VIETNAM ACADEMY OF SOCIAL SCIENCES
GRADUATE ACADEMY OF SOCIAL SCIENCES
TRAN THI THU HA
PROCEDURES FOR RECOVERY OF BUSINESS
OPERATIONS OF INSOLVENT ENTERPRISES IN
VIETNAMESE BANKRUPTCY LAW
Major: Economic Law
Code: 9 38 01 07
SUMMARY OF DOCTORAL THESIS IN LAW
HANOI - 2019
The Doctoral thesis was completed at:
GRADUATE ACADEMY OF SOCIAL SCIENCES
Supervisor: Assoc Prof. Dr. Nguyen Nhu Phat
Reviewer 1: Prof. Dr. Le Hong Hanh
Reviewer 2: Assoc Prof. Dr. Duong Dang Hue
Reviewer 3: Assoc Prof. Dr. Le Thi Thu Thuy
The doctoral thesis will be examined by Examination Board of
Graduate Academy of Social Sciences at ………………………….
The doctoral thesis can be found at:
- National Library of Vietnam;
- Library of Graduate Academy of Social Sciences
INTRODUCTION
1. Rationale
The positive development of the socialist-oriented market economy in
Vietnam over the past few decades has brought remarkable socio-economic
achievements, but the loss and bankruptcy of Vietnamese enterprise has also
increased constantly, causing many negative consequences for the economy,
people and society. Like other countries in the world, the State of Vietnam
always sets out the task of resolving losses and bankruptcy in order to ensure a
healthy and legal business environment for the participants in investment and
business.
The first Vietnamese Bankruptcy Law was promulgated in 1993 and was
replaced by the Bankruptcy Law in 2004, effective from October 15, 2004 to
January 31, 2014, in which the procedures for recovery of business operations
was officially determined based on acquiring international experience and
meeting the situation of domestic business development. However, after more
than 10 years of implementation, the realization this provision was not as
successful as expected, there were only one successful case over the country. On
June 19, 2014, the National Assembly passed the Bankruptcy Law 2014 with the
goal of “creating an opportunity for enterprises and cooperatives with conditions
to restore and restructure production and business activities”.
However, the actual implementation of procedures for recovery of business
operations of the insolvent enterprise that are under Chapter VII of the Law on
Bankruptcy in 2014 is inadequate, the bankruptcy cases at the courts are hardly
follow the procedures. In most cases enterprises are enough signs of inability to
pay debts, the recovery of enterprises by civil, economic and administrative
methods before proceeding with bankruptcy procedures has brought more
positive results than the method of implementation recovery procedures under
the Bankruptcy Law.
The above fact requires legal science that it is necessary to study and
supplement the theory and to re-evaluate the current situation of law and
practical implementation to create a basis for perfecting the law and
organizing the implementation of restoring business operations of enterprises
that are unable to pay due debts. Besides, studying of the procedures in some
developed countries will give a clearer view of the reasons for effective
implementation of it.
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Vietnam is in the process of becoming more and more aware of the
socialist-oriented market economy. The legal system, mechanisms and policies
are increasingly perfected and been more suitable to international law and met
practical requirements, in which the urgent need in the immediate period is
improving market economy, innovation growth model and economic
restructuring. The country also needs judicial procedures for recovery of
business operations of the insolvent enterprises that are more appropriately with
market laws, strongly supporting the development of enterprises and the socioeconomic.
Facing the above situation, the doctoral student selected the topic
“Procedures for recovery of business operations of insolvent enterprises in
Vietnamese bankruptcy law” as a doctoral thesis. It has the meaning of both
legal science and practice of settling business bankruptcy procedures and
ensuring the country's socio-economic stability and development.
2. Purposes and missions of the thesis
- The purpose of the thesis are developing reasoning on the procedures for
recovery of business operations of insolvent enterprises that are incapable of
paying debts according to Vietnamese bankruptcy law; providing scientific
arguments for assessing the legal situation, the practice of implementing
procedures for recovery of business operations of insolvent enterprises and
pointing out solutions of such problems.
- The missions of the thesis:
+ Evaluating the overall situation of research and issues related to the thesis
topic, identifying the left-open content, also debating to raise issues that need
further research in the thesis.
+ Researching, analyzing, clarifying and deepening some basic theoretical
issues about procedures for recovery of business activities of insolvent
enterprises; identifying specific content in this procedure.
+ Researching, analyzing and properly evaluating the legal status of
procedures for recovery of business activities of insolvent enterprises in Vietnam
today; the actual implementation of law on procedures for recovery business
activities of insolvent enterprises in Vietnam.
+ Giving directions and solutions to improve the law and improve the
effectiveness of law enforcement on procedures for recovery of business
activities of insolvent enterprises in Vietnam today.
3. Objects and scope of the thesis
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- The research objects of the thesis are the provisions of law and the
practice of law on procedures for recovery of business activities of insolvent
enterprises and legal provisions related to these procedures. Enterprises that are
the subject of the thesis are enterprises in general stipulated in the 2014
Enterprise Law (not including cooperatives under the Law on Cooperatives and
business individuals).
- The scope the thesis include: Theoretical issues on procedures for
recovery of business operations of insolvent enterprises and the legal experience
of some countries on the recovery of business activities of insolvent enterprises;
legal documents that are closely related to the content of the thesis are issued
from 2014 up to now in comparison with the previous documents and status;
some cases of resolving bankruptcy requests and recovery of business operations
of enterprises.
4. Research method of the thesis
4.1. Methodology
The thesis uses dialectical materialism and historical materialism of
Marxism-Leninism; Ho Chi Minh Thought; guidelines and policies of
Vietnamese Communist Party and the State of the Socialist Republic of Vietnam
on legislation, on comprehensive renovation of the country and on development
of a market economy.
4.2. Research methods
The thesis uses many different scientific and social research methods such
as: analysis method, systematic method, combination and statistics method,
historical methods, comparative methods...
5. New scientific contributions of the thesis
Firstly, the thesis has supplemented the system of concepts and
characteristics of enterprises unable to pay debts; concepts, characteristics,
principles and contents of business recovery procedures of enterprises losing
their ability to pay debts in bankruptcy procedures.
Secondly, the thesis has studied the trend of bankruptcy laws of the
countries generally and in three specific countries: the United States, France, and
China, in orderto compare with Vietnamese law; proposed more effective
solutions for the perfecting the theory and perfecting the law, overcoming the
limitations of procedures for recovery business operations of enterprises that are
unable to repay debts in Vietnam
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Thirdly, the thesis has analyzed and clarified the status of the law and
applied the law on procedures for recovery of business activities of insolvent
enterprises.
Fourthly, the thesis has raised the views, directions and solutions to
improve the law on procedures for recovery of business activities of insolvent
enterprises as well as introduced a system of solutions to solve restrictions in
implementing these procedures.
6. Scientific and practical meanings of the thesis
- The thesis is a specific and scientific research in the law on recovery of
business activities of insolvent enterprises in Vietnam. The research results of
the thesis contribute to supplement and develop theoretical issues about the
procedures for recovery business operations of insolvent enterprise.
- The thesis provides a scientific and practical basis for policy makers and
competent agencies to refer to the improvement of the law on procedures for
recovery of business operations of insolvent enterprises; to improve the
efficiency of business recovery procedures of enterprises that are unable to repay
debts in Vietnam. In addition, the research results of the thesis are also valuable
references for the research and teaching of law on the recovery of business
activities of enterprises that are unable to pay debts.
7. Structure of the thesis
In addition to the introduction, conclusion, references and list of works
related to the thesis has been published, the thesis consists of 4 chapters
Chapter 1
OVERVIEW ABOUT RESEARCH AND THEORIES
1.1. Overview about research
1.1.1. General studies about law on bankruptcy of enterprises
Bankruptcy of enterprises is an area that has been mentioned by researchers
for a long time, especially published works related to the process of developing
and promulgating the Bankruptcy Law in 1993, in 2004 and in 2014. Many
elaborate studies, documents on this topic series are published.
It is possible to summarize the universal scientific and information values
of the above works as follows: (i) The research on the recovery of business
operations of insolvent enterprises continues to develop the reason essays in
specialized areas of corporate bankruptcy; (ii) Developing basic reasoning
system about bankruptcy; (iii) Dividing into three criteria to determine the
enterprise's inability to pay debts; (iv) Analysis of the initial bankruptcy theory,
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current bankruptcy theory and the modern view of interest rates and investment
in the effective relationship between bankruptcy and costs and interest rates; (v)
Identifying the trend of the viewpoint of building bankruptcy law in Vietnam
gradually shifting to protect enterprises from being unable to pay their debts; (vi)
Providing comprehensive concepts and characteristics of bankruptcy and
compare with dissolution of enterprises; situation of implementing Bankruptcy
Law; (vii) In the field of finance and banking, research also show the specificity
or special regime of bankruptcy of banks and credit institutions with stricter
criteria.
1.1.2. Studies on procedures for recovery of business operations of
enterprises are incapable of paying debts and settling bad debts
There are a few studies on procedures for recovery of business activities of
insolvent enterprises and they are mainly integrated in the content of bankruptcy
research and especially determined through the content “The goal of bankruptcy
law”. Currently, some master thesis in law and some research initially analysis
this content.
The above works mentioned the issues related to the procedures for
recovery of business operations of insolvent enterprises, which are: (i) The
reasoning on procedures for recovery of business activities in the theory of
bankruptcy law; (ii) Bankruptcy law objectives; (iii) Analyzing Vietnamese and
international bankruptcy laws; (iv) Legal status of procedures for recovery of
business operations of enterprises that are unable to pay debts.
In the field of bad debt payment, research have focused on researching bad
debt payment activities in banks and credit institutions for each type of business
and type of debt.
1.2. Evaluation of research related to the thesis topic
- There have been many elaborate studies on the subject of business
bankruptcy. However, these works and articles only cover the basic contents of
bankruptcy procedures in general, but have not studied in a comprehensive and
systematic way about the legal aspects of submission procedures for recovery of
insolvent businesses as an independent procedure; There is no comprehensive
assessment of the status of the regulations on procedures for recovering business
activities in Vietnam so that it can make recommendations to build and perfect
the law on recovery procedures.
- Scholars in the world have a consensus in the need to develop special
procedures for the recovery of business operations of insolvent enterprises in the
bankruptcy procedures of enterprises. However, in different countries, scholars
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have made different arguments and ways to deal with procedures to recovery
business operations of insolvent enterprises.
- The search for a solution to improve the efficiency of the law on the
recovery of business operations of insolvent is becoming increasingly necessary.
- The research on procedures for recovery of business operations of
insolvent enterprises are not profound, lack of systematic and yet to explain the
reasoning, to apply foreign experiences and methods in accordance with
Vietnamese practices.
- At the doctoral thesis, there has not been a research project that
systematically studies the problem of recovering business activities of insolvent
enterprises to improve the law on this problem.
On the basis of researching and analyzing documents, the thesis has
inherited and determined the following research contents:
First, inheriting the results of research on the origin, the nature of
procedures for recovery of business operations of insovent enterprises in the
common goal of bankruptcy law and supplementing theory system of business
recovery of insolvent enterprises and the concepts, characteristics and related
contents of this procedure.
Second, acquiring some of the views stated in some foreign works and
some countries experiences on enhancing the active role of insolvent enterprises
and regulations about asset management officers on procedures for recovery of
business operations of insolvent enterprises, so that, the thesis continue to
analyze the situation and propose solutions suitable to Vietnamese situation.
Third, inheriting the analysis and assessment of the legal status and law
enforcement on procedures for recovery of business activities of insolvent
enterprises that are mentioned in the master thesis and some research in the
country; besides, developing the analysis of reality currently; adding new
assessments discovered during the research process.
Fourth, building a system of views, orientations and solutions to improve
the law on procedures for recovery of business activities of insolvent enterprises
and solutions to improve law enforcement efficiency in this field.
1.3. Basic theory of the thesis
- The Communist Party and State's views on perfecting the socialistoriented market economy institutions, restructuring the economy and
restructuring state enterprises and judicial reforms.
- Theories and doctrines related to bankruptcy law, solving the insolvency
and recovery of business operations of insolvent enterprises. In addition, the
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notions, theories of humanities and solidarity in business are also interested to
find ways to sympathize and understand among creditors with each other and
with debtors (like an idiom “birds of a feather flock together”).
1.4. Research hypothesis and research questions
Research hypothesis:
Firstly: enterprises, that follow market-based, have rights of free
competition, are inevitably capable of losing money, losing their ability to pay
their debts and thus may go bankrupt.
Secondly: procedures for recovery of business activities of insolvent
enterprises have specific characteristics regarding the economic nature as well as
the legal form of judicial procedures, so that it is necessary to ensure a legal
basis that follows the nature of these procedures.
Thirdly: Vietnam needs to consult and absorb the experience of other
countries in a reasonable way to improve the law on procedures for recovery of
business activities of insolvent enterprises.
Fourthly: There should be scientific assessments on the legal situation and
law enforcement in this area to have a more reasonable solution to implement
the objectives.
Research questions:
- What are the specific characteristics of business recovery of insolvent
enterprises? Do the specificities of these procedures require specific processes
and solutions in bankruptcy procedures for enterprises?
- How are the procedures for recovery of business operations of insolvent
enterprises in the current law and how are they reasonable? How do these affect
the process of recovery of business operations of insolvent enterprises, whether
these support or hinder businesses and related subjects in the implementation
process?
- What is the current situation in the process of implementing procedures
for recovery of business of enterprises? Have the role, capacity, rights and
obligations of the participants ensured effective implementation of these
procedures?
- Is the legislative objective consistent with Vietnamese practices, in
accordance with modern legislative trends? Why is the goal of business recovery
in bankruptcy procedures ineffective?
- What are the solutions to recovery of the business operations of the
enterprises and promote their efficiency in practice, ensure stability and
developing the economy?
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1.5. Research results
- On theoretical aspects: The results of theoretical research provide a
unified understanding of the concept, characteristics, nature and elements of the
procedures for recovery of business operations of insolvent enterprises.
- On practical aspects: The thesis properly assess the legal status of
procedures for recovery of business activities of insolvent enterprises and the
real situation of law implementation on these procedures in Vietnam; Gives
opinions, directions and solutions to improve the law and overcome the
limitations in implementing procedures for recovery of business activities of
insolvent enterprises.
Chapter 1 Conclusion
Chapter 2
THEORETICAL MATTERS ON PROCEDURES FOR RECOVERY OF
BUSINESS OPERATIONS OF INSOLVENT ENTERPRISES AND
EXPERIENCES FROM OTHER COUNTRIES
2.1. Theoretical matters on insolvent enterprises in the Law on
Bankruptcy and recovery of business operations of insolvent enterprises.
2.1.1. The concept and characteristics of insolvent enterprises in the Law
on Bankruptcy
Through studying the insolvency factor of the enterprises that includes the
due debt of the enterprise and the time of overdue debt, the researcher gives the
definition: Insolvent enterprises are determined to be unable to pay a debt that is
overdue.
The legal characteristics of insolvent enterprises are expressed in the
following three specific criteria: (i) Insolvent enterprises are have the
characteristic of “not implementing obligation on debt payment within 03
months from the payment due date”; (ii) Loss of ability to pay due debts does
not need the correspondence between debts and existing assets of the
enterprises; (iii) The debt of an insolvent enterprise is generated from its
legitimate business activities.
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2.1.2. The concept and nature of recovery of business operations of
insolvent enterprises
2.1.2.1. The concept of recovery of business operations of insolvent
enterprises
Recovery of business activities of insolvent enterprises (according to
bankruptcy procedures) is a judicial procedure to recovery business operations
of enterprises towards the target that such enterprises are restored and repaid
previously due debts of creditors and workers.
Enterprises that need to recover have their own insolvency characteristic
and are allowed to go through bankruptcy procedures. In addition, there are also
specific characteristics: Enterprises can recover business activities that based on
effective factors/options; debts of insolvent enterprises can be paid/will be paid
in the future or can be erased, replaced by other forms; the consensus between
creditors, insolvent enterprises and workers on the recovery procedures.
2.1.2.2. The nature of recovery of business operations of insolvent
enterprises
First, recovery of business operations of insolvent enterprises is an
economic activity (business reorganization);
Second, recovery of business operations of insolvent enterprises is a
judicial activity. This is an economic activity carried out in the form of judicial
procedures, which are regulated by the bankruptcy law in connection with
proceedings at the Court, so that it is also called judicial proceedings (resolving
bankruptcy cases).
Third, recovery of business operations of insolvent enterprises is a judicial
procedure to resolve the interests of creditors by creating stability for insolvent
businesses.
Fourth, recovery of business operations of insolvent enterprises has
conditional nature.
2.1.2.3. The economic and social aspects related to the recovery of
business operations of insolvent enterprises
Economic aspect: A stable and developed economy is based on the stability
and development of economic sectors, but the enterprise is the most important
subject.
Social aspect: A business is formed to contribute to the creation of wealth
and material for society.
2.2. Procedures for recovery of business operations of insolvent
enterprises
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2.2.1. The concept and characteristics of procedures for recovery of
business operations of insolvent enterprises
2.2.1.1. The concept of procedures for recovery of business operations of
insolvent enterprises
Procedures for recovery of business operations of insolvent enterprises are
bankruptcy procedures on the basis of agreements between creditors and
enterprises approved at the creditors' conferences and recognized by courts;
therefore, the insolvent enterprise carry out a business plan within a time limit
fixed by agreement or prescribed by law, under the supervision of the Court and
the representative of the creditor, aiming at enterprises are entitled to recover
and repay the previously due debts of creditors and workers.
2.2.1.2. The characteristics of procedures for recovery of business
operations of insolvent enterprises
Firstly, the subjects include: Insolvent enterprises, creditors; the court as a
conductor of bankruptcy procedures; the People's Procuracy as a supervisor the
implementation of these procedures for recovery of business activities of the
enterprises; subjects of property management; subjects of supervising business
activities and liquidating assets of enterprises.
Secondly, the benefits that the parties are looking forward to: The main
benefit that the parties aim at in this relationship is the economic benefit to the
major and usually non-state actors; socio-economic stability benefits for state
actors; charge for the implementation of public services.
Thirdly, the rights and obligations of the subjects: Insolvent enterprises are
obliged to build and organize the implementation of business recovery plans and
have important rights to doing normal business. Other entities have the right to
decide according to the collective regime the plan of restoring business activities
of enterprises that are incapable of paying debts; supervise the implementation
of the plan; review the implementation of the business recovery plan of the
enterprise; suspend the recovery plan of the business...
Fourthly, the recovery procedure has its own characteristics in that it can
be converted into liquidation procedures in bankruptcy proceedings.
2.2.2. The necessity, meanings and modes of recovery procedures of
insolvent enterprises
2.2.2.1. The necessity of recovery procedures of insolvent enterprises in
bankruptcy procedures
Modern law on bankruptcy always tends to raise the issue of implementing
procedures to restore business operations of insolvent enterprises as a last
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chance that the State and society grant to businesses. Therefore, the role of the
law to recover business operations of insolvent businesses should be considered
as an easier way to create opportunities for entrepreneurs to continue to
implement their “dream” after the failure.
2.2.2.2. The meanings of recovery procedures of insolvent enterprises
Firstly, for insolvent enterprises: The main recovery procedure is the last
rescue for businesses and entrepreneurs falling into bankruptcy to restore their
business, restore their capabilities payment ability and reputation, trust of
partners in the market.
Secondly, for creditors: Procedures for recovery of business operations of
insolvent are aimed at maximizing the repayment of creditors, thereby protecting
the rights of owners debt and related people.
Thirdly, for employees: Procedures for recovery of business activities of
insolvent enterprises ensure labor rights and material, spiritual life of individuals
and families least affected.
Fourth, for the economy and the stability of society: Successful recovery of
enterprises falling into bankruptcy will contribute to limiting negative impacts
on society.
2.2.2.3. Modes of recovery procedures of insolvent enterprises
First: Implement financial solutions
Secondly: Implement solutions to innovate production and business
activities, improve efficiency and profitability
Third: Implementing solutions on organizational restructuring of the
enterprise
Fourth: Implementing other solutions
2.2.2.4. The legal consequences of recovery procedures of insolvent
enterprises
The first case: The enterprise has completed the business recovery plan,
fulfilling its debt repayment obligation to the creditors. The bankruptcy
relationship of the business under which it will end, return the full legal status to
the business as before it became the litigant of bankruptcy.
The second case: The enterprise fails to implement the plan to recover its
business operation or the time limit for implementing the business recovery plan
is still incapable of paying the debt. The recovery of business operations of
insolvent enterprises is terminated and will be transferred to liquidation
procedures for bankruptcy.
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2.2.3. The principles and contents of procedures for recovery of business
operations of insolvent enterprises
2.2.3.1. The principles of procedures for recovery of business operations
of insolvent enterprises
First, the recovery procedure is only applied on the principle of
“consensus” between the creditor and the insolvent enterprise and expressing the
common will of the creditor.
Second, the enterprises that implement the business recovery plan must be
placed under the supervision of the representatives of the Court and the
creditors.
Thirdly, procedures for recovery of business operations of insolvent
enterprises are made in public and transparent.
2.2.3.2. The contents of procedures for recovery of business operations of
insolvent enterprises
The content of these recovery procedures is generalized according to the
steps, stages or procedures for carrying out procedures or the rights to resolve of
the subjects in these procedures.
2.2.3.3. Specific issues need to be regulated in the procedures for recovery
of business operations of insolvent enterprises
(i) Impact factors and scope of application of business recovery procedures
for insolvent enterprises.
(ii) The forms and methods of recovery of business operations of insolvent
enterprises.
(iii) The nature of the business recovery procedure of an insolvent
enterprise.
2.3. Experience of adjusting the law on recovery of business activities
of insolvent enterprises in some countries over the world
3.2.1. Legal trends of some countries
The first trend: There is only one system of general legal documents
(including the Law and the guiding documents) regulating both procedures to
solve the insolvent enterprises which are recovery procedures and liquidation of
the business.
The second trend: There are separated document systems that adjust each
procedure of judicial recovery and liquidation.
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2.3.2. The bankruptcy laws of many countries pay more attention to the
recovery of business operation of insolvent enterprises
2.3.3. Criteria for enterprises falling into bankruptcy generally and
applying recovery procedures particularly tend to expand
2.3.4. The role of the regime of management and liquidation of assets, the
committee of creditors is confirmed in the bankruptcy procedure in general and
the procedures for recovering business operations of insolvent enterprises
2.3.5. Recovery procedure is a judicial procedure and also is an ideal
solution to save insolvent businesses and protect them from falling into
bankruptcy
2.3.6. Creating the initiative for insolvent businesses to participate in the
beginning of the bankruptcy procedures
Chapter 2 Conclusion
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Chapter 3
LEGAL AND PRACTICAL SITUATION ON IMPLEMENTING
THE PROCEDURES FOR RECOVERY OF BUSINESS OPERATIONS
OF INSOLVENT ENTERPRISES IN VIETNAM CURRENTLY
3.1. Legal situation on the procedures for recovery of business
operations of insolvent enterprises in Vietnam currently
3.1.1. Legal provisions on procedures for recovery of business operations
of insolvent enterprises
Legal provisions on procedures for recovery of business operations of
insolvent enterprises are analysed in 7 following groups:
3.1.1.1. Criteria for the insolvent enterprise and the competence of the
Court to open bankruptcy procedures - the basis for considering and opening
procedures to recovery business operations of enterprises
The determination signs of insolvent enterprises are based on three specific
criteria: (1) Enterprises have a debt (unpaid); (2) The debt has not been paid
within 03 months or more from the payment due date; (3) Enterprises do not
fulfill their obligation to pay debts and do not have creditors' consent to delay
the implementation of debt payment obligations.
The bankruptcy law of Vietnam as well as the laws of most countries in the
world believe that the insolvency of enterprises (or formerly known as
bankruptcy) will be the basis internal inside of the enterprise for the Court to
consider and issue a decision to open bankruptcy procedures in general as well
as recovery procedures in particular. The Court's decision to open bankruptcy
procedures is an important first step into bankruptcy procedures in general and
firstly to consider and review procedures for recovering business operations of
the insolvent enterprises
3.1.1.2. Conditions to apply procedures to recover business operations of
the insolvent enterprises
Firstly, the procedures for recovering business operations of enterprises
must be the contents expressed in the resolutions adopted by the creditors'
conference.
Secondly, the insolvent enterprises must build a plan to recover their
business activities within the prescribed time limit.
Thirdly, the plan to restore business activities must be considered and
approved by the Creditors Conference in accordance with Article 90 in the
Bankruptcy Law 2014.
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3.1.1.3. Basis of consensus of creditors and contents of business recovery
plan of insolvent enterprises.
From the side of enterprises: This is the first basis to express opinions (if
any) on the policy of recovering business activities from the owner of insolvent
enterprise.
From the side of creditors: The process of building a business recovery
plan, the creditors are entitled to comment and decide on the plan of business
recovery that are built by insolvent enterprise.
From the side of related subjects: Bankruptcy Law also stipulates the right
to present opinions of related persons or their legal representatives; witnesses;
assessors and representatives of valuation agencies present assessment
conclusions and valuation results; the person carrying out other judicial
measures explains the issues that are not clear or contradictory.
3.1.1.4. Organizing the implementation of business recovery plans of
enterprises
Solution 1: Implement financial solutions
Solution 2: Implement solutions to reorganize production and business
activities, improve efficiency and profitability
Solution 3: Implement solutions for restructuring the organizational
structure of the enterprise
Solution 4: Implementing other solutions (Bankruptcy Law 2014 also
provides open regulations on implementing specific solutions. However, these
regulations have not been specifically instructed, so there is no specific solution
in current period).
3.1.1.5. Time limit for implementing business recovery plan
The time limit for implementing business recovery plans of insolvent
enterprises shall comply with the resolutions of the creditors' conferences
through the plan of business operation restoration. In cases where the creditor
conference cannot determine the implementation time limit, the time limit for
implementing the business operation restoration plan is prescribed no more than
3 years after the creditors' conference approves the operation restoration
business plan.
3.1.1.6. Legal measures to ensure the ability to recover business operations
of enterprises
Measure 1: Preserving assets, not worsening the situation of insolvent
enterprises
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Measure 2: Supervising the implementation of the business recovery plan
of enterprises
Measure 3: Supplementing regulations on asset managers, managing
enterprises and liquidating assets enterprises
3.1.1.7. Suspension of procedures for recovering business operations of
insolvent enterprises.
Case 1: Suspend procedures for recovering business operations of
insolvent enterprises because the enterprises have completed the business
recovery plan.
Case 2: Suspend procedures for recovering business operations of insolvent
enterprises due to the enterprises failing to implement the business operation
recovery plans.
3.1.2. Assessment of bankruptcy laws and procedures for recovery of
business operations of insolvent enterprises
Firstly, on the criteria of the inability to pay due debts: The Bankruptcy
Law 2014 determined the bankruptcy objects by qualitative method that
facilitate to easy opening of bankruptcy procedures but there are not shown
evidence that these procedures easily accomplishes the goal toward debt
businesses. Therefore, is it necessary to build certain criteria to identify
insolvent businesses that can apply procedures to recover business operations
and that may be a problem to be addressed in the process of completing the
bankruptcy law in our country.
Secondly, on conditions to apply procedures to restore business activities
of insolvent enterprises: The bankruptcy law only points to a procedure which is
an opportunity for insolvent enterprises. These are still one step lower than the
US “bankruptcy protection” procedure or the French Republic's (procédure de
sauvegarde) protection procedure.
Thirdly, on the basis of the consensus of creditors and the content of
business recovery plans of enterprises that are unable to pay debts: Vietnamese
law has not yet determined the types of subjects representing the owners. in
debt; lack of specific regulations on security methods, specific functions, tasks
and powers of asset managers and enterprises managing and liquidating assets;
The law lacks the regulations binding the responsibilities of the parties in the
process of recovering business operations of enterprises that are incapable of
paying debts and solutions to support the recovery of business activities of
enterprises.
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Fourthly, on organizing the implementation of the plan to restore business
activities of enterprises: The lack of specific mechanisms for financial solutions
and innovation of organizational structure will create great difficulties. for
businesses that are unable to pay and propose to implement a reasonable
recovery plan. The forms of supervision of asset managers, enterprises managing
and liquidating assets and creditors for enterprises implementing the business
recovery plan have not been specifically guided.
Fifthly, legal measures to ensure the ability to recover business operations
of enterprises are ineffective, failing to ensure the right of creditors to monitor
the operation of enterprises losing their ability to pay debts.
Sixthly, the grounds for suspending procedures for recovering business
activities of insolvent enterprises are still lacking in legislative techniques.
3.2. Actual implementation of law on procedures for recovery of
business operations of insolvent enterprises and some recovery methods
have been implemented in Vietnam.
3.2.1. Actual implementation of law on procedures for recovery of
business activities of insolvent enterprises in Vietnam
First, the results of implementing the Bankruptcy Law show that the good
purpose of the Law, that is to restore business activities of insolvent enterprises,
has not been achieved; has not yet integrated into the demand for market
economy development in our country.
Secondly, the rate of resolving the request to open bankruptcy procedures
of the court in our country is not high, for example, the number of cases that
have not been resolved annually and transferred to the following year.
Thirdly, lack of support from the State on the needed financial conditions
to recovery of business operations that makes the implementation of regulations
on business operation recovery faces many difficulties in practice.
Fourthly, objective conditions on corporate finance have not ensured the
purposes of implementation of business recovery of enterprises.
Fifthly, the time for reviewing and inventorying assets of insolvent
enterprises is too long that makes creditors and the enterprises loose the patience
to build plans.
Sixthly, asset managers, enterprises managing and liquidating assets have
not really played a worthy role, contributing to improving the efficiency in
implementing procedures for recovery of business operations of insolvent
enterprises.
17
Seventh, Vietnamese enterprises have not actively implemented procedures
to recover business operations when they started showing signs of insolvency,
many cases break obligation to file bankruptcy procedures or break
responsibility to inform about an insolvent enterprises.
Eighthly, the enterprises have psychology of afraid of implementing
bankruptcy procedures generally and procedures to recover business operations
of creditors and insolvent enterprises.
Ninth, social psychology in general and business people in particular in
Vietnam often tend to “be perfect” in business.
3.2.2. Some methods for recovery of business operations of insolvent
enterprises that have been implemented in Vietnam.
3.2.2.1. Self-negotiation by business and commercial contracts to conduct
business recovery
3.2.2.2. Reorganization of state enterprises
The first case: Reorganization of Vietnam Shipbuilding Industry Corp.
The second case: Reorganization of Vietnam Maritime Corporation
3.2.2.3. Acquisition of commercial banks, conversion of debt to contributed
capital
Chapter 3 Conclusion
18
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