In the context of economic fluctuations, understanding the bankruptcy procedures for businesses has become more important than ever. This article provides a comprehensive guide on the business bankruptcy process according to the latest regulations in 2025.
Clause 2, Article 4 of the Bankruptcy Law defines business bankruptcy as a situation in which a business loses its ability to pay and is declared bankrupt by the People's Court. The conditions for a business to be considered as having lost its ability to pay include: (Official Letter 199/TANDTC-PC)
There is a specific, clear debt recognized, agreed upon, or determined by the parties involved, and the parties do not dispute this debt.
The debt is overdue, specifically:
It is a debt with a clear payment deadline, and by the due date, the business is obligated to repay it.
This payment deadline is recognized, agreed upon, or determined by the parties.
The business fails to meet its debt obligations within 03 months from the payment deadline, including two cases:
The business has no assets to repay the debts;
The business has assets but fails to pay its debts.
2. Procedure for Filing a Bankruptcy Petition
2.1 Preparing Documents
The documents required for filing a bankruptcy petition for a business that has lost its ability to pay include: (Article 28 of the Bankruptcy Law 2014)
A petition to open bankruptcy proceedings as prescribed by law.
Financial reports of the business: Reports for the last 03 years. If the business has been in operation for less than 03 years, financial reports for the entire period of operation must be provided.
An explanation of the inability to pay: Accompanied by a report on the recovery measures that have been attempted but failed.
A detailed list of assets: Indicating the assets and locations of each asset owned by the business.
A list of creditors and debtors: Including the names, and addresses of creditors and debtors; details about the debts, including secured debts, unsecured debts, overdue debts, and debts not yet due.
Documents related to the establishment of the business: Documents such as the Business Registration Certificate, company charter, and other relevant legal documents.
The results of asset valuation or appraisal (if any): Reports on the appraisal of the business's remaining assets.
Additionally, if a proposal is made to appoint a bankruptcy trustee or a business to manage and liquidate the assets, the petition must include their names and addresses.
2.2 Submitting the Petition to the Court (Article 30, Bankruptcy Law)
The petition and accompanying documents and evidence must be submitted to the competent People's Court through one of the following methods:
Submit directly to the People's Court;
Send to the People's Court via postal service.
The submission date is counted from the date the People's Court receives the petition or the date stamped by the postal service where the petition was sent.
3. Role of the Court and Bankruptcy Trustee
3.1 Role of the Court: (Articles 32, 39, 40, 42, 43 of the Bankruptcy Law)
Accepting the bankruptcy petition: Upon receiving the payment receipt for the bankruptcy fee and provisional bankruptcy costs, the court accepts the bankruptcy petition. If no fee or provisional cost is required, the petition is accepted from the date the court receives a valid petition.
Notification of acceptance:
The court must notify the petitioner, the business that has lost its ability to pay, relevant agencies, and the local People's Procuracy about the acceptance of the petition.
Time limit: 03 working days from the date of acceptance.
Processing the bankruptcy petition: Within 03 working days from the date assigned, the judge will review the petition and may:
Notify the petitioner about paying the bankruptcy fee and provisional bankruptcy costs.
Request modifications or supplements to the petition if it is incomplete.
Transfer the petition to the appropriate court if the case is outside its jurisdiction.
Return the bankruptcy petition.
Decision to open or not open bankruptcy proceedings: Time limit: 30 days from the date of acceptance.
Appointing or changing the bankruptcy trustee: Time limit: 03 working days from the decision to open bankruptcy proceedings.
Supervising the bankruptcy trustee’s activities during the bankruptcy process.
3.2 Role of the Bankruptcy Trustee: (Article 16 of the Bankruptcy Law 2014)
Managing assets and supervising business operations: The trustee is responsible for verifying, collecting, and managing relevant documents; preparing a list of assets, creditors, and debtors; securing assets and preventing asset concealment; and supervising the business operations of the business that has lost its ability to pay.
Proposing the sale of assets to cover bankruptcy costs.
Organizing asset valuation and liquidation: Organizing asset valuation and liquidation according to regulations; reporting to the civil enforcement agency and notifying all concerned parties about the assignment of liquidation tasks.
Representing the business when no representative is available.
Reporting the status of assets and liabilities: Providing reports on the business’s assets, liabilities, and activities; participating in the development of a recovery plan if applicable.
Requesting the judge to apply necessary measures: Proposing that the judge gather documents, declare transactions void, apply emergency measures, or impose administrative penalties when violations are found.
4. Steps in the Bankruptcy Process
4.1 Inventory and Asset Valuation
1. Inventory of assets: (Article 65 of the Bankruptcy Law 2014)
Deadline for execution: Within 30 days from the date of receiving the decision to open bankruptcy proceedings, the business that has lost its ability to pay must conduct an inventory and determine the value of its assets. If necessary, the judge may be requested to extend the deadline, but no more than twice, with each extension not exceeding 30 days.
In the absence of a legal representative, the bankruptcy trustee or the company managing and liquidating assets will appoint a representative to carry out the inventory and asset valuation.
Report on inventory results: After completing the inventory, the list of assets with determined values must be immediately sent to the People's Court handling the bankruptcy proceedings.
2. Asset valuation: (Article 122 of the Bankruptcy Law 2014)
Deadline for valuation: Within 10 working days from the date the bankruptcy declaration is issued, the bankruptcy trustee or the company managing and liquidating assets must organize the asset valuation as per regulations.
The asset valuation must be carried out in accordance with the law on asset valuation and other related legal provisions.
If necessary, the judge may decide to hire a valuation organization to determine the value of the assets.
4.2 Creditor Meeting
1. Contents and procedure of the creditor meeting: (Based on: Article 81 of the Bankruptcy Law 2014)
The creditor meeting is conducted in the following order:
The judge opens the meeting.
A vote is held to elect the secretary of the meeting.
A report on the presence or absence of participants is made.
Announcements regarding the resolution of the petition to open bankruptcy proceedings.
A report on the business’s financial and operational situation is provided.
Presentations by the business owner, creditors, and other stakeholders.
Discussions on relevant issues.
A proposal to change the legal representative of the business if needed.
Formation of a creditor’s representative board (if applicable).
Adoption of a resolution: The resolution of the creditor meeting is adopted when more than half of the unsecured creditors are present and represent at least 65% of the total unsecured debt, with a majority in favor.
2. Resolution of the creditor meeting: (Article 83 of the Bankruptcy Law 2014)
The creditor meeting has the right to issue a resolution with the following conclusions:
Propose the suspension of bankruptcy proceedings.
Propose the application of business recovery measures.
Propose the declaration of business bankruptcy.
The resolution must be signed by the judge, bankruptcy trustee, and the representative of the company managing and liquidating assets, and it must be notified to the creditor meeting.
5. Rights and Obligations of Involved Parties
5.1 Rights and Obligations of the Bankrupt Business
Rights: (Article 20 of the Bankruptcy Law 2014)
To express opinions on accepting or rejecting part or all of the petitioner's request to open bankruptcy proceedings.
To be publicly notified of the decision to open bankruptcy proceedings once the decision is made.
Obligations: (Article 20 and Article 49 of the Bankruptcy Law 2014)
To participate in the creditor meeting; if unable to participate, a written authorization must be provided for someone else to attend.
To provide full information and documents related to assets, debts, and business activities upon request by the Court, bankruptcy trustee, or other relevant authorities.
To protect the assets of the business and prevent asset concealment during the bankruptcy process.
To cooperate with the bankruptcy trustee or company managing and liquidating assets in asset liquidation and distribution of the proceeds to creditors.
5.2 Rights and Obligations of Creditors
Rights: (Article 5 and Article 78 of the Bankruptcy Law 2014)
To submit a petition to open bankruptcy proceedings when the business loses its ability to pay.
To participate in the creditor meeting and vote on debt resolution plans, including business recovery measures or declaring bankruptcy.
To be informed about the bankruptcy resolution process and their rights in asset liquidation.
To be paid debts according to the priority order specified by law in the asset liquidation process.
Obligations: (Article 78 and Article 79 of the Bankruptcy Law 2014)
To provide full information and documents related to the business’s debts when requested by the Court, bankruptcy trustee, or other relevant authorities.
To fully participate and cooperate in the creditor meetings to ensure their rights and the rights of other creditors are upheld.
To comply with the Court’s decisions and the resolutions of the creditor meetings regarding debt resolution and asset liquidation.
6. Legal Consequences of Bankruptcy Declaration
When a business is declared bankrupt:
Termination of business operations: The business will cease its operations and be removed from the business registry, effectively ending its legal existence.
Resolution of employee rights: Employees will be given priority for the payment of unpaid wages, severance pay, social insurance, health insurance, and other rights according to the labor contract and collective labor agreement signed.
Asset liquidation according to regulations: The remaining assets of the business will be liquidated to pay debts according to the priority order established by law.
Restrictions on business managers: Individuals holding managerial positions in a business declared bankrupt may be prohibited from holding similar positions in state-owned enterprises or face restrictions on establishing businesses for a certain period.
7. Practical Advice
To ensure a smooth bankruptcy process:
Study bankruptcy law carefully before submitting a petition: Understanding the legal provisions related to bankruptcy helps the business determine the right timing and method for filing, avoiding mistakes and saving time.
Prepare full documentation as required:
Ensure the validity and effectiveness of the legal procedure, helping the Court and relevant authorities have sufficient information to consider and resolve the petition quickly and accurately.
Help save time and costs for the business and protect the legal rights of the involved parties.
Support the asset liquidation process and debt distribution fairly and transparently, ensuring the rights of all parties.
Hire professional legal counsel: Experienced lawyers or legal consultants in bankruptcy will assist the business in understanding its rights and obligations and guide it through the legal procedures effectively.
Cooperate closely with the bankruptcy trustee: The bankruptcy trustee plays an important role in managing assets and overseeing the liquidation process. Close cooperation with them will help ensure the rights of involved parties and compliance with the law.
Conclusion
The bankruptcy procedure is a complex process that requires a thorough understanding and strict adherence to legal regulations. Understanding the process and preparing thoroughly will help businesses minimize risks and protect the rights of involved parties.
For detailed advice on business bankruptcy procedures, please contact Harley Miller Law Firm.
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