BUSINESS LAW Insolvency and Bankruptcy Group 6: Members Nguyn Thoi - PowerPoint PPT Presentation

BUSINESS LAW Insolvency and Bankruptcy

Group 6: Members  Nguyễn Thoại Ngọc .  La Phương Thảo  Huỳnh Huy Giang  Nguyễn Thị Hồng Minh  Nguyễn Giáng Hương

Out Outline line  Definition of insolvency, bankruptcy.  Something important about bankruptcy law.  Example.

Insolvency fall into the state lost, consecutive failures in business, must sell all property that is not enough to pay debts Business insolvency is defined in two different ways:  Cash flow insolvency Unable to pay debts as they fall due.  Balance sheet insolvency Having negative net assets – in other words, liabilities exceed assets. When a company becomes insolvency they must rectify the situation as soon as possible in order to avoid possible bankruptcy, by generating cash, minimizing overhead costs, cutting back on living expenses and settling or renegotiating current debts and debt repayments.

Bankruptcy :: status as a business due to loss-making and unable to pay due debt and the court, according to the law, decides the business liquidate their assets to pay debts for creditors. The conditions:  The unsecured/partially secured debt has matured.  A request for payment of the debt has been made and the debtor has failed to repay the debt.  The bankruptcy of enterprises shall be carried out in accordance with the law on bankruptcy. A state of insolvency can lead to bankruptcy but the condition may also be temporary and fixable without legal protection from creditors. Insolvency does not necessarily lead to bankruptcy, but all bankrupt debtors are considered insolvent.

The role of bankruptcy law:  To protect legitimate interests of creditor, property of debtors are maximized and pay equally for creditor.  To protect rightful interests of debtor, free debtor from obligation of paying and create chance to restart.  To protect interests of employee, join recovering company and liquidate property.  Contribute to organize, structuralize economy, help company have chance to save and escape from bankrupt situation; or select, eliminate weak company.  Ensure society’s order: to set order and procedure of bankruptcy, limit contradictions between debtor and creditor.

BA BANK NKRUPT UPTCY CY LA LAW

 Bankruptcy Law prescribes the conditions and the submission of applications for opening of bankruptcy procedures; the determination of property obligations and measures to preserve property in bankruptcy procedures; the conditions and procedures for restoration of business operation, the procedures for property liquidation and bankruptcy declaration; the rights, obligations and responsibilities of the applicants for opening of bankruptcy procedures, of the enterprises and cooperatives requested for bankruptcy declaration and of the participants in the settlement of requests for bankruptcy declaration.  (Chapter I, Article 1, Bankruptcy Law 2004)

Sub ubject ject of of Ap Applic icati ation on  Enterprises  Cooperatives  Unions of Cooperatives “ This Law applies to enterprises, cooperatives, unions of cooperatives (cooperatives and unions of cooperatives are referred collectively to as cooperatives), which are established and operate according to law provisions .” ( Bankruptcy Law 2004, Article 2, Clause 1)

Ef Effect ect of of Ba Bank nkruptcy uptcy La Law  1. The Bankruptcy Law and other law provisions shall apply when settling the bankruptcy of enterprises, cooperatives operating in the territory of the Socialist Republic of Vietnam, except otherwise provided for by international agreements which the Socialist Republic of Vietnam has signed or acceded to.  2. Where there appears the difference between the provisions of the Bankruptcy Law and the provisions of other laws on the same matters, the provisions of the Bankruptcy Law shall apply. ( Bankruptcy Law 2004, Article 4, Clause 1 and 2)

Bankruptcy nkruptcy proc oced edures ures  The bankruptcy procedures applicable to enterprises which fall into the state of bankruptcy are as follows: - The submission of applications for, and opening of bankruptcy procedures; - The restoration of business operation; - The liquidation of properties, debts; - The declaration of bankruptcy of the company. ( Bankruptcy Law 2004, Art.5, clause 1)

Debts secured with properties of enterprises, cooperatives or the third persons. Guaranteed creditors yes Yes. But lower than Partially guaranteed creditors debt Unguaranteed creditors no

App pplication lication for ope pening ning bankruptcy kruptcy pr procedures cedures  Unguaranteed or partially guaranteed creditors  Representatives of the employees or trade union representatives  Shareholders or groups of shareholders of a joint stock company  Partnership members of a partnership company  The owner or the lawful representative of a company in certain cases as provided may request the Court to open bankruptcy procedures when the enterprise is in bankrupt state. (Bankruptcy Law 2004, Article13,14,15,16,17)

Prop oper erty ty-managin managing g and nd liquidating uidating tea eams  A property-managing and -liquidating team is composed of: a) An executor of the judgment-executing agency of the same level as team leader; b) An official of the court; c) A representative of the creditor; d) The lawful representative of the enterprise or cooperative subject to the opening of bankruptcy procedures; e) In cases where it is necessary that the representative of the trade union organization, the laborers' representative, the representative of professional agencies join the property-managing and - liquidating team, the judge shall consider and decide thereon. ( Bankruptcy Law 2004, Article 9, clause 2)

Bankruptcy charges and advance of bankruptcy charges  The applicants for opening of bankruptcy procedures must advance bankruptcy charges under courts's decisions, except laborers defined in Article 14 of this Law.  The bankruptcy charges shall be advanced by the State budget: bankruptcy charges must not be advanced The applicants for opening of bankruptcy procedures do not have money for payment, but have other assets

Th The cou e courts' ts' ju juris risdiction diction • 1. The people's courts of districts or provinces have the competence to carry out bankruptcy procedures for cooperatives which have already made their business registration at the district or provincial-level business registries in their respective localities.  2. The provincial-level people's courts of the localities where foreign-invested enterprises in Vietnam are headquartered have the competence to carry out the bankruptcy procedures for such foreign-invested enterprises. (Bankruptcy Law 2004, Article 7)

Receipt of Application and Procedures at Court Within thirty (30) days upon receipt of an application, a decision will be issued to open or not open the bankruptcy procedures by the competent court upon careful consideration of the adequate evidences on the company’s bankruptcy. (bankruptcy law 2004, article 28)

Com omplai plaints nts abo bout ut deci ecisions sions not t to o ope pen n bankruptcy kruptcy pr procedures cedures  Within seven (07) days as from the date of receiving the decisions not to open the bankruptcy procedures, the applicants shall have the right to complain there about to the chief judges of such courts.  Within five (05) days as from the date of receiving the complaints about decisions not to open bankruptcy procedures, the courts' chief judges must issue one of the following decisions: a) To retain the decisions not to open bankruptcy procedures; b) To cancel the decisions not to open the bankruptcy procedures and issue decisions to open the bankruptcy procedures. ( bankruptcy law 2004, article 32)

Notif Notifica ication tion of of deci ecisi sions ons to op o open en th the e bankruptcy nkruptcy pr procedures cedures  Within seven (07) days as of the issuance of the decision on opening bankruptcy procedures the procuracies of the same level local newspapers the central dailies for 3 the court must notify consecutive issues. creditors debtors ( bankruptcy law 2004, article 29)