I. What is bankruptcy?
According to the provisions of Clause 2, Article 4 of the Law on Bankruptcy 2014, “Bankruptcy is a legal status of an insolvent entity that is declared bankrupt by the People’s Court”.
An enterprise or cooperative is determined to be insolvent when the insolvent enterprise or cooperative being an enterprise or cooperative fails to fulfill its debt payment obligation within 03 months from the date of payment. payment due.
II. Persons who have the right and obligation to file a petition to open bankruptcy proceedings.
Persons who have the right to file a petition for initiation of bankruptcy proceedings specified in Clauses 1, 2, 5, 6, Article 5 of the Law on Bankruptcy 2014 include:
– Unsecured creditor, partially secured creditor.
– Employees, grassroots trade unions, and directly superior grassroots trade unions in places where grassroots trade unions have not been established.
– Shareholders or groups of shareholders owning at least 20% of the ordinary shares or more for a consecutive period of at least 06 months have the right.
– A member of a cooperative or the legal representative of a member cooperative of a union of cooperatives.
Persons obligated to file a petition for initiation of bankruptcy proceedings specified in Clauses 3 and 4, Article 5 of the Law on Bankruptcy 2014 include:
– 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 Members’ Council of a limited liability company with two or more members, owner of a one-member limited liability company, a general partner of a partnership company.
III. Decision to open or not to open bankruptcy proceedings
According to the provisions of Clause 1, Article 42 of the Law on Bankruptcy 2014, “Within 30 days from the receipt of a written request for initiation of bankruptcy process, the Judge shall make a Decision on the initiation of bankruptcy process or refusal to initiate bankruptcy process, except the cases prescribed in Article 105 of this Code”.
– Decision to open bankruptcy proceedings.
+ The judge issues a decision to open bankruptcy proceedings when the enterprise or cooperative is insolvent
+ In case of necessity, before issuing a decision to open bankruptcy proceedings, the judge may convene a meeting with the participation of the petitioner to initiate bankruptcy proceedings, the business owner or the lawful representative of the enterprise. enterprises and cooperatives that are required to open bankruptcy procedures, relevant individuals and organizations to consider and examine the grounds to prove that the enterprise or cooperative is insolvent.
– Decide not to open bankruptcy proceedings.
The People’s Court shall issue a decision not to initiate bankruptcy proceedings if it considers that the enterprise or cooperative is insolvent.
In this case, the applicant requesting the initiation of bankruptcy proceedings shall be refunded the bankruptcy cost advance; requesting insolvent enterprises and cooperatives to perform property obligations that have been suspended under Article 41 of the Law on Bankruptcy 2014 to be continued.
IV. Prohibited activities after the enterprise or cooperative has decided to open bankruptcy proceedings.
According to the provisions of Article 48 of the Law on Bankruptcy 2014, after the decision to open bankruptcy procedures is issued, enterprises and cooperatives are prohibited from performing the following activities:
1. After the Decision on the initiation of bankruptcy is made, the insolvent entity is prohibited from:
a) Dispersing and hiding assets;
b) Paying the unsecured debts, except the unsecured debts incurred after the initiation of bankruptcy process and the employees’ salaries prescribed in Point c Clause 1 Article 49 of this Law.
c) Renouncing the right over debt claim;
d) Making an unsecured debt into a secured or partly-secured debt with collateral which are assets of the entity.
Any transaction prescribed in Clause 1 this Article is invalid and shall be handled according to Article 60 of this Law.
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