall insolvent, creditors may request any of these enterprises or cooperatives to pay the debt in accordance with law.

2. In case a guarantor falls insolvent, the guarantee shall be settled as follows:

a/ If the guaranty obligation arises, the guarantor shall perform such obligation. In case the guarantor fails to make full payment within the scope of guarantee, the guarantee may request the guaranteed to pay the deficit;

b/ If the guaranty obligation has not yet arisen, the guaranteed shall take another security measure, unless otherwise agreed by the guaranteed and guarantee.

3. In case the guaranteed falls or both guarantor and guaranteed fall insolvent, the guarantor shall bear responsibility for the guaranteed in accordance with law.

Article 56.Return of rented or borrowed assets when enterprises or cooperatives are declared bankrupt

1. Within 10 working days after receiving a decision on bankruptcy declaration, the owner of assets rented or borrowed by the enterprise or cooperative for use in business operation shall produce title documents and asset lease or lending contracts to the civil judgment enforcement agency for receiving back assets.

2. In case an enterprise or a cooperative declared bankrupt has paid in advance the rental while the lease term has not yet expired, the lessor may receive back the leased asset only after refunding the rental amount corresponding to the remaining lease term for the civil judgment enforcement agency to add to assets of such enterprise or cooperative.

3. In case an enterprise or a cooperative declared bankrupt has transferred the rented or borrowed asset to another party and cannot claim it back, the lessor or lender may request a compensation for such asset as an unsecured debt.

Article 57.Return of assets received as security

Insolvent enterprises or cooperatives shall return assets received as security to individuals and organizations that have handed over such assets as security for the performance of their obligations toward these enterprises or cooperatives before people’s courts initiate bankruptcy procedures in case such individuals and organizations have performed their obligations.

Article 58.Retrieval of sold goods

If sellers that have sent goods to purchasers being insolvent enterprises or cooperatives have not yet been paid and purchasers have not yet received goods, sellers may retrieve such goods. If insolvent enterprises or cooperatives have received such goods and cannot return them, sellers shall become unsecured creditors.

Chapter V

MEASURES TO PRESERVE ASSETS

Article 59.Transactions deemed invalid

1. 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 falling into one of the following cases:

a/ They are involved in the transfer of assets not at market prices;

b/ They are to convert unsecured debts into ones secured or partially secured with assets of enterprises or cooperatives;

c/ They are payments or clearing beneficial for one creditor for an undue debt or larger than a due debt;

d/ They are donation of assets;

dd/ They are not for business operation of enterprises or cooperatives;

e/ They are for the purpose of dispersing assets of enterprises or cooperatives.

2. Transactions of insolvent enterprises or cooperatives specified in Clause 1 of this Article which are conducted with affiliated persons within 18 months before people’s courts issue decisions to initiate bankruptcy procedures are deemed invalid.

3. Affiliated persons mentioned in Clause 2 of this Article include:

a/ Parent companies, managers of parent companies and persons competent to appoint managers of affiliated companies;

b/ Affiliated companies in relation to their parent companies; enterprises established by cooperatives in relation to such cooperatives;

c/ Persons or groups of persons that can influence the issuance of decisions by agencies managing enterprises or cooperatives regarding operation of such enterprises or cooperatives;

d/ Managers of enterprises or cooperatives in relation to such enterprises or cooperatives;

dd/ Spouses, blood or adoptive parents, blood or adopted children and blood siblings of managers of enterprises or cooperatives or of members or shareholders holding controlling contributed capital or shares;

e/ Individuals authorized to represent persons specified at Points a, b, c, d and dd of this Clause;

g/ Enterprises in which persons specified at Points a, b, c, d, dd, e and h of this Clause hold shares controlling the issuance of decisions by the management of such enterprises;

h/ Groups of persons who agree to act together to acquire contributed capital, shares or benefits of companies or to control the issuance of decisions by companies.

4. Asset management officers or asset management and liquidation firms shall scrutinize transactions of insolvent enterprises or cooperatives. If detecting transactions specified in Clauses 1 and 2 of this Article, they shall request people’s courts to consider and declare such transactions invalid.

Article 60.Declaration of invalid transactions

1. Within 10 working days after an asset management officer or asset management and liquidation firm and bankruptcy procedure participant request declaration of an invalid transaction or a people’s court detects a transaction specified in Clause 1 or 2, Article 59 of this Law, the people’s court shall issue either of the following decision:

a/ Decision to reject the request of the asset management officer or asset management and liquidation firm and bankruptcy procedure participants;

b/ Decision to declare the transaction invalid, cancel security measures and remedy consequences of the invalid transaction in accordance with law.

2. A decision to declare a transaction invalid takes effect on the date of its issuance.

3. Within 5 working days after receiving a decision to declare a transaction invalid, the insolvent enterprise or cooperative and party entering into the transaction with the enterprise or cooperative may request in writing the chief justice of the people’s court to review such decision.

4. Within 7 working days after receiving a request for review of the decision to declare the transaction invalid, the chief justice of the people’s court that has issued such decision shall issue either of the following decision:

a/ Decision to reject the review request;

b/ Decision to cancel the decision to declare the transaction invalid. In case of a dispute, such dispute shall be settled under the provisions of Chapter X of this Law.

5. Within 7 working days after receiving a decision specified at Point b, Clause 1 of this Article, the civil judgment enforcement agency shall take the initiative in enforcing such decision in accordance with the law on civil judgment enforcement.

Article 61.Suspension or termination of performance of valid contracts

1. Within 5 working days after a people’s court accepts a petition for initiation of bankruptcy procedures, if seeing that the current or future performance of a valid contract may cause harm to an insolvent enterprise or cooperative, creditors and such enterprise or cooperative may request the court to issue a decision to suspend the performance of the contract, except the case of settlement of secured debts under Article 53 of this Law.

2. A written request for a people’s court’s decision to suspend the performance of a contract mentioned in Clause 1 of this Article must have the following principal contents:

a/ Date of making;

b/ Name and address of the requester;

c/ Number and title of the contract; date (day, month, year) of contract signing;

d/ Party entering into the contract with the enterprise or cooperative;

dd/ Specific contents of the contract;

e/ Ground for the request.

3. Within 5 working days after receiving a written request, if accepting it the people’s court shall issue a decision to suspend the performance of the contract. If not accepting it, the people’s court shall notify such in writing to the requester.

4. Within 5 working days after the people’s court issues a decision to initiate bankruptcy procedures, the people’s court shall examine the suspended contract as specified in Clause 1 of this Article to issue either of the following decisions:

a/ Decision to continue the performance of the contract if the current or future performance of the contract is not likely to cause harm to the enterprise or cooperative;

b/ Decision to terminate the performance of the contract and remedy consequences under Article 62 of this Law.

5. In case people’s courts decide not to initiate bankruptcy procedures, people’s courts that have decided to suspend the performance of contracts under Clause 1 of this Article shall cancel suspension decisions.

Article 62.Settlement and compensation for damage when the performance of contracts is terminated

1. When the performance of a contract is terminated, if assets received by the insolvent enterprise or cooperative from the contract still exist in assets of the enterprise or cooperative, the party entering into the contract with the enterprise or cooperative may claim back such assets and refund sums of money which it has received from the enterprise or cooperative. If such assets no longer exist, the party entering into the contract may have the right of an unsecured creditor to the unrefunded sums of money.

2. In case the termination of the performance of a contract causes harm to the party entering into the contract with the enterprise or cooperative, such party may have the right of an unsecured creditor to the damage.

Article 63.Clearing of obligations

1. After people’s courts issue decisions to initiate bankruptcy procedures, creditors and insolvent enterprises or cooperatives may clear obligations in contracts established before such decisions are issued.

2. The clearing of obligations under Clause 1 of this Article is subject to consent of asset management officers and asset management and liquidation firms. Asset management officers and asset management and liquidation firms shall report to judges on the clearing of obligations.

3. Methods of clearing obligations:

a/ In case the parties have equivalent property obligations, they are not required to perform obligations to one another and such obligations are deemed expired, unless otherwise provided by law;

b/ In case the parties have different property obligations and the asset value difference belongs to the enterprise or cooperative, the party entering into the contract with the enterprise or cooperative shall pay for the asset value difference before adding it to its total assets;

c/ In case the parties have different property obligations and the asset value difference belongs to the party entering into the contract with the enterprise or cooperative, such party shall become an unsecured creditor for the asset value difference.

Article 64.Assets of insolvent enterprises and cooperatives

1. Assets of an insolvent enterprise or cooperative include:

a/ Assets and property rights held by the enterprise or cooperative at the time a people’s court issues a decision to initiate bankruptcy procedures;

b/ Assets and property rights acquired after a people’s court issues a decision to initiate bankruptcy procedures;

c/ Value of collaterals in excess of secured debts payable by the enterprise or cooperative to secured creditors;

d/ Value of land use rights of the enterprise or cooperative determined in accordance with the land law;

dd/ Assets recovered from acts of hiding or dispersing assets of the enterprise or cooperative;

e/ Assets and property rights recovered from invalid transactions;

g/ Other assets specified by law.

2. Assets of an insolvent private enterprise or partneship include:

a/ Assets specified in Clause 1 of this Article;

b/ Assets of the owner of the private enterprise or partners not directly used for business operation. In case the owner of the private enterprise or partners has/have assets under common ownership, such assets shall be divided in accordance with the civil law and relevant laws.

3. For cooperatives declared bankrupt, the handling of undivided assets must comply with the law on cooperatives.

Article 65.Inventory of assets of insolvent enterprises and cooperatives

1. Within 30 days after receiving a decision to initiate bankruptcy procedures, an insolvent enterprise or cooperative shall conduct the inventory and valuation of its assets. In case of necessity, it shall request in writing a judge to prolong such time limit for another 30 days for no more than twice. The valuation of assets of the enterprise or cooperative must be conducted in accordance with law.

2. In case the lawful representative of the enterprise or cooperative is absent, the person designated by the asset management officer or asset management and liquidation firm to act as the representative of the enterprise or cooperative shall conduct the inventory and valuation of its assets.

3. The table of inventory of valued assets must be promptly sent to the people’s court carrying out bankruptcy procedures.

4. If finding the inventory and valuation of assets of the enterprise or cooperative under Clause 1 of this Article inaccurate, the people’s court shall request the asset management officer or asset management and liquidation firm to organize the reinventory and revaluation of some or all of assets of the enterprise or cooperative. The value of assets may be determined and priced at market prices at the time of inventory.

5. In case the representative of the enterprise or cooperative and other persons do not cooperate with the asset management officer or asset management and liquidation firm in the inventory of assets or intentionally falsify the inventoried assets, they shall be handled in accordance with law.

Article 66.Sending of debt claims

1. Within 30 days after a people’s court issue a decision to initiate bankruptcy procedures, creditors shall send debt claims to the asset management officer or asset management and liquidation firm.

2. A debt claim must have the following contents:

a/ Name, address, nationality and personal identity of the creditor or his/its representative;

b/ Total payable debts, including due debts and unpaid due interests; undue debts; secured debts and security method; unsecured debts payable by the enterprise or cooperative; compensation (if any) to be paid under the contract.

3. Enclosed with debt claims are documents and evidences proving such debts. Debt claims shall be signed by creditors or their lawful representatives.

4. In case of aforce majeurecircumstance or an objective obstacle, the period during which theforce majeurecircumstance or objective obstacle exists shall not be counted into the time limit prescribed in Clause 1 of this Article.

Article 67.Making of lists of creditors

1. Within 15 days after the time limit for sending debt claims expires, an asset management officer or asset management and liquidation firm shall make a list of creditors, collect documents related to debts and publicly post up such list. A list of creditors must clearly state names, addresses, nationalities and personal identities of creditors or their representatives, debts owed to each creditor, including secured and unsecured debts, due and undue debts.

2. A list of creditors shall be publicly posted up at the office of the people’s court carrying out bankruptcy procedures and the head office of the enterprise or cooperative and published on the enterprise registration information portal and e-portal of the people’s court and sent to creditors that have sent debt claims within 10 working days after they are posted up.

3. Within 5 working days after the time limit for posting up the list of creditors expires, creditors and the insolvent enterprise or cooperative may request the judge to review the list of creditors. In case of aforce majeurecircumstance or an objective obstacle, the period during which theforce majeurecircumstance or objective obstacle exists shall not be counted into the time limit prescribed in this Clause.

4. Within 3 working days after receiving a review request, the judge shall consider and settle the request. If finding the request grounded, he/she shall modify or supplement the list of creditors.

Article 68.Making of lists of debtors

1. An asset management officer or asset management and liquidation firm shall make a list of debtors of the insolvent enterprise or cooperative. A list of debtors must clearly state names, address, nationalities and personal identities of debtors or their lawful representatives, debts of each each debtor, including secured and unsecured debts, due and undue debts.

2. Within 45 days after a decision to initiate bankruptcy procedures is issued, the list of debtors shall be publicly posted up at the office of the people’s court carrying out bankruptcy procedures and the head office of the enterprise or cooperative and sent to the debtors within 10 working days after it is posted up.

3. Within 5 working days after the time limit for posting up the list expires, the debtors and the insolvent enterprise or cooperative may request the judge to review the list of debtors.

4. Within 3 working days after receiving a review request, the judge shall consider and settle the request. If finding the request grounded, he/she shall modify or supplement the list.

Article 69.Registration of secured transactions of insolvent enterprises and cooperatives

An insolvent enterprise or cooperative that lends to others assets which are subject to registration of secured transactions as prescribed by law but has not yet registered such assets shall promptly conduct the registration. In case the insolvent enterprise or cooperative fails to register secured transactions, the asset management officer or asset management and liquidation firm shall do so.

Article 70.Application of provisional urgent measures

1. In the course of settlement of petitions for initiation of bankruptcy procedures, persons with the right and obligation to file petitions specified in Article 5 of this Law, asset management officers and asset management and liquidation firms may request a people’s court with jurisdiction to carry out bankruptcy procedures to issue decisions on application of one or several provisional urgent measures to preserve assets of insolvent enterprises or cooperatives and ensure the lawful rights and interests of employees, as follows:

a/ Permitting the sale of perishable goods, goods with a close expiry date and goods hard to be sold beyond a certain point of time; permitting the harvest and sale of cash crops or other products and goods;

b/ Distraining and sealing up assets of the enterprise or cooperative;

c/ Freezing bank accounts of the enterprise or cooperative; blockading assets at places where they consigned for safe keeping;

d/ Sealing up warehouses and funds, seizing and managing accounting books and relevant documents of the enterprise or cooperative;

dd/ Prohibiting the transfer of property rights to assets of the insolvent enterprise or cooperative;

e/ Prohibiting the alteration of the status of assets of the insolvent enterprise or cooperative;

g/ Prohibiting the enterprise or cooperative and other related individuals and organizations from taking certain acts or forcing them to take cetain acts;

h/ Compelling advance payment of salaries, wages, compensations or allowances for labor accidents or occupational diseases by the employer to employees;

i/ Other provisional urgent measures prescribed by law.

2. Persons requesting application of a provisional urgent measure shall send written requests to people’s courts with jurisdiction to apply such measures. A written request for application of a provisional urgent measure must have the following principal contents:

a/ Date of making;

b/ Name and address of the requester;

c/ Name and address of the person against whom the provisional urgent measure is requested to be applied;

d/ Reason for the application of the provisonal urgent measure;

dd/ Provisonal urgent measure that needs to be applied and specific requirements.

Depending on requirements on application of a provisional urgent measure, the requester shall provide the people’s court with evidences to prove the necessity to apply such measure.

3. Procedures for application, change or cancellation of provisional urgent measures, settlement of requests for review of the application, change or cancellation of provisional urgent measures and enforcement of decisions on application, change or cancellation of provisional urgent measures must comply with this Law, the law on civil procedures and civil judgment enforcement.

4. The Supreme People’s Court shall guide this Article.

Article 71.Handling of suspension of the enforcement of civil judgments or settlement of cases

1. In case people’s courts issue decisions not to initiate bankruptcy procedures, people’s courts, arbitrations or civil judgment enforcement agencies that have issued suspension decisions under Article 41 of this Law shall issue decisions to cancel suspension decisions.

2. In case people’s courts issue decisions to initiate bankruptcy procedures, people’s courts, arbitrations or civil judgment enforcement agencies that have issued suspension decisions under Article 41 of this Law shall issue decisions to terminate bankruptcy procedures and forward case files to people’s courts carrying out bankruptcy procedures for settlement.

3. In case people’s courts issue decisions to terminate the performance of bankruptcy procedures under Clause 1, Article 86 of this Law and terminate the procedures for resumption of business operation under Point a, Clause 1, Article 95 of this Law, people’s courts, arbitrations or civil judgment enforcement agencies shall issue decisions to cancel termination decisions mentioned in Clause 2 of this Article and settle cases in accordance with law.

Article 72.Handling of termination of the enforcement of civil judgments and settlement of cases

1. In case of termination of the judgment enforcement under Clause 2, Article 71 of this Law, people’s courts carrying out bankruptcy procedures shall handle on a case-by-case basis as follows:

a/ In case judgments or decisions of people’s courts have taken legal effect and there are no decisions on distraint of assets of enterprises or cooperatives to secure the judgment enforcement, judgment creditors may get paid as unsecured creditors;

b/ In case judgments or decisions of people’s courts have taken legal effect and there are decisions on distraint of assets of enterprises or cooperatives to secure the judgment enforcement, judgment creditors may get paid as secured creditors.

2. In case of termination of the settlement of cases under Clause 2, Article 71 of this Law, upon receiving case files forwarded by people’s courts that have issued decisions to terminate the settlement of cases, people’s courts carrying out bankruptcy procedures shall consider and decide on property obligations which insolvent enterprises or cooperatives shall perform or property obligations which other involved parties shall perform toward these enterprises or cooperatives as follows:

a/ In case the insolvent enterprises or cooperatives shall perform the property obligation, persons toward whom the property obligation is performed have the right to request to be paid as creditors with assets of these enterprises or cooperatives;

b/ In case involved parties shall perform the property obligation toward insolvent enterprises or cooperatives, they shall pay to these enterprises or cooperatives amounts of value equivalent to such property obligation.

Article 73.Obligations of banks at which enterprises and cooperatives open their accounts

From the date when a people’s court issues a decision to declare an enterprise or a cooperative bankrupt, the bank at which the enterprise or cooperative opens its account shall be prohibited from settling debts of the enterprise or cooperative, except when it obtains written consent of the people’s courts or civil judgment enforcement agency.

Article 74.Obligations of employees

From the date when a people’s court decides to initiate bankruptcy procedures, employees have the obligation to protect assets of their enterprise or cooperative and may neither hide nor disperse assets of their enterprise or cooperative.

Chapter VI

CREDITORS’ MEETINGS

Article 75.Convening of creditors’ meetings and sending of convening notices

1. Except cases in which a creditors’ meeting is not required to be held under Article 105 of this Law, a judge shall convene a creditors’ meeting within 20 days after the date of completing the asset inventory, if the asset inventory is completed after a list of creditors is made, or after the date of completing the making of a list of creditors, if the asset inventory is completed before a list of creditors is made.

2. A notice of convening a creditors’ meeting and other relevant documents shall be sent no later than 15 days before the opening date of the meeting to every person having the right or obligation to attend the meeting prescribed in Article 77 or 78 of this Law. The notice of convening a creditors’ meeting must specify the time, venue, agenda and contents of the meeting.

3. Notices of convening creditors’ meetings and enclosed documents may be handed directly, delivered or sent by registered or non-registered mail, fax, telex or email or by other methods provided that the sending is recorded.

Article 76.Principles of conducting creditors’ meetings

1. Respect for agreements among bankruptcy procedure participants if such agreements neither violate legal prohibitions nor go contrary to social ethics.

2. Equal rights and obligations of bankruptcy procedure participants.

3. Publicity in conducting creditors’ meetings.

Article 77.Right to attend creditors’ meetings

The following persons have the right to attend creditors’ meetings:

1. Creditors named on the list of creditors. Creditors may authorize in writing other persons to attend the creditors’ meeting and the authorized persons have the rights and obligations like creditors;

2. Employees’ representatives and trade union representatives who are authorized by employees. In this case, employees’ representatives and trade union representatives have the rights and obligations like creditors;

3. Guarantors who have already paid debts for insolvent enterprises or cooperatives. In this case, guarantors become unsecured creditors.

Article 78.Obligation to attend creditors’ meetings

1. Those who have filed petitions for initiation of bankruptcy procedures prescribed in Article 5 of this Law or lawful representatives of insolvent enterprises or cooperatives have the obligation to attend creditors’ meetings; in case such persons are unable to attend creditors’ meetings, they shall authorize in writing other persons to attend the meetings. In this case, authorized persons have the rights and obligations like authorizing persons.

2. In case representatives of insolvent enterprises or cooperatives are deliberately absent from creditors’ meetings without plausible reasons, asset management officers and asset management and liquidation firms may file written requests with a people’s court to handle them in accordance with law.

Article 79.Validity conditions of a creditors’ meeting

1. Being attended by creditors who represent at least 51% of unsecured debts.

Creditors who do not attend the creditors’ meeting but have sent to the judge their written opinions on the contents prescribed in Clause 1, Article 83 of this Law before the date the meeting is held shall be regarded as attending the meeting.

2. Being attended by the asset management officer and asset management and liquidation firm that are assigned to settle the petition for initiation of bankruptcy procedures.

Article 80.Postponement of creditors’ meetings

1. A creditors’ meeting shall be postponed if the conditions prescribed in Article 79 of this Law are not fully met; in case a creditors’ meeting is postponed, the judge shall make a minutes and record opinions of the meeting attendants. The judge shall notify the postponement of the creditors’ meeting to bankruptcy procedure participants right on the day the meeting is postponed.

2. The judge shall reconvene a creditors’ meeting within 30 days after the meeting is postponed.

3. If a creditors’ meeting which is reconvened under Clause 2 of this Article still fails to fully meet the conditions prescribed in Article 79 of this Law, the judge shall make a minutes and decide to declare bankruptcy.

Article 81.Agenda and proceedings of creditors’ meetings

1. A creditors’ meeting shall be conducted as follows:

a/ The judge assigned to take charge of the case opens the creditors’ meeting;

b/ The creditors’ meeting votes to approve the appointment of the meeting secretary at the proposal of the asset management officer or asset management and liquidation firm. The secretary shall make the meeting minutes;

c/ The asset management officer or asset management and liquidation firm reports on the presence and absence of persons invited to the creditors’ meeting according to the convening notice issued by the people’s court and reasons for their absence and then checks the personal identity papers of the meeting attendants;

d/ The judge informs the creditors’ meeting of the meeting attendants and contents of settlement of the petition for initiation of bankruptcy procedures;

dd/ The asset management officer or asset management and liquidation firm informs the creditors’ meeting of the business situation and actual financial state of the insolvent enterprise or cooperative; asset inventory results, the list of creditors, the list of debtors and other information if considering it necessary;

e/ The owner or lawful representative of the enterprise or cooperative presents his/her opinions about the contents reported to the meeting by the asset management officer or asset management and liquidation firm and proposes plans and solutions to reorganize its business operation, and debt repayment ability and deadlines;

g/ Creditors or their lawful representatives present specific issues for settlement, and reasons for, purposes and grounds of their bankruptcy settlement petition;

h/ Related persons or their lawful representatives present their opinions on issues related to their lawful rights and interests in the settlement of the petition for initiation of bankruptcy procedures;

i/ Witnesses present their opinions; assessors and representatives of price appraisal agencies present assessment or valuation results; persons implementing other judicial assistance measures explain unclear or contradictory issues;

k/ The asset management officer or asset management and liquidation firm publicizes written opinions, documents and evidences provided by those who are absent from the meeting, if any;

l/ The creditors’ meeting discusses contents presented by the asset management officer or asset management and liquidation firm and opinions of the meeting attendants;

m/ The asset management officer or asset management and liquidation firm and meeting attendants may request the judge to issue a decision to replace the lawful representative of the insolvent enterprise or cooperative;

n/ Creditors have the right to form a creditor representative board.

2. A resolution of the creditors’ meeting shall be approved when it is voted for by more than half of attending unsecured creditors who represent at least 65% of total unsecured debts. Resolutions of creditors’ meetings are binding on all creditors.

Article 82.Creditor representative boards

1. A creditor representative board shall be composed of between 3 and 5 members who are elected by creditors at a creditors’ meeting, including a chairperson, a vice chairperson and member(s).

2. Creditor representative boards shall, on behalf of creditors, supervise the implementation of resolutions of creditors’ meetings and request asset management officers or asset management and liquidation firms to implement resolutions of creditors’ meetings. If asset management officers or asset management and liquidation firms fail to implement their requests, creditor representative boards may report such in writing to the judges in charge of settling the bankruptcy cases.

Article 83.Resolutions of creditors’ meetings

1. A creditors’ meeting may issue a resolution containing one of the following conclusions:

a/ Requesting termination of the settlement of the petition for initiation of bankruptcy procedures, if the enterprise or cooperative concerned falls into the case prescribed in Clause 1, Article 86 of this Law;

b/ Requesting application of measures to restore the business operation of the enterprise or cooperative concerned;

c/ Requesting declaration of bankruptcy of the enterprise or cooperative concerned.

2. A resolution of a creditors’ meeting must have the following principal details:

a/ Date of issuance;

b/ Name of the asset management officer or asset management and liquidation firm;

c/ Name and address of the filer of the petition for initiation of bankruptcy procedures;

d/ Name and address of the enterprise or cooperative against which a petition for initiation of bankruptcy procedures is filed;

dd/ Names and addresses of related persons;

e/ Opinions of attendants to the creditors’ meeting;

g/ Opinions of the asset management officer or asset management and liquidation firm about requests of attendants to the creditors’ meeting;

h/ Conclusions made at the creditors’ meeting and voting results.

3. A resolution of a creditors’ meeting must contain signatures of the judge, asset management officer or representative of the asset management and liquidation firm and be announced at the meeting.

4. In case a creditors’ meeting fails to issue a resolution under Clause 2, Article 81 of this Law, the people’s court shall declare the enterprise or cooperative concerned bankrupt.

Article 84.Sending of resolutions of creditors’ meetings

Within 3 working days after a creditors’ meeting concludes, the people’s court shall send the resolution of the meeting to the same-level people’s procuracy and persons who have the right and obligation to attend to the meeting prescribed in Articles 77 and Article 78 of this Law.

Article 85.Requests and recommendations for review of resolutions of creditors’ meetings and settlement of these requests and recommendations

1. If disagreeing with a resolution of a creditors’ meeting, within 5 working days after receiving such resolution, a person having the right or obligation to attend the creditors’ meeting prescribed in Article 77 or 78 of this Law may file a written request, or the people’s procuracy of the same level with the people’s court settling the bankruptcy case may make a written recommendation, for review of the resolution to the chief justice of such court.

2. A written request or recommendation must have the following principal details:

a/ Date of making;

b/ Name and address of the requester or the procuracy making the recommendation;

c/ Contents of the request or recommendation.

3. Within 10 working days after receiving the written request or recommendation, the chief justice of the court settling the bankruptcy case shall consider and issue either of the following decisions:

a/ To reject the request or recommendation;

b/ To re-organize the creditors’ meeting.

4. Within 3 working days after the date of its issuance, the request or recommendation settlement decision shall be sent to the same-level people’s procuracy and persons having the right or obligation to attend the creditors’ meeting prescribed in Articles 77 and 78 of this Law.

5. The settlement decision prescribed in Clause 3 of this Article is the final one.

Article 86.Termination of bankruptcy procedures

1. During the period from the date when a people’s court issues a decision on initiation of bankruptcy procedures to the date when it issues a decision declaring the enterprise or cooperative bankrupt, if the enterprise or cooperative does not become insolvent, the people’s court shall issue a decision to terminate bankruptcy procedures.

The enterprise or cooperative shall refund the advanced amount to pay bankruptcy expenses to the filers of the petitions for initiation of bankruptcy procedures, except the case when such filers violate Clause 4, Article 19 of this Law.

2. Within 3 working days after it is issued, a decision on termination of bankruptcy procedures shall be sent to persons who have been notified of the decision on initiation of bankruptcy procedures prescribed in Clause 1, Article 43 of this Law.

Within 15 days after receiving the decision on termination of bankruptcy procedures, a bankruptcy procedure participant may file a request for review of, or the people’s procuracy of the same level with the people’s court settling the bankruptcy case may make a recommendation about, the decision to the chief justice of such court.

3. Within 3 working days after receiving the request or recommendation  prescribed in Clause 2 of this Article, the chief justice of the people’s court settling the bankruptcy case shall consider and settle it and make either of the following decisions:

a/ To uphold the decision on termination of bankruptcy procedures;

b/ To cancel the decision on termination of bankruptcy procedures and assign a judge to settle the bankruptcy case.

4. Within 3 days after it is issued, a decision on settlement of a request or recommendation for review of a decision on termination of bankruptcy procedures shall be sent to persons who have been notified of the decision on initiation of bankruptcy procedures prescribed in Clause 1, Article 43 of this Law.

Chapter VII

PROCEDURES FOR BUSINESS OPERATION RESTORATION

Article 87.Makingof business operation restoration plans

1. Within 30 days after the creditors’ meeting approves a resolution on application of measures to restore business operation, the insolvent enterprise or cooperative shall make a business operation restoration plan and send it to the judge, creditors, the asset management officer or asset management and liquidation firm for opinion.

2. Within 10 working days after receiving the enterprise’s or cooperative’s business operation restoration plan, creditors, the asset management officer or asset management and liquidation firm shall send their opinions to the enterprise or cooperative for finalizing the plan and reporting to the asset management officer or asset management and liquidation firm, creditors and the creditor representative board (if any).

3. Upon receiving the business operation restoration plan prescribed in Clause 2 of this Article, the asset management officer or asset management and liquidation firm shall report it to the judge.

4. Within 15 days after receiving the business operation restoration plan from the asset management officer or asset management and liquidation firm, the judge shall consider the plan before submitting it to the creditors’ meeting for consideration and approval.

Article 88.Contents of business operation restoration plans

1. A business operation restoration plan for an insolvent enterprise or cooperative must specify measures for restoring its business operation; and debt repayment conditions, time limits and plans.

2. Measures for restoring business operation include:

a/ Raising capital;

b/ Reducing, writing off or rescheduling debts;

c/ Changing production and business lines;

d/ Renewing production technologies;

dd/ Reorganizing the managerial apparatus; consolidating or splitting up production sections;

e/ Selling shares to creditors or others;

g/ Selling or leasing assets;

h/ Other lawful measures.

Article 89.Time limits for implementation of business operation restoration plans

1. The time limit for implementing a plan on restoration of business operation of an insolvent enterprise or cooperative must comply with the creditors’ meeting’s resolution approving such plan.

2. In case a creditors’ meeting does not set a time limit for implementing the business operation restoration plan of the insolvent enterprise or cooperative, the plan shall be implemented within 3 years after the date it is approved by the creditors’ meeting.

Article 90.Validity conditions of a creditors’ meeting approving an enterprise’s or a cooperative’s business operation restoration plan

1. Being attended by creditors representing at least 51% of unsecured debts.

Creditors who do not attend the creditors’ meeting but have sent their written opinions on the approval or disapproval of the enterprise’s or cooperative’s business operation restoration plan to the judge before the date the creditors’ meeting is held shall be considered as attending the meeting.

2. Being attended by the asset management officer or asset management and liquidation firm assigned to settle the petition for initiation of bankruptcy procedures.

Article 91.Agenda and proceedings of a creditors’ meeting approving a business operation restoration plan

1. Within 10 working days after deciding to submit the plan on restoration of business operation of the insolvent enterprise or cooperative to the creditors’ meeting, the judge shall convene a creditors’ meeting to consider and approve such plan.

2. The creditors’ meeting shall be conducted as follows:

a/ The judge assigned to take charge of the case opens the meeting;

b/ The meeting votes to approve the appointment of a meeting secretary at the proposal of the asset management officer or asset management and liquidation firm. The secretary shall make the meeting minutes;

c/ The asset management officer or asset management and liquidation firm reports on the presence and absence of persons invited to attend the creditors’ meeting according to the convening notice issued by the people’s court, reasons for their absence and check personal identity papers of the meeting attendants;

d/ The judge informs the creditors’ meeting of the meeting attendants;

dd/ The enterprise’s or cooperative’s representative presents the business operation restoration plan;

e/ Attendants to the creditors’ meeting present their opinions on the business operation restoration plan;

g/ The creditors’ meeting discusses and votes to approve the business operation restoration plan.

4. The creditors’ meeting may be postponed once if its validity conditions are not fully met. The re-organization of the creditors’ meeting must comply with Articles 90 and 91 of this Law.

5. The resolution of the creditors’ meeting approving the business operation restoration plan shall be approved if it is voted for by more than half of the attending unsecured creditors who represent at least 65% of total unsecured debts.

In case the business operation restoration plan involves the use of security assets, it must specify the period of using such security assets and plans on their handling and be agreed by the creditors that hold such assets.

6. The resolution of the creditors’ meeting is binding on all creditors.

7. In case of failure to re-organize a creditors’ meeting or the creditors’ meeting fails to approve a resolution under Clause 5 of this Article, the people’s court shall declare the enterprise or cooperative bankrupt.

Article 92.Recognition of a resolution of a creditors’ meeting approving an enterprise’s or a cooperative’s business operation restoration plan

1. The judge shall issue a decision to recognize the resolution of the creditors’ meeting approving the business operation restoration plan of the insolvent enterprise or cooperative. The resolution is binding on all bankruptcy procedure participants.

From the effective date of the resolution, the enterprise or cooperative is no longer subjected to the prohibitions and placed under supervision in business operation as prescribed in Articles 48 and 49 of this Law.

2. Within 7 working days after it is issued, the people’s court shall send the decision recognizing the resolution of the creditors’ meeting approving the business operation restoration plan to the insolvent enterprise or cooperative, creditors and the same-level people’s procuracy.

Article 93.Supervision of implementation of a business operation restoration plan

1. After the judge issues a decision to recognize the resolution of the creditors’ meeting approving the business operation restoration plan of an insolvent enterprise or cooperative, the asset management officer or asset management and liquidation firm and creditors shall supervise the business operation of the enterprise or cooperative.

2. Once every 6 months, the enterprise or cooperative shall report on the implementation of its business operation restoration plan to the asset management officer or asset management and liquidation firm for reporting to the judge and notification to creditors.

Article 94.Modification and supplementation of a business operation restoration plan

1. In the course of implementing a business operation restoration plan, creditors and the enterprise or cooperative concerned may reach agreement on modification or supplementation of such plan.

2. The agreement on modification or supplementation of the enterprise’s or cooperative’s business operation restoration plan shall be approved when it is voted for by more than half of the attending unsecured creditors who represent at least 65% of total unsecured debts.

3. The asset management officer or asset management and liquidation firm shall send to the judge a written request for issuance of a decision recognizing the agreement on modification or supplementation of the enterprise’s or cooperative’s business operation restoration plan.

Within 7 working days after it is issued, the decision recognizing the agreement on modification or supplementation of the enterprise’s or cooperative’s business operation restoration plan shall be sent to the enterprise or cooperative and its creditors.

Article 95.Termination of business operation restoration procedures

1. A judge shall issue a decision to terminate the procedures for restoration of the business operation of an insolvent enterprise or cooperative in one of the following cases:

a/ The enterprise or cooperative has fulfilled the business operation restoration plan;

b/ The enterprise or cooperative cannot implement the business operation restoration plan;

c/ Past the time limit for implementing the business operation restoration plan, the enterprise or cooperative remains insolvent.

2. The people’s court shall make public the decision on termination of procedures for restoration of the business operation of the enterprise or cooperative prescribed in Clause 1, Article 43 of this Law.

Article 96.Legal consequences of the termination of business operation restoration procedures

1. In the case prescribed at Point a, Clause 1, Article 95 of this Law, the enterprise or cooperative shall be regarded as no longer falling into insolvency. The judge in charge of settling the petition for initiation of bankruptcy procedures shall issue a notice of cessation of rights and obligations of the asset management officer or asset management and liquidation firm.

2. In the cases prescribed at Points b and c, Clause 1, Article 95 of this Law, the judge shall issue a decision declaring the enterprise or cooperative bankrupt.

Chapter VIII

BANKRUPTCY PROCEDURES APPLICABLE TO CREDIT INSTITUTIONS

Article 97.Application of provisions on bankruptcy procedures to credit institutions

Bankruptcy procedures applicable to credit institutions are prescribed in this Chapter. For matters not yet prescribed in this Chapter, relevant provisions of this Law, except those of Chapters VI and VII, shall apply.

Article 98.Right and obligation to file petitions for initiation of bankruptcy procedures

After the State Bank of Vietnam issues a document on removal of special control or termination of application or non-application of solvency restoration measures, if the credit institution concerned remains insolvent, the following persons have the right and obligation to file a petition for initiation of bankruptcy procedures:

1. The persons prescribed in Clauses 1, 2, 5 and 6, Article 5 of this Law;

2. 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.

Article 99.Acceptance of petitions for initiation of bankruptcy procedures against credit institutions

A people’s court shall accept the petition for initiation of bankruptcy procedures against a credit institution in case the State Bank of Vietnam has issued a  document on removal of special control or termination of application or non-application of solvency restoration measures but the credit institution remains insolvent.

Article 100.Refund of special loans

Credit institutions receiving special loans from the State Bank of Vietnam or other credit institutions under the Law on Credit Institutions, which are declared bankrupt, shall refund such special loans to the State Bank of Vietnam or other credit institutions before dividing their assets under Article 101 of this Law.

Article 101.Order of division of assets

1. The asset value of a credit institution shall be divided in the following order:

a/ Bankruptcy expenses;

b/ Wages, severance pays, social insurance premiums and health insurance premiums for employees, other benefits according to labor contracts and collective labor agreements already signed;

c/ Deposits and monetary amounts payable by deposit insurance institutions to those who deposit money at the bankrupt credit institution in accordance with the law on deposit insurance and the guidance of the State Bank of Vietnam;

d/ Financial obligations toward the State Bank of Vietnam; unsecured debts payable to creditors on the list of creditors; secured debts not yet paid as the value of their security assets are insufficient for debt payment.

2. The remainder of the credit institution’s asset value after all the debts prescribed in Clause 1 of this Article are paid, if any, shall belong to:

a/ Members of the credit institution being a cooperative;

b/ The owner of the credit institution being a single-member limited liability company;

c/ Capital contributors of the credit institution being a limited liability company with two or more members; shareholders of the credit institution being a joint-stock company.

3. In case the asset value is insufficient to pay the debts prescribed in Clause 1 of this Article, the entities of the same priority rank shall receive payments in proportion to the debts owed to them .

Article 102.Return of entrusted assets and custodial assets when credit institutions are declared bankrupt and conduct asset liquidation

Within 10 working days after receiving a decision declaring a credit institution bankrupt, owners of assets entrusted to, kept in custody at, or assigned for management to, the credit institution under asset entrustment, custody or management contracts, shall produce papers proving their ownership over such assets and related records and documents to civil judgment enforcement agencies in order to take their assets back.

Article 103.Transactions of credit institutions under special control

Transactions conducted by a credit institution during the period it is placed under special control or subjected to solvency restoration measures under the control by the State Bank of Vietnam are not governed by the provisions on invalid transactions in Article 59 of this Law.

Article 104.Decisions declaring credit institutions bankrupt

Within 30 days after an asset management officer or asset management and liquidation firm makes the list of creditors, list of debtors and asset inventory of the credit institution concerned, the people’s court shall issue a decision declaring such credit institution bankrupt.

The Supreme People’s Court shall guide the implementation of this Article.

Chapter IX

DECLARATION OF BANKRUPTCY OF ENTERPRISES AND COOPERATIVES

Article 105.Declaration of bankruptcy of enterprises and cooperatives according to summary procedures

1. People’s courts shall settle bankruptcy cases according to summary procedures in the following cases:

a/ Petitions for initiation of bankruptcy procedures are filed under Clauses 3 and 4, Article 5 of this Law but the insolvent enterprise or cooperative has no money or other assets to pay the bankruptcy fee and advance money to pay bankruptcy expenses;

b/ Petitions for initiation of bankruptcy procedures have been accepted but the insolvent enterprise or cooperative has no assets to pay bankruptcy expenses.

2. When considering that an enterprise or a cooperative falls into a case prescribed in Clause 1 of this Article, a people’s court shall notify bankruptcy procedure participants that it shall settle the case according to summary procedures.

3. Within 30 days after issuing a notice as prescribed in Clause 2 of this Article, the people’s court shall consider and declare the enterprise or cooperative bankrupt, for the cases prescribed in Clause 1 of this Article, or continue settle the case according to general procedures and notify such to bankruptcy procedure participants.

4. In case a people’s court issues a decision declaring the enterprise or cooperative bankrupt under Point b, Clause 1 of this Article, the filer of the petition for initiation of bankruptcy procedures shall not be refunded the bankruptcy fee and advanced payments for bankruptcy expenses.

Article 106.Bankruptcy declaration decisions upon failure of creditors’ meetings

In the cases prescribed in Clause 3, Article 80, Clause 4, Article 83 and Clause 7, Article 91 of this Law, within 15 days after receiving a report on results of the creditors’ meeting, the people’s court shall issue a decision declaring the enterprise or cooperative concerned bankrupt.

Article 107.Decisions declaring enterprises or cooperatives bankrupt after creditors’ meetings issue resolutions

1. Within 15 days after receiving a resolution of the creditors’ meeting requesting declaration of bankruptcy prescribed at Point c, Clause 1, Article 83 of this Law, the people’s court shall issue a decision declaring the enterprise or cooperative concerned bankrupt.

2. In the following cases, the people’s court shall issue a decision declaring the enterprise or cooperative concerned bankrupt even after the creditors’ meeting approves a resolution on application of business operation restoration procedures:

a/ The enterprise or cooperative fails to make a business operation restoration plan within the time limit prescribed in Clause 1, Article 87 of this Law;

b/ The creditors’ meeting does not approve the business operation restoration plan of the enterprise or cooperative;

c/ The enterprise or cooperative fails to implement the business operation restoration plan.

Article 108.Decisions declaring enterprises and cooperatives bankrupt

1. A decision declaring an enterprise or a cooperative bankrupt must contain the following principal details:

a/ Date of issuance;

b/ Name of the people’s court and full name of the judge conducting bankruptcy procedures;

c/ Name and address of the enterprise or cooperative declared bankrupt;

d/ Grounds for bankruptcy declaration;

dd/ Termination of the operation of the bankrupt enterprise or cooperative; suspension of transactions related to the enterprise or cooperative; termination of the obligation to pay interests to the enterprise or cooperative; settlement of consequences arising from suspended transactions; declaration of invalid transactions and settlement of consequences arising from invalid transactions; termination of labor contracts signed with employees and settlement of benefits for employees;

e/ Cessation of powers of the enterprise’s or cooperative’s representative;

g/ Liquidation of assets and auction of remaining assets of the enterprise or cooperative;

h/ Plan on division of the asset value before and after the enterprise or cooperative is declared bankrupt according to the order of asset division prescribed in Article 54 of this Law;

i/ Forwarding of requests for settlement of disputes to a competent people’s court;

k/ Ban on holding of certain posts after the enterprise or cooperative is declared bankrupt as prescribed in Article 130 of this Law;

l/ Settlement of other matters in accordance with law.

2. A decision declaring an enterprise or a cooperative bankrupt takes effect on the date of its issuance.

Article 109.Sending and notification of decisions declaring enterprises or cooperatives bankrupt

1. Within 10 working days after issuing a decision declaring an enterprise or a cooperative bankrupt, a people’s court shall make notification according to Clause 1, Article 43 of this Law. If the bankruptcy declaration decision also bans some persons from holding certain managerial posts, establishing, or acting as managers of, enterprises and cooperatives, the court shall also send a copy of the decision to the provincial-level Justice Department of the locality where it is headquartered.

2. Within 10 days after issuing a decision declaring an enterprise or a cooperative bankrupt, a people’s court shall send such decision to the business registration agency for de-registration of the enterprise or cooperative from the business register; in case the Supreme People’s Court issues a decision on settlement of a request for review of, or a recommendation about, the bankruptcy declaration decision as prescribed in Article 113 of this Law, this time limit may be prolonged but must not exceed 15 days after the date the Chief Justice of the Supreme People’s Court issues the decision.

Article 110.Property obligations after the issuance of decisions declaring enterprises and cooperatives bankrupt

1. Decisions declaring enterprises and cooperatives bankrupt prescribed in Article 105, 106 or 107 of this Law do not exempt owners of private enterprises or partners of partnerships from property obligations towards creditors whose debts have not yet been paid, unless otherwise agreed by bankruptcy procedure participants or prescribed by law.

2. Property obligations that arise after the issuance of decisions declaring enterprises or cooperatives bankrupt shall be settled in accordance with the law on civil judgment enforcement and other relevant laws.

Article 111.Requests for review, and protests against, decisions declaring enterprises or cooperatives bankrupt

1. The persons who are notified of the decision declaring an enterprise or a cooperative bankrupt under Clause 1, Article 109 of this Law have the right to file a request for review of, and the people’s procuracy of the same level with the people’s court which has issued such decision may make a protest against, such decision.

2. The time limit for filing a request for review of, or making a protest against, a decision declaring an enterprise or a cooperative bankrupt is 15 days after receiving, or being properly notified of, the decision.

Within 3 working days after receiving a request for review of, or a protest against, its decision declaring an enterprise or a cooperative bankrupt, the people’s court shall send the dossier of the bankruptcy case, enclosed with the request or protest, to its immediate higher-level people’s court for consideration and settlement.

Article 112.Settlement of requests for review, and protests against, decisions declaring enterprises and cooperatives bankrupt

1. Upon receiving a bankruptcy case dossier enclosed with a request for review of, or a protest against, a decision declaring an enterprise or a cooperative bankrupt, the immediate higher-level people’s court of the court which has issued such decision shall appoint a team consisting of 3 judges to consider and settle such request or protest and send the bankruptcy case dossier to the same-level people’s procuracy.

2. Within 5 working days after receiving the bankruptcy case dossier from the people’s court, the people’s procuracy shall return the dossier to the people’s court.

3. Within 20 days after receiving the bankruptcy case dossier enclosed with the request or protest, the judge team shall hold a working session and make one of the following decisions:

a/ To reject the request or protest and uphold the decision declaring the enterprise or cooperative bankrupt;

b/ To modify the decision declaring the enterprise or cooperative bankrupt;

c/ To cancel the decision declaring the enterprise or cooperative bankrupt and return the dossier to the lower-level people’s court for re-settlement.

4. The working session of the judge team shall be attended by a representative of the people’s procuracy and recorded in a minutes by a clerk of the people’s court. When necessary, the people’s court may summon the requester and other related persons to the working session to present their opinions.

5. The request or protest settlement decision of the higher-level people’s court takes legal effect on the date of its issuance.

Article 113.Consideration of written requests and recommendations according to special procedures

1. Within 15 days after the immediate higher-level people’s court issues a request or recommendation settlement decision under Article 112 of this Law, in case a bankruptcy procedure participant files a request for review of, or the Supreme People’s Procuracy or the people’s court concerned makes a recommendation about, such decision, the Chief Justice of the Supreme People’s Court shall re-consider such decision if obtaining any of the following grounds:

a/ There is a serious violation of the bankruptcy law;

b/ There arises a new circumstance which may fundamentally change the contents of the bankruptcy declaration decision and was unknown to the people’s court and bankruptcy procedure participants at the time the people’s court issued such decision.

2. If obtaining a ground prescribed in Clause 1 of this Article, the Supreme People’s Court shall request the people’s court which has issued the request or recommendation settlement decision under Article 112 of this Law to transfer the bankruptcy case dossier to the Supreme People’s Court for consideration and settlement.

3. Within 30 days after receiving the request or recommendation, the Chief Justice of the Supreme People’s Court may make either of the following decisions:

a/ To reject the request or recommendation and uphold the decision of the lower-level people’s court;

b/ To cancel the decision declaring the enterprise or cooperative bankrupt issued by the lower-level people’s court and the request or recommendation settlement decision issued by the immediate higher-level people’s court and return the bankruptcy case dossier to the lower-level people’s court for re-settlement.

4. The request or recommendation settlement decision issued by the Chief Justice of the Supreme People’s Court is the final one and takes legal effect on the date of its issuance.

Chapter X

HANDLING OF DISPUTED ASSETS OF ENTERPRISES AND COOPERATIVES

Article 114.Handling of asset-related disputes that arise before the issuance of decisions declaring enterprises or cooperatives bankrupt

1. In the course of settling bankruptcy for an enterprise or a cooperative, if an asset-related dispute arises before the issuance of a decision declaring the enterprise or cooperative bankrupt, the people’s court settling the bankruptcy case shall consider separating the disputed assets for settlement in another case in accordance with the law on civil procedures.

2. After obtaining an effective judgment or decision on settlement of the asset-related dispute prescribed in Clause 1 of this Article, the people’s court settling the bankruptcy case shall handle such assets as follows:

a/ If the bankruptcy declaration decision is not issued yet, assets obtained under the effective court judgment or decision shall be added up to the enterprise’s or cooperative’s assets;

b/ If the bankruptcy declaration decision has been issued, assets obtained under the effective court judgment or decision shall be divided according to this bankruptcy declaration decision.

3. The notification of the separation of disputed assets for settlement in another case prescribed in Clause 1 of this Article must comply with Clause 1, Article 43 of this Law.

4. After an enterprise or a cooperative is declared bankrupt, the asset management officer or asset management and liquidation firm shall represent the enterprise and cooperative in the settlement of asset-related disputes.

Article 115.Settlement of cases in which asset-related disputes arise in the course of enforcing decisions declaring enterprises or cooperatives bankrupt

1. In case an asset-related dispute arises in the course of liquidating assets according to a decision declaring an enterprise or a cooperative bankrupt or in case of impossibility to enforce a decision declaring an enterprise or a cooperative bankrupt, the judgment enforcer, asset management officer, asset management and liquidation firm and bankruptcy procedure participants shall request the people’s court which has settled the bankruptcy case to consider the dispute.

2. Within 10 working days after receiving a request from the judgment enforcer, asset management officer, asset management and liquidation firm and bankruptcy procedure participants, the people’s court shall issue either of the following documents:

a/ To reject the request of the judgment enforcer, asset management officer, asset management and liquidation firm or bankruptcy procedure participants; or

b/ To transfer the request to a competent person for consideration and making of a protest against the decision declaring the enterprise or cooperative bankrupt in accordance with law.

3. In case the judgment enforcer, asset management officer, asset management and liquidation firm or bankruptcy procedure participants disagree with the document prescribed at Point a, Clause 2 of this Article, they may request a competent person to consider and make a protest against the decision declaring the enterprise or cooperative bankrupt in accordance with law.

4. The asset management officer and asset management and liquidation firm shall represent the enterprise or cooperative in the settlement of asset-related disputes.

Chapter XI

BANKRUPTCY PROCEDURES INVOLVING FOREIGN ELEMENTS

Article 116.Bankruptcy procedure participants being foreigners

Bankruptcy procedure participants being foreigners shall comply with Vietnam’s bankruptcy law.

Article 117.Judicial mandate by Vietnamese people’s courts to foreign competent agencies

1. In the course of settling bankruptcy cases involving foreign elements, people’s courts shall conduct judicial mandate according to mutual judicial assistance agreements to which the Socialist Republic of Vietnam is a contracting party or on the principle of reciprocity.

2. Judicial mandate procedures must comply with the laws on civil procedures and mutual judicial assistance.

Article 118.Procedures for recognition and enforcement of bankruptcy settlement decisions issued by foreign courts

The recognition and enforcement of bankruptcy settlement decisions issued by foreign courts must comply with mutual judicial assistance agreements to which the Socialist Republic of Vietnam is a contracting party and other regulations on mutual judicial assistance.

Chapter XII

ENFORCEMENT OF DECISIONS DECLARING ENTERPRISES AND COOPERATIVES BANKRUPT

Article 119.Competence to enforce bankruptcy declaration decisions

The competence to enforce bankruptcy declaration decisions is prescribed in this Law, the law on civil judgment enforcement and other relevant laws.

Article 120.Procedures for enforcement of bankruptcy declaration decisions

1. Within 5 working days after a bankruptcy declaration decision is issued, the civil judgment enforcement agency shall proactively issue a decision on the enforcement of the bankruptcy declaration decision and assign an judgment enforcer to enforce such decision.

2. After receiving the task assignment decision of the civil judgment enforcement agency’s head, the judgment enforcer shall:

a/ Open a bank account under the name of the civil judgment enforcement agency competent to enforce the bankruptcy declaration decision in order to deposit recovered amounts of the bankrupt enterprise or cooperative;

b/ Supervise the asset liquidation conducted by the asset management officer and asset management and liquidation firm;

c/ Apply coercive measures to recover assets and hand over such assets to those entitled to buy assets in bankruptcy cases in accordance with the law on civil judgment enforcement;

d/ After receiving a report on asset liquidation results from the asset management officer or asset management and liquidation firm, implement the asset division plan according to the decision declaring the enterprise or cooperative bankrupt.

Article 121.Request for asset management officers and asset management and liquidation firms to conduct asset liquidation

1. Within 2 working days after receiving a task assignment decision issued by the head of the civil judgment enforcement agency, the judgment enforcer shall issue a written request to the asset management officer or asset management and liquidation firm to conduct asset liquidation.

2. The written request to the asset management officer or asset management and liquidation firm to conduct asset liquidation must have the following principal details:

a/ Date of making;

b/ Name of the requesting judgment enforcer;

c/ Name of the asset management officer or asset management and liquidation firm requested to conduct asset liquidation;

d/ Name and address of the bankrupt enterprise and cooperative;

dd/ Specific methods of asset liquidation as prescribed in Articles 122, 123 and 124 of this Law.

3. The written request to the asset management officer or asset management and liquidation firm to conduct asset liquidation shall be sent to the people’s court, people’s procuracy and bankruptcy procedure participants.

4. Past 2 years after receiving the written request from the judgment enforcer as prescribed in Clause 2 of this Article, if the asset management officer or asset management and liquidation firm fail to liquidate some assets, they shall stop the liquidation and transfer all of such assets and their documents to the civil judgment enforcement agency for handling and liquidation in accordance with law.

Article 122.Asset valuation

1. Within 10 working days after the bankruptcy declaration decision is issued, the asset management officer or asset management and liquidation firm shall value assets in accordance with law.

Asset management officers and asset management and liquidation firms may not sign valuation contracts with organizations or individuals with whom they have related rights and interests.

2. For to-be-liquidated assets which are in danger of being destroyed or significantly decreasing in their value, asset management officers and asset management and liquidation firms shall value and liquidate such assets in accordance with law.

Article 123.Asset re-valuation

1. Assets shall be re-valued when there are serious violations of Article 122 of this Law which falsify asset valuation results.

2. Judges shall decide on re-valuation of assets in case assets are sold under Clause 3, Article 23 of this Law. Judgment enforcers shall decide on re-valuation of assets in case assets are liquidated.

Article 124.Sale of assets

1. Assets shall be sold in the following forms:

a/ Auction;

b/ Sale not through auction procedures.

2. The auction of movables each valued at over VND 10,000,000 and real estate must comply with the law on asset auction.

Within 5 working days from the date of valuation, asset management officers and asset management and liquidation firms shall reach agreement with auction organizations. Asset management officers and asset management and liquidation firms shall sign contracts on asset auction services with auction organizations.

In case asset management officers and asset management and liquidation firms cannot reach agreement with auction organizations, judgment enforcers shall select auction organizations to sign contracts on asset auction services.

Contracts on asset auction services shall be signed within 10 days after the date of valuation.

The auction of a movable shall be held within 30 days after the contract on asset auction services is signed. For immovables, this time limit is 45 days.

3. Asset management officers and asset management and liquidation firms may themselves hold an auction for a to-be-liquidated asset in the following cases:

a/ There is no auction organization in the province or centrally run city where the asset is located or auction organizations in such province or centrally run city refuse to sign auction contracts;

b/ The asset is a movable valued at between VND 2,000,000 and VND 10,000,000.

The auction of a movable shall be held within 30 days from the date of valuation or the date of receiving the auction organization’s written refusal to provide asset auction services. For immovables, this time limit is 45 days.

4. Asset management officers and asset management and liquidation firms may sell not through auction procedures assets each valued at under VND 2,000,000 or assets prescribed in Clause 2, Article 122 of this Law.

The sale of assets shall be conducted within 5 working days after the date of issuance of the decision on enforcement of the bankruptcy declaration decision or the asset sale decision.

5. Asset auction procedures must comply with the law on asset auction.

Article 125.Recovery of assets in cases of violation

1. Asset management officers, asset management and liquidation firms or judgment enforcers may request people’s courts to issue a decision to recover assets of enterprises or cooperatives due to performance of invalid civil transactions under Article 59 of this Law. The recovery of assets must comply with the law on civil judgment enforcement.

2. Disputes over asset recovery or differences in the value of assets of enterprises or cooperatives shall be settled in accordance with Article 115 of this Law.

Article 126.Termination of enforcement of bankruptcy declaration decisions

The head of a civil judgment enforcement agency shall decide to terminate the enforcement of a bankruptcy declaration decision in the following cases:

1. The enterprise or cooperative that is declared bankrupt has no assets to be liquidated or divided;

2. The assets of the enterprise or cooperative that is declared bankrupt have been completely divided;

3. The head of the civil judgment enforcement agency has reported the settlement of the bankruptcy case to the people’s court and notified related individuals, agencies and organizations of the termination of enforcement of the bankruptcy declaration decision.

Article 127.Handling of assets that arise after the issuance of decisions declaring enterprises or cooperatives bankrupt

1. In case an invalid civil transaction prescribed in Article 59 of this Law is detected after the decision declaring the enterprise or cooperative bankrupt is issued, the asset management officer or asset management and liquidation firm may request a people’s court to declare the transaction invalid, settle consequences of the invalid transaction and divide assets of the enterprise or cooperative in accordance with Article 54 of this Law.

2. In case an undivided asset is detected after the decision declaring the enterprise or a cooperative bankrupt is issued, the people’s court which has declared the bankruptcy shall consider and decide on the division of such asset in accordance with Article 54 of this Law.

3. Civil judgment enforcement agencies shall enforce asset division decisions prescribed in Clause 2 of this Article.

Article 128.Settlement of complaints about the enforcement of decisions declaring enterprises or cooperatives bankrupt

The settlement of complaints about the enforcement of decisions declaring enterprises or cooperatives bankrupt must comply with the law on civil judgment enforcement.

Chapter XIII

HANDLING OF VIOLATIONS

Article 129.Responsibilities for violations of the bankruptcy law

1. Individuals, agencies and organization that commit violations of law in the course of settling bankruptcy cases shall, depending on the nature and seriousness of their violations, be disciplined, administratively sanctioned or examined for penal liability; if causing damage, they shall pay compensation in accordance with law.

2. Asset management officers and asset management and liquidation firms that commit violations of law in the course of settling bankruptcy cases shall be administratively sanctioned depending on the nature and seriousness of their violations; if causing damage, they shall pay compensation in accordance with law. In case asset management officers and other employees of asset management and liquidation firms commit criminal offenses, they may be examined for penal liability in accordance with law.

Article 130.Ban from holding managerial posts after enterprises or cooperatives are declared bankrupt

1. Holders of the posts of president, director, general director and member of the Board of Directors in enterprises with 100% state capital which are declared bankrupt shall be prohibited from holding such posts in any state enterprises from the date their enterprises are declared bankrupt.

2. Those who act as representatives of state capital at state-invested enterprises which are declared bankrupt shall be prohibited from holding managerial posts in any state-invested enterprises.

3. If holders of managerial posts in enterprises or cooperatives which are declared bankrupt intentionally violate the provisions of Clause 1, Article 18; Clause 5, Article 28; and Clause 1, Article 48 of this Law, judges shall consider and decide to deprive them of the right to establish, or act as managers of, enterprises and cooperatives within 3 years from the date bankruptcy declaration decisions are issued.

4. The provisions in Clauses 1, 2 and 3 of this Article shall not apply in case enterprises or cooperatives go bankrupt forforce majeurereasons.

Chapter IX

IMPLEMENTATION PROVISIONS

Article 131.Transitional provisions

1. As from the effective date of this Law, assets of enterprises and cooperatives which are detected after bankruptcy declaration decisions are issued under Bankruptcy Law No. 21/2004/QH11 shall be handled in accordance with Article 127 of this Law.

2. Complaints about and protests against bankruptcy declaration decisions which are issued in accordance with Bankruptcy Law No. 21/2004/QH11 before the effective date of this Law and remain unsettled by the effective date of this Law shall be settled according to the procedures prescribed in Clause 2 of Article 111, and Articles 112 and 113 of this Law.

3. Petitions for initiation of bankruptcy procedures accepted by people’s courts before the effective date of this Law shall be settled in accordance with this Law if decisions declaring enterprises or cooperatives bankrupt have not yet been issued.

4. The Government, the Supreme People’s Court and the Supreme People’s Procuracy shall guide the implementation of this Article.

Article 132.Effect

1. This Law takes effect on January 1, 2015.

2. Bankruptcy Law No. 21/2004/QH11 ceases to be effective on the effective date of this Law.

Article 133.Implementation detailing and guidance

The Government, the Supreme People’s Court and the Supreme People’s Procuracy shall detail and guide the implementation of articles and clauses as assigned in this Law.

This Law was passed on June 19, 2014, by the XIIIthNational Assembly of the Socialist Republic of Vietnam, at its 7thsession.-

Chairman of the National Assembly
NGUYEN SINH HUNG

 

 



[1]Công Báo Nos 683-684 (17/7/2014)

[2]Công Báo Nos 683-684 (17/7/2014)

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