Bankruptcy Law Is An Effective Legal Tool To Protect The Legitimate Rights And Interests Of Creditors.

There is no incentive to compete, their existence is maintained by the will of the State. The subsidized economy does not need bankruptcy law. Signs of the collapse of this model can be seen when enterprises "cross the fence", increasingly gaining more autonomy in planning and organizing business. Along with the entry of foreign investment, business freedom for the private sector, the competitive environment reappears and becomes fierce quickly in the domestic market, the role of the State as a limited liability investor in new State enterprises gradually becomes clear. When business freedom and competition reappears, the need to regulate the bankruptcy of economic units that are under the management of the new State becomes urgent. It is worth noting: the most urgent need to adjust bankruptcy law in transition countries is that State enterprises suffer massive losses when entering competition with a less dynamic position compared to the private economic sector and foreign capital. In 1986, China enacted a bankruptcy law that applied only to state-owned enterprises. Therefore, for many countries such as the former Soviet Union, Central and Eastern Europe and Vietnam, bankruptcy law was primarily used as a restructuring tool to address the mass insolvency of state-owned enterprises that were transforming into other forms of enterprises.

In addition, as mentioned above, bankruptcy is an inevitable product of the market economy, so the bankruptcy of a company affects many related subjects, causing many impacts on aspects of economic and social life. Therefore, it is necessary to have a law regulating this issue. That is the reason for the objective need to have bankruptcy law as an independent legal field.

2. Purpose and role of Bankruptcy Law

2.1 Purpose of bankruptcy law:

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The main purpose of bankruptcy law in most countries is for the government to provide a humane way out for businesses that are in financial difficulty or unable to pay their debts. In addition, depending on the laws of each country, bankruptcy law also protects the rights of creditors, debtors and employees.

2.2 The Role of Bankruptcy Law

2.2.1. Bankruptcy law is a legal tool to effectively protect the legitimate rights and interests of creditors.

In business, mutual debt is a normal phenomenon, few businesses can avoid it. When there is debt, the creditor naturally has the right to collect the debt through many different forms and measures, including filing a lawsuit in court. However, collecting debt through litigation in civil courts and economic courts often cannot satisfactorily resolve the legitimate rights and interests of businesses. Therefore, in addition to civil proceedings and economic proceedings as normal debt collection procedures, the State must design another special debt collection mechanism so that creditors, when necessary, can use it to collect debts, which is bankruptcy proceedings. The superiority of the debt collection mechanism through bankruptcy proceedings lies in the fact that debt collection is guaranteed by the Court being able to declare the debtor's existence terminated and thereby sell all of its assets to pay creditors. Although today, bankruptcy proceedings still have to fulfill some additional goals, including the goal of helping debtor enterprises recover (that is, protecting the interests of debtors), but basically, bankruptcy proceedings since its inception until now are still a type of judicial proceedings set forth first and foremost to protect the interests of creditors. Prioritizing the protection of the rights and interests of creditors has made bankruptcy proceedings a legal tool that plays a very important role in promoting investment activities of business people. Since the Bankruptcy Law, business people will be more secure because their debts have a better mechanism for protection.

Vietnam's bankruptcy law has clearly demonstrated the State's concern for protecting the legitimate rights and interests of creditors. This is demonstrated through a series of legal provisions related to the powers of creditors such as: the right to file a petition to open bankruptcy proceedings (Article 13, LPS 2004), the right to appeal the List of Creditors (Clause 2, Article 52, LPS 2004), the right to have a representative in the asset management and asset payment institution (Clause 1, Article 83, LPS 2004), the right to propose and approve the debtor's business recovery plan (Articles 70, 71).

LPS 2004), the right to appeal the decision declaring bankruptcy (Clause 1, Article 91, LPS 2004), etc.

2.2.2. Bankruptcy law protects the interests of debtors, creating opportunities for debtors to withdraw from the market in an orderly manner.

When it first appeared, bankruptcy law did not address the issue of protecting debtors. At that time, it was believed that bankruptcy was a crime and the person who caused bankruptcy was a criminal, so they were not only not protected but also punished in many ways, including imprisonment. For example, the first bankruptcy law in England in 1542 stipulated that "all debtors must be hanged" to deter merchants from making losses. Today, the concept of business has changed, so the way the State and the law treat debtors who fall into bankruptcy has also been designed in a positive direction, beneficial to the debtor. Business is an activity that contains many risks. Due to unpredictable market fluctuations and other objective factors, business losses and inability to pay debts when due can happen at any time to businessmen. On the other hand, a bankrupt enterprise can lead to many negative consequences for society, first of all for workers and creditors. That is why today, when enterprises fall into bankruptcy, the first problem that the State is concerned with solving is not to declare the enterprise bankrupt immediately and divide its assets to creditors, but to find every way to help the enterprise escape this difficult situation. That explains why the laws of most countries stipulate many different forms of recovery for bankrupt enterprises to choose and apply in order to create opportunities for these enterprises to restore their business capacity.

In the United States, in particular, bankruptcy laws are very lenient toward individuals and businesses when they are unable to pay their debts. For us as individuals, there are two types of bankruptcy: The first type is regulated in Chapter VII, which allows individuals in financial trouble to “discharge” – have their debts forgiven – most unsecured debts. This type of bankruptcy does not help individuals keep their assets.

secured debt, which means the borrower pledges assets, such as land, as collateral when borrowing; The second type, provided for in Chapter XIII, allows individuals in financial trouble to repay their debts in installments over a three- to five-year grace period. At the end of the repayment period, if the borrower has used all of his or her income to repay the debt according to the plan, the remaining debt is written off. This type can be used to pay off overdue secured debt without losing the collateral. Bankruptcy laws apply slightly differently to businesses. Some businesses can continue to operate under Chapter XI while they restructure their debts. So, unlike most bankruptcy laws around the world, US law allows a bankrupt company to continue operating under the same management team while it attempts to restructure its debts. In other words, there is essentially no appointment of a corporate supervisor. Some argue that this system, known as captive debt, promotes economic growth and job creation because many companies are allowed to stay in business and their assets are protected.

In Vietnam, bankruptcy law has also been built in this direction. Specifically, the 1993 Enterprise Bankruptcy Law and the recent 2004 Bankruptcy Law have not only protected the legitimate rights and interests of creditors but also protected the legitimate rights and interests of indebted enterprises and especially have not considered bankruptcy as a crime as in some countries in the world. This can be seen through the fact that the law stipulates a series of rights for indebted enterprises in the bankruptcy settlement process. For example, from the time the Court issues a decision to open bankruptcy proceedings, all debt collection rights are suspended and resolved according to a single common procedure conducted by the Court, while at the same time, individual debt collection is strictly prohibited. The bankruptcy laws of many countries have created maximum conditions for indebted enterprises to overcome financial difficulties, escape bankruptcy and return to normal operations, without requiring the Court to declare bankruptcy immediately upon receipt of a request. Immediately after the decision to open bankruptcy proceedings is issued, the indebted enterprise also has the right to develop a reconciliation plan and a solution to reorganize production and business to submit to the Creditors' Conference for consideration and approval (Article 1).

64 LPS 2004). The court shall only issue a decision to open liquidation proceedings when the Creditors' Conference does not approve the plan to reorganize production and business activities, or in the case where the enterprise does not implement or fails to implement the plan to reorganize production and business activities approved by the Creditors' Conference. In addition, the debtor also has the right to appoint a representative to participate in the Asset Management and Liquidation Team (Article 9, PSDN Law 1993) ... When there is a decision to open liquidation proceedings, the remaining assets of the enterprise will be paid to the creditors in a certain order; after payment, all debts of the enterprise, even if not fully paid, are considered to have been paid and the creditors will no longer have the right to claim the debt, except for a few exceptions stipulated in the Bankruptcy Law of each country.

2.2.3. Bankruptcy law contributes to protecting the interests of workers.

Bankruptcy not only causes bad consequences for creditors and debtors but also for workers. This is first of all reflected in the fact that because of bankruptcy, workers lose their jobs and become unemployed. Therefore, to protect workers, first of all, we must find a way to prevent businesses from going bankrupt. The business recovery mechanism set forth by law is to implement this policy because in reality, saving businesses from bankruptcy is also saving workers from unemployment. But on the other hand, when workers work without being paid their full wages for a long time, the State also needs to create a method for them to be able to claim the wages owed by the business. To achieve this goal, bankruptcy law must provide them with certain rights such as the right to file a petition to open bankruptcy proceedings, the right to participate in the bankruptcy settlement process, the right to be given priority in payment of wages and other legal amounts they are entitled to before the normal debts of the enterprise...

And this is the point where Vietnam's bankruptcy law specifically provides many regulations. For example, Article 14 of the 2004 LPS stipulates the right of employees to file a petition to open bankruptcy proceedings: "In case an enterprise or cooperative cannot pay wages or other debts to employees and it is found that the enterprise or cooperative is insolvent, it shall be liable to pay the employee's wages or other debts.

If a cooperative or enterprise falls into bankruptcy, the employees shall appoint a representative or, through a union representative, submit a petition to open bankruptcy proceedings against that enterprise or cooperative.”

2.2.4. Bankruptcy law contributes to ensuring social order and security.

Normally, when a debtor has too many creditors but too few assets to pay off the debt, it is very likely that creditors will fight over the debtor's assets. If creditors are allowed to "do whatever they want", arbitrarily "seize debts", freely deprive debtors of their assets in an unorganized and unfair manner, social order and security will not be guaranteed. Therefore, every State needs to have measures to intervene in this debt collection to avoid the negative consequences mentioned above. Bankruptcy procedures are a legal tool that can help the State come up with many mechanisms to implement debt payment fairly among creditors. Based on bankruptcy law, the Court will represent the State to fairly and objectively resolve conflicts of interests between creditors and debtors, and that will contribute to ensuring order and security in society.

According to the 2004 LPS, the People's Court at the provincial and district levels is the competent authority to conduct bankruptcy proceedings for enterprises and cooperatives. When opening bankruptcy proceedings, an Asset Management and Liquidation Team is established to manage the liquidation of assets, and a Creditors' Conference is also established to ensure fairness in the creditors' rights.

2.2.5. Bankruptcy law contributes to the health of the economy.

Along with other economic laws, bankruptcy law also contributes to the health of the economy, promoting more effective production and business activities. This is shown in the following points:

Firstly , bankruptcy and bankruptcy law are tools to deter businessmen, forcing them to be proactive, creative but also cautious in their practice. A professional attitude that combines proactiveness, creativity and caution is essential because it helps businessmen make decisions.

Reasonable decisions are the premise for the effective operation of each enterprise. The effective operation of individual enterprises will naturally lead to the effective operation of the economy as a whole.

Second , bankruptcy law is not only a deterrent, forcing businesses to always improve themselves to survive and develop, but also a legal basis to eliminate ineffective businesses, creating a healthy business environment for investors. Through bankruptcy procedures, businesses that are constantly losing money and are heavily indebted, like "sick people" in the economy, must be handled and removed from the market. Thus, bankruptcy procedures have contributed to creating a safe and healthy legal environment - an indispensable factor for the sustainable development of the economy .

3. Some points to note in the bankruptcy laws of countries around the world:

Research on bankruptcy laws of different countries shows that there are differences in the legal regulations on bankruptcy-related issues. This is completely understandable because each country has a different socio-economic situation and different cultures.

Within the framework of the thesis, the author will go into two main contents: regulations on the scope of application and the concept of bankruptcy of the Bankruptcy Law in some countries around the world.

3.1. Scope of application of the Bankruptcy Law.

This is the first issue that the Bankruptcy Law of each country often regulates differently. For example, in Vietnam, in addition to state agencies, there are also political organizations, socio-political organizations, socio-professional organizations; in addition to traders (enterprises and individual business households), there are also citizens who owe money to others and cannot pay on time. The question is, can all individuals, organizations, and agencies as mentioned above be declared bankrupt or not, that is, who are the subjects of application of the Bankruptcy Law? In Vietnam, the Law on Enterprise Bankruptcy

The 1993 Law on Enterprises and the 2004 Law on Bankruptcy considered this issue to be extremely important, so it was brought up for handling right in the first provisions of the law (Article 1 of the 1993 PSDN Law; Article 2 of the 2004 LPS) and the handling methods were also different.

Currently, the scope of application of the Bankruptcy Law in different countries is regulated differently. There are many reasons for this different regulation, but the most basic is that the socio-economic conditions and the operational capacity of the Court in each country are not the same. Countries where the economy is underdeveloped, there is not much experience in resolving bankruptcy, the legal culture of business people is not high, the Court apparatus is not qualified in terms of human resources and working equipment, then it is certainly not possible to expand the scope of application of the Bankruptcy Law as in developed countries. It is also for that reason that currently, in general, in the world, there are 3 ways to handle the issue of the scope of application of the Bankruptcy Law.

In the first way, bankruptcy law only applies to business entities (traders), including legal entities (companies) and natural persons (business individuals). For example, in Latvia, bankruptcy proceedings are applied to enterprises (the concept of enterprise is understood in a broad sense, including organizations and individuals with business registration) 5 . In the Russian Federation, before 2002, according to two laws of the Russian Federation, the Law on Insolvency (Bankruptcy) of Enterprises of 1991 and the Law on Insolvency (Bankruptcy) of 1998, bankruptcy only applied to economic organizations with legal status and business individuals. However, on September 27, 2002, the Russian State Duma (Parliament) issued and on October 16, 2002, the Federation Council (ie the Upper House) of Russia agreed to pass the new Law on Insolvency (Bankruptcy), accordingly, the scope of application of bankruptcy procedures in the Russian Federation was expanded to include individual consumers and a whole chapter, Chapter X, was devoted to regulating bankruptcy for this subject 6 .

In the second way , bankruptcy law only applies to entities that are enterprises, that is, only debtors that are considered enterprises can be declared bankrupt.

5 Documents of the Latvian bankruptcy law scientific seminar held at the Ministry of Justice in November 2003

6 PSG. Dr. Duong Dang Tue and Dr. Nguyen Van Tinh, editors (2005), Issues related to the proposal to amend and supplement the 2004 Bankruptcy Law , Ministry of Justice Publishing House, p. 16.

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