They cannot recover their debts or if they can, it is not worth much because the assets of the indebted enterprise are often very small while the creditors are often very numerous. In addition, the remaining assets of the indebted enterprise are paid in order of priority, so the hope of payment is very slim. Stemming from the nature of the bankruptcy procedure, creditors believe that debt collection under bankruptcy procedures is the least effective method of debt collection and should only be used in cases of last resort, when other debt collection measures are not effective. Therefore, normally, after sending a debt collection notice but not being paid by the enterprise, creditors will find other measures to collect the debt themselves without filing a request immediately.
2.4.2.2. Payment of secured debt
According to the provisions of Article 35 of the Bankruptcy Law 2004, debts secured by mortgaged or pledged assets of bankrupt enterprises established before the date the Court accepts the petition to open bankruptcy proceedings are debts that are given priority to be paid with those assets. That means that the mortgaged or pledged assets will be sold to pay first for secured debts. If the value of the mortgaged or pledged assets is not enough to pay for these debts, the remaining debt of the secured creditor will be paid from the remaining value of the enterprise's assets as the debt of other unsecured creditors. If the value of the mortgaged or pledged assets is greater than the debt payable, the remaining value will be included in the remaining bankruptcy assets of the enterprise to pay for other financial obligations in the order prescribed in Article 37 of the Bankruptcy Law 2004.
2.4.2.3. Payment of unsecured debt
Payment of other property obligations of the enterprise, including payment obligations to unsecured creditors from the remaining asset value of the enterprise, shall be made in the following order: Bankruptcy fees; debts;
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salary, severance allowance, social insurance as prescribed by law and other benefits according to the collective labor agreement and signed labor contract; unsecured debts must be paid to creditors on the list of creditors according to the principle: if the value of the assets is sufficient to pay the debts, each creditor shall only be paid a part of his debt in proportion to the value of the remaining assets of the enterprise. Debts that are not due at the time of opening liquidation proceedings shall be treated as due debts, but no interest shall be charged for the period that is not due (Article 34 of the Bankruptcy Law 2004). In case after paying all financial obligations there is still a surplus, the remaining assets shall belong to the cooperative members; private enterprise owners; company members; shareholders of joint stock companies or owners of state-owned enterprises (stipulated in Clause 2, Article 37 of the Bankruptcy Law 2004).
2.4.2.4. Employee rights
According to Point b, Clause 1, Article 37 of the Bankruptcy Law 2004, when dividing assets, social insurance payments are given priority along with salary debts and severance pay. In current practice, many enterprises, after paying secured debts, still do not have enough left to pay other debts. The problem is that if the social insurance debt is not paid, which the enterprise had to pay monthly but did not pay and owes a large amount of money up to several hundred million or billions of VND, then social insurance will not pay the regime to the employees. The Bankruptcy Law 2004 has regulations on the order of debt payment, but when faced with these cases, the Courts at all levels are very confused, have difficulties, and are worried about the pressure from the employees. In some cases, they are also under pressure from local authorities because many employees file lawsuits with the Party and local authorities. In cases where employees are no longer paid
Wage arrears, severance pay, social insurance, there should be regulations to reduce difficulties for workers, which can be a subsidy for them to create other jobs. The settlement of social policies such as pensions and other regimes, social insurance agencies are all based on the requirement to have a Decision declaring bankruptcy of the enterprise. To have a Decision declaring bankruptcy of the enterprise, the asset division plan must be completed. However, debt collection is not easy in all cases, so in many cases, to have a Decision declaring bankruptcy of the enterprise, the time to have a Decision declaring bankruptcy of the enterprise must last for several years. This is related to social security policy, the pressure of workers on the Court is very high.
2.4.2.5. Handling of civil debts of private business owners and partners in a partnership company
According to the provisions of Article 90 of the 2004 Bankruptcy Law, private enterprise owners and partners of partnerships are not exempted from property obligations. In reality, the implementation of this provision also encounters difficulties due to different understandings for private enterprise owners and partners of partnerships in enterprises that have had a decision to declare bankruptcy under the 1993 Enterprise Bankruptcy Law. For example , Private Enterprise A in Q province had a Decision to " terminate the enforcement of the decision to declare bankruptcy of the enterprise " in 1997 under the 1993 Enterprise Bankruptcy Law. By 2006, a subject was the creditor of a debt larger than the amount actually received during the liquidation of the enterprise's bankruptcy assets in 1997. Now, it is discovered that the owner of private enterprise A still has assets in another locality and requests the enforcement agency of Q province to help force the owner of private enterprise A to continue paying the remaining amount. Each agency has a different opinion. The local and central enforcement agencies believe that: In case the above assets are discovered during the time of the enforcement of the Court's decision to declare bankruptcy of the enterprise, but due to negligence, the Enforcement Officer has not yet recommended the Court to include them in the list of remaining assets.
If the remaining assets of the enterprise are liquidated and paid to creditors, the civil judgment enforcement agency of Q province will continue to organize the enforcement. In case the assets are discovered later, that is, not within the above-mentioned time period, the parties will be instructed to file a lawsuit at the Court. The local Court and the Supreme Court believe that if the debt has been determined by the Court, that is, the debt collection has been resolved and is effective, the private enterprise has the obligation to pay the debt at any time, with any assets of the enterprise, regardless of whether the assets were obtained before or after the Court decided to declare the enterprise bankrupt. Compared with the provisions of the 1993 Enterprise Bankruptcy Law, the unlimited liability regime of private enterprise owners and general partners of partnerships is not understood to last indefinitely as in the 2004 Bankruptcy Law, but this liability will be terminated after the Asset Management and Liquidation Team has completed the enforcement of the bankruptcy declaration decision by issuing a Decision to terminate the enforcement of the Bankruptcy Declaration Decision. At the same time, creditors also have no right to request private enterprise owners and general partners of partnerships to continue paying outstanding debts, even if these entities later acquire new assets. Therefore, the request for the enforcement agency to continue selling assets owned by private enterprise owners and general partners of partnerships after the bankruptcy declaration decision has been completed has no legal basis.
However, if based on the provisions of Article 90 of the Bankruptcy Law 2004, the owner of a private enterprise, the general partner of a general partnership must use his future assets to continue to pay the debts he owes to creditors. According to the general principle, the debtor who is an individual will also be released from debt, except for certain cases foreseen in the Bankruptcy Law. This provision is necessary, stemming from the following reasons: first , from fairness. If only members of capital companies are required to be responsible to creditors within the scope of their assets
that they contributed to the company, while forcing private business owners and general partners of the partnership to fulfill this obligation not only with all their existing assets but also with assets that they may have in the future is an unfair treatment for businessmen. Second, this provision is not contrary to the concept of unlimited liability of private business owners and general partners in the partnership. According to current Vietnamese law, there has not been an official concept of what "unlimited liability " is. There is a view that the unlimited nature of responsibility is shown in that the debtor must use all of his/her existing assets, regardless of where the assets are located or what purpose they are being used for (consumption or business), to pay the debt. There is also an argument that unlimited responsibility means not only using all existing assets but also future assets to pay the debt, to pay the debt to the end, to pay off the debt. It is necessary to understand unlimited responsibility from the first point of view, when the debtor is an individual who has used all of his existing assets to pay the debt, it is considered that he has fulfilled his unlimited responsibility. Third, it comes from the benefits that releasing the debtor can bring to society, to the people involved and the debtor himself. If the debtor is an individual who is forced to pay the debt to the end, then these people, no matter how capable and enthusiastic they are in business, will no longer be enthusiastic about doing business (because if the business makes a profit, they will have to continue to use that profit to pay off the debt) and the consequence will limit the force of businessmen in the market. Regulations on debt release will encourage debtors to proactively file for bankruptcy resolution, strictly comply with their obligations and responsibilities, enhance their cooperation with other entities in the bankruptcy resolution process and create conditions to unleash creativity and entrepreneurial spirit among businessmen - indispensable conditions in a dynamic and developing economy.
Chapter 3
SOLUTIONS TO COMPLETE AND ENSURE EFFECTIVE IMPLEMENTATION OF REGULATIONS ON BANKRUPTCY LIQUIDATION PROCEDURES
3.1. SOLUTIONS TO IMPROVE REGULATIONS ON PROCEDURES FOR LIQUIDATION OF BANKRUPTCY ASSETS
3.1.1. Bankruptcy assets
The provisions on bankruptcy assets and the handling of bankruptcy assets as stated in Article 49 of the 2004 Bankruptcy Law are unreasonable, incomplete, and adversely affect the legitimate rights and interests of bankrupt debtors. All assets that the debtor has acquired since the time of the Court's Decision on accepting the bankruptcy petition form a unified and unique block called bankruptcy assets. Determining the scope of this block of assets is very important because it not only affects the rights of creditors but also has great significance in deciding the direction of resolving a specific bankruptcy case. If the Court determines that the debtor's assets no longer exist or are still very insignificant, the Court can immediately declare the debtor bankrupt and terminate the case without having to carry out any other legal procedures. The issue of bankruptcy assets as stipulated in Article 49 of the Bankruptcy Law 2004 needs to be amended in the following direction:
First, add some types of assets and property rights to the bankruptcy assets of the debtor enterprise such as: Assets and property rights recovered from unfair transactions of the debtor; assets and property rights acquired from the recovery of invalid transactions of the debtor; assets and property rights acquired by the owner of a private enterprise or a partner in a partnership; assets and property rights acquired after the date of opening bankruptcy proceedings. According to the provisions of the Bankruptcy Law 2004, after opening bankruptcy proceedings, the debtor's business activities can still be conducted normally.
It is therefore entirely possible for the debtor to acquire additional assets and property rights after the date of commencement of the case. It is therefore necessary to include assets and property rights acquired by the debtor after the date of commencement of the bankruptcy proceedings in the bankruptcy estate.
Second, add a clause to Article 49 of the 2004 Bankruptcy Law that stipulates the types of assets exempted from bankruptcy assets. Currently, from a humanitarian perspective, many countries in the world have allowed individual debtors to retain some assets, mainly essential daily living items if they have not violated the law or committed fraud in the process of managing and operating the business. According to the practice of countries, bankruptcy assets are specifically exempted: In the US Bankruptcy Law, exempted bankruptcy assets include the main assets of individuals to protect minimum living needs such as cars worth up to 1,200 USD; 500 USD for jewelry... or humanitarian financial amounts such as unemployment compensation, medical care, child support. In the Insolvency Law of the Russian Federation, the assets excluded from bankruptcy are assets related to production facilities, infrastructure important to public life that are included in the balance sheet of local self-government bodies or federal authorities... In the Bankruptcy Law of Japan, assets located outside the territory of Japan are excluded. In the Bankruptcy Law of Australia, the assets excluded from bankruptcy are: Clothing and household furniture; means of transport (car or motorbike) with a value not exceeding
$6,150.00; business tools and equipment with a total value not exceeding
$3,150.00 (these figures are as of 10/26/2006); Superannuation ; Personal Injury Compensation.
In summary, Vietnam's bankruptcy law also needs to add provisions on exempt bankruptcy assets according to international practice and experience in some of the above countries, exempt bankruptcy assets are assets, property rights are objects serving daily life of minimal nature.
of the debtor and subsidies for the debtor due to inability to work, illness, or loss of employment; pensions, amounts received from life insurance contracts, alimony after divorce, compensation for health damage caused by illegal acts of others...
3.1.2. Bankruptcy property settlement
3.1.2.1. Subjects conducting bankruptcy liquidation procedures
According to the current provisions of Vietnam's bankruptcy law, the subjects related to the bankruptcy asset payment process include the Court; the Asset Management and Liquidation Team; creditors and debtors. In which, the Judge (representing the Court) has the role of officially deciding on the asset division plan of the bankrupt enterprise. The Asset Management and Liquidation Team is established by the Judge at the same time as the decision to open bankruptcy proceedings. This is a specialized institution that helps the Judge manage and liquidate the assets of the bankrupt enterprise. It is the agency that implements the Judge's decision on applying asset liquidation procedures to the bankrupt enterprise. Bankruptcy laws in all countries have provisions on asset management institutions. For example , the US Bankruptcy Law assigns the right to manage bankruptcy assets to a Trustee. The Trustee is a person entrusted to manage assets, is a legal representative on behalf of the owner to exercise powers over the assets, participates in legal relations independently and therefore can become plaintiff and defendant in specific legal relations [43, pp. 291-292]. In the liquidation procedure, the Trustee is elected by the creditors or, if not elected, is appointed by the Court as a temporary Trustee to conduct the management of bankruptcy assets until the actual Trustee is selected. According to this procedure, the creditors can also elect a Committee of at least 3 people to advise the Trustee and make recommendations to the Court. The Trustee has the following main powers: The right to use or sell or lease the bankruptcy assets after