Supplementing procedures for business and cooperative recovery

The draft Bankruptcy Law has new provisions to protect businesses at risk of insolvency, giving them the opportunity to restructure and maintain operations instead of going bankrupt.

The draft Bankruptcy Law has new provisions to protect businesses at risk of insolvency, giving them the opportunity to restructure and maintain operations instead of going bankrupt.

The draft revised Bankruptcy Law gives priority to applying pre-bankruptcy rehabilitation procedures to restore enterprises and cooperatives.

In the Draft Law on Bankruptcy (amended) drafted by the Supreme People's Court, a new regime has appeared, regulating the rehabilitation of enterprises and cooperatives. Compared to the current Law on Bankruptcy, which stipulates rehabilitation as a procedure in bankruptcy proceedings, the Draft Law amends and supplements it in the direction of stipulating the separation of rehabilitation procedures and encouraging and prioritizing the application of pre-bankruptcy rehabilitation procedures to restore enterprises and cooperatives.

“The addition of this procedure is necessary and in line with international practice,” the Vietnam Federation of Commerce and Industry (VCCI) emphasized in its comments on the Draft sent to the Supreme People's Court.

However, VCCI still has some additional issues to ensure that this procedure achieves its set goals.

Specifically, regarding the person who has the right to file a request to open rehabilitation proceedings, the draft is being designed to have a case where "The creditor whose debt will be due within 6 months or whose debt has become due but not more than 6 months from the date of filing the request to open rehabilitation proceedings" is the person who has the right to file a request to open rehabilitation proceedings.

VCCI believes that creditors, in many cases, will not know whether the business is at risk of insolvency or not.

“The creditor has a debt that is due, has not yet collected the debt, and does not know whether the enterprise is able to pay or not, so it is very difficult to assess whether the enterprise is at risk of insolvency or not. This regulation is likely to push enterprises into situations where they have to carry out recovery according to the provisions of this Draft, which is both time-consuming, affects the business operations of the enterprise and loses reputation,” VCCI suggested.

In addition, the Draft also stipulates that the Court will return the application for opening rehabilitation proceedings in the case where “the creditor submits an application for opening rehabilitation proceedings but does not receive the consent of the enterprise or cooperative”. Thus, whether the creditor’s application for opening rehabilitation proceedings is approved or not depends on the enterprise being requested to be restored. In many cases, the enterprise will not agree, so the creditor’s application is meaningless, only causing the enterprise to fall into trouble and difficulty.

This is the reason why VCCI proposed to remove the subject of creditors with debts due within 6 months or debts that have due but not more than 6 months.

Currently, in addition to the above subjects, the Draft Bankruptcy Law is regulating the persons who have the right to file a request to open rehabilitation proceedings for enterprises and cooperatives. Including: the legal representative of the enterprise or cooperative; Owner of a private enterprise, Chairman of the Board of Directors of a joint stock company, Chairman of the Board of Members of a limited liability company with two or more members, owner of a one-member limited liability company, general partner of a partnership; Shareholders or groups of shareholders owning 20% ​​or more of the common shares for a continuous period of at least 06 months, shareholders or groups of shareholders owning less than 20% of the common shares for a continuous period of at least 06 months in case the Company Charter stipulates;

Members and groups of members with charter capital accounting for 65% or more of the total charter capital of a limited liability company with two or more members; members and groups of members with charter capital accounting for less than 65% of the total charter capital of a limited liability company with two or more members in cases where the company's charter provides; members of cooperatives or legal representatives of member cooperatives of cooperative unions are also entitled to submit applications for opening restoration procedures.

Source: https://baodautu.vn/bo-sung-thu-tuc-phuc-hoi-doanh-nghiep-hop-tac-xa-d250581.html