I. Legal basis
- Enterprise Law 2020
- Bankruptcy Law 2014
II. Differences between dissolution and bankruptcy
Similarity:
_ First, the enterprise terminates its operation after dissolution or bankruptcy.
_ Second, the seal and certificate of business registration shall be revoked.
_ Third, enterprise must fulfill property obligations and pay debts when carrying out procedures for dissolution or bankruptcy.
Difference:
| Criteria | Dissolution | Bankruptcy |
|---|---|---|
| Definition | Dissolution of an enterprise is the termination of the existence of an enterprise according to the will of the enterprise or of a competent authority. Law on Enterprises governing dissolution | Bankruptcy is the state of an enterprise that is insolvent and declared bankrupt by the people's court. Bankruptcy Law governing bankruptcy |
| Features | _ Cases of enterprises being dissolved: a) The expiry of operation term stated in the company's charter without a decision on extension; b) According to resolutions and decisions of the business owner, for private enterprises, of the Members' Council, for partnerships, of the Members' Council, of the company owner, for limited liability companies; , of the General Meeting of Shareholders, for joint-stock companies; c) The company no longer meets the minimum number of members as prescribed in this Law for 06 consecutive months without carrying out procedures for transformation of enterprise type; d) The certificate of enterprise registration is revoked, unless otherwise provided for by the Law on Tax Administration. _The condition for an enterprise to be dissolved is to fulfill all financial and debt obligations that the enterprise has established with third parties. _ The dissolution of a business will result in the termination of the company's legal status. _ Business owners and managers are not restricted or prohibited from holding the position of running the business or performing a number of business activities. | _ Insolvency means the enterprise fails to fulfill its debt payment obligation within 03 months from the due date of payment. _ In the process of resolving the bankruptcy case, creditors cannot separate themselves to collect their own debts, but they must all be gathered into a single legal entity, called the creditors' meeting. _ Bankruptcy is not only for debt collection purposes, but also focuses on helping debtors to recover business operations. |
| Right holder for application | Business owner, members' council, company owner, general meeting of shareholders, all general partners. | _ Unsecured creditors, partially secured creditors; _ Employees, grassroots trade unions, and direct superior trade unions in places where grassroots trade unions have not yet been established; _ The legal representative of the enterprise, the owner of the private enterprise, the Chairman of the Board of Directors of a joint-stock company, the Chairman of the Members' Council of a limited liability company with two or more members, the owner of the company One-member limited liability company, general partner of a partnership company; _ Shareholder or group of shareholders meeting the statutory conditions. |
| Place of application | Department of Planning and Investment | Court |
| Restrictions for business managers after termination of operation | No retriction | The person holding the managerial position of the enterprise declared bankrupt may be considered and decided by a judge not to have the right to establish an enterprise or a cooperative or to act as an enterprise manager. |
| Procedures | _ Approve the decision to dissolve the enterprise; _ Organize the liquidation of assets; _ Send the decision on dissolution of the enterprise to relevant agencies and organizations; _ Notify business status; _ Pay debts of the enterprise; _ Send the dissolution request to the business registration agency. | _ File and receive the petition to open bankruptcy proceedings; _ Negotiate to withdraw the petition to open bankruptcy proceedings; _ Accept the petition to open bankruptcy proceedings due to unsuccessful negotiation; _ Decide to open bankruptcy proceedings when there are grounds to open; _ Organize the creditors' meeting; _ The court declares the company bankrupt; _ Execute the court's decision declaring bankruptcy. |
Note:
For companies with foreign investment. Before dissolving the company, investors need to carry out procedures for termination of investment projects.
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