The State Bank of Vietnam (SBV) is working on a draft decree on the application of the Bankruptcy Law to credit institutions.
The draft decree, which consists of eight chapters with 45 articles, provides the conditions and submission of applications for opening of bankruptcy procedures; the determination of property obligations and measures to preserve property in bankruptcy procedures; the order of and procedures for restoration of business activities, procedures for property liquidation and bankruptcy declaration; rights, obligations and responsibilities of applicants for opening of bankruptcy procedures, of credit institutions requested for bankruptcy declaration, and of participants in the settlement of requests for bankruptcy declarations.
Under the draft decree, persons allowed to submit applications for opening of bankruptcy procedures for a credit institution include its creditors with unsecured debts or partially secured debts, its employees, owners, shareholders and lawful representatives.
Within five days after receiving the bankruptcy application, the court would notify such to the SBV for the latter to decide on the application, non-application or termination of application of measures to restore the credit institution’s solvency. In case the SBV issues a decision on the non-application or termination of measures to restore the credit institution’s solvency or that institution becomes unable to pay its due debts, the court would decide to open bankruptcy procedures.
After a decision on opening of bankruptcy procedures is issued by the court, all business activities of the credit institution must be carried out under the court’s supervision and inspection. The credit institution is also strictly prohibited from hiding or dispersing assets, paying unsecured debts, abandoning or reducing the right to claim debts or converting unsecured debts into secured debts. It must ask for judges’ written permission before conducting such activities as pledging, mortgaging, transferring, selling, donating, leasing assets; receiving assets from a transfer contract; terminating the performance of an effective contract; borrowing money; selling, exchanging stocks or transferring property ownership; paying debts arising from its business activities or paying wages to its laborers.-