New Bankruptcy Regulations in Vietnam
The Supreme People’s Court of Vietnam, along with the Ministry of Justice and the Supreme People’s Procuracy, released the Joint Circular No. 07/2018/TTLT-BTP-VKSNDTC-TANDTC (“JC 07”) on June 12, 2018, to ensure coordination in the enforcement of bankruptcy decisions by the court. It includes guidelines on issues related to enforcement procedures for court decisions on bankruptcy cases. JC 07 which will come into effect on August 1, 2018, will lead to better coordination between the enforcement agencies and courts and will further strengthen the bankruptcy and insolvency framework.
As per JC 07, once the civil judgment enforcement agency receives the court’s notice on the acceptance of the application to open bankruptcy proceedings, the enforcement agency needs to issue a decision to temporarily suspend the execution of the judgment against the insolvent company’s assets within five working days. However, this will not hold true in case the company is required to pay the salaries to its employees or pay compensation for the life, health, and honor of its employees.
If the court suspends or decides not to initiate bankruptcy proceedings, the civil judgment enforcement agency must revoke its temporary suspension decision within five business days and enforce the judgment in accordance with the law.
In case a bankrupt enterprise is the judgment creditor of other judgments or decisions, the civil judgment enforcement agency will continue to enforce its judgments or decisions as required by law. The executors are required to simultaneously inform the civil judgment enforcement agency as well as the officials managing the assets and the judge responsible for the bankruptcy proceedings about the collected assets so that it could be redistributed.
After the opening of bankruptcy proceedings, if the judge decides to sell the assets of the bankrupt enterprise to ensure the cost of bankruptcy but is unable to sell the assets, then the judge will declare the enterprise as bankrupt and transfer the case to civil judgment enforcement agency for execution. The executors will then transfer it to the asset management officer to evaluate the assets and the sale will proceed through auctions.