benefits of insolvent enterprises and cooperatives, creditors and employees. In case of discovering the sale or transfer of assets without the permission of the Judge or the dissipation of assets, the Administrator shall request the Judge to declare the transaction invalid and decide to recover the assets of the enterprise or cooperative that were illegally sold or transferred.
The asset preservation measures prescribed in LPS 2014 include:
- Declare the transaction invalid [36, Article 60]
- Temporary suspension, suspension of performance of the Contract in effect [36, Article 61]
- Offset of obligations [36, Article 63 ]
- Send debt collection papers [36, Article 66]
- Make a list of creditors [36, Article 67]
- Make a list of debtors [36, Article 68];
- Registration of secured transactions of insolvent enterprises and cooperatives
- Apply temporary emergency measures [36, Article 70]
- Supervise business activities of enterprises and cooperatives according to the provisions of law.
- To perform the function of managing and liquidating assets of bankrupt enterprises and cooperatives, LPS 2014 stipulates that the Administrator and the enterprise managing and liquidating assets have the right to supervise the activities of enterprises and cooperatives. Accordingly, after the decision to open bankruptcy proceedings is made, enterprises and cooperatives must report to the Administrator and the enterprise managing and liquidating assets before carrying out activities related to borrowing, pledging, mortgaging, guaranteeing, buying, selling, transferring, leasing assets; selling, converting shares; transferring ownership of assets; terminating the implementation of the bankruptcy proceedings.
present the contract in effect; pay debts arising after opening bankruptcy proceedings; pay salaries to employees in the enterprise or cooperative. [36, Article 49].
- The form of reporting includes direct reporting, registered mail, regular mail, email, fax, telex. Within 03 working days from the date of receiving the report of the enterprise or cooperative, the Administrator is responsible for responding to the enterprise or cooperative on whether or not the above activities can be performed and is responsible for his/her response. The Administrator must report to the Judge on the content of his/her response. In case the enterprise or cooperative performs the above activities without the consent of the Administrator, the implementation shall be suspended, the original status shall be restored and the consequences shall be resolved according to the provisions of law.
Second, liquidate assets of insolvent enterprises and cooperatives.
The administrator shall exercise his/her rights and obligations in accordance with the provisions of law when enforcing the decision to declare an enterprise or cooperative bankrupt. The administrator shall organize the valuation and liquidation of assets in accordance with the provisions of Articles 121, 122, 123, and 124 of the Bankruptcy Law 2014, deposit the collected amounts into an account opened by the competent Civil Judgment Enforcement agency at a bank, and report to the Civil Judgment Enforcement agency and notify relevant participants in the bankruptcy proceedings of the assignment of the organization or individual to carry out the liquidation of assets.
Thus, in addition to performing the task of managing and supervising the use of assets, the Administrator also participates in the process of liquidating assets of enterprises and cooperatives. It can be said that the Administrator, together with the enterprise managing and liquidating assets, is primarily responsible for the assets of insolvent enterprises and cooperatives.
In addition, Clause 2, Article 16 and Clause 2, Article 47 of the 2014 Law on Insolvency also stipulate that the Administrator has the right to represent the enterprise in cases where the enterprise or cooperative does not have a legal representative. In this case, the Administrator shall exercise the rights and obligations of the enterprise or cooperative during the bankruptcy proceedings. The Administrator shall receive remuneration and shall perform professional insurance responsibilities in accordance with the provisions of law. To implement this provision, it is necessary to have provisions on insurance that is responsible for paying for damages caused by the Administrator's negligence in exercising his/her rights and obligations, and creditors are allowed to sue the Administrator for any damages caused by his/her negligence in exercising his/her assigned rights and obligations.
In addition to clearly defining the authority of the Trustee in performing the function of asset management and liquidation, the Bankruptcy Law and its implementing documents also stipulate acts that the Trustee is not allowed to do. These are acts that intentionally cause damage or are likely to cause damage to organizations and individuals participating in bankruptcy resolution. Clause 1, Article 3 of Decree No. 22/2015/ND-CP dated February 16, 2015 of the Government detailing the implementation of a number of articles of the Bankruptcy Law on Trustees and the practice of asset management and liquidation stipulates acts that are strictly prohibited for Trustees, including:
- Leasing, lending or allowing other individuals or organizations to use their Asset Management Practice Certificate to practice asset management and liquidation;
- Suggesting or receiving any amount of money or material benefits from a participant in bankruptcy proceedings or taking advantage of the name of the Administrator to gain profits from individuals or organizations in addition to the expenses the Administrator receives as prescribed by law;
- Taking advantage of duties and powers to collude with individuals and organizations for personal gain;
- Disclosing information about the organization and operation of insolvent enterprises and cooperatives that the Administrator knows during practice, unless otherwise agreed by the enterprise or cooperative in writing or otherwise provided by law;
- Other acts contrary to the provisions of law and the Code of Ethics of the Administrator.
2.3.3. Regarding the legal responsibilities of the Administrator, asset management and liquidation enterprises
The administrator is obliged to comply with the principles of asset management and liquidation practice and is responsible for his/her professional activities in accordance with the provisions of the law on bankruptcy. In order to ensure that the administrator properly exercises his/her powers and obligations and prevents violations that cause damage to the parties in the bankruptcy case, the Bankruptcy Law 2014 stipulates the general and specific responsibilities of the administrator when violating the law on bankruptcy. Article 129 of the Bankruptcy Law 2014 stipulates:
- Individuals, agencies and organizations that violate the law during the process of resolving bankruptcy cases shall, depending on the nature and severity of the violation, be subject to disciplinary action, administrative sanctions or criminal prosecution; if causing damage, they must compensate according to the provisions of law.
- The administrator, asset management and liquidation enterprise that violates the law during the bankruptcy settlement process shall, depending on the nature and severity of the violation, be subject to administrative sanctions; if causing damage, compensation must be paid in accordance with the provisions of law. In case the administrator or an individual of the asset management and liquidation enterprise violates criminal law, he/she may be prosecuted for criminal liability in accordance with the provisions of law.
Violations by the Administrator may include improper or incomplete performance of the duties that the law requires the Administrator to perform, such as: Making a list of assets that does not reflect the actual situation; not performing or incompletely performing the task of inspecting and supervising the use of assets, resulting in loss of assets of the enterprise; not requesting the Judge to decide to apply temporary emergency measures to preserve the assets of the enterprise in necessary cases, resulting in loss of assets of the indebted enterprise; making a false list of creditors and debtors; causing loss or damage to the assets of the enterprise; not properly implementing the provisions of the law on auctioning assets of enterprises subject to asset liquidation procedures; illegally using assets of the enterprise; making dishonest reports on the implementation of bankruptcy decisions.
There may also be cases where the Administrator intentionally commits the prohibited acts mentioned above such as: Leasing, lending or allowing other individuals or organizations to use his/her Administrator practice certificate to practice asset management and liquidation; suggesting or receiving any amount of money or material benefits from a participant in bankruptcy proceedings or taking advantage of the Administrator's name to gain profits from individuals or organizations in addition to the expenses the Administrator receives according to the provisions of law; taking advantage of duties and powers to collude with individuals or organizations for the purpose of personal gain...
Thus, the Bankruptcy Law 2014 has relatively complete and comprehensive regulations on a new entity performing the function of asset management and liquidation in Vietnam, which is the institution of the Administrator. With the regulations on this entity, it can be said that the Bankruptcy Law 2014 has created a new profession - asset management and liquidation in Vietnam. The problem is that we need to continue to improve the institution, create a synchronous legal corridor, as well as have solutions.
effective management and administration, creating conditions for the Bankruptcy Administrator to perform well his/her functions and duties, contributing to promoting the effectiveness and efficiency of the Bankruptcy Law in practice, positively contributing to the socio-economic development of the country in the coming time.
2.4. Current status of implementation of legal provisions on liquidation of bankruptcy assets
2.4.1. In the trial work at the Court
Through the practical application of the provisions of the law on bankruptcy and liquidation of bankrupt assets, it is shown that the settlement of requests for declaring bankruptcy of enterprises and cooperatives at the Court is still difficult. In 2013, after 9 years of implementing the Bankruptcy Law 2004, the actual trial at the Court is still very limited. Through the summary of the implementation of the Bankruptcy Law by 63 provincial People's Courts, there are 49 Courts that have received and settled a total of 336 requests for declaring bankruptcy and 14 Courts that have not received and settled requests for declaring bankruptcy, including the Courts of Cao Bang, Bac Kan, Dien Bien, Ha Giang, Ha Nam, Lao Cai, Ninh Thuan, Hoa Binh, Thai Nguyen, Binh Phuoc, Tuyen Quang, Hung Yen, Kien Giang, Lai Chau.
Of the total 336 petitions for bankruptcy declaration, the Court issued 236 Decisions to open bankruptcy proceedings, of which 83 Decisions to declare bankruptcy were issued. Of the 83 Decisions to declare bankruptcy, there were 07 cases in which the Court issued Decisions to declare enterprises and cooperatives bankrupt in special cases (Article 87 of the 2004 Bankruptcy Law). There were 153 cases in which a Decision to declare bankruptcy had not been issued, of which 49 cases had the reason that the debts of enterprises and cooperatives had not been recovered, and the assets of enterprises and cooperatives had not been sold [55, pp. 4-5].
Compared to the implementation of the Bankruptcy Law 2004, the situation of accepting and resolving requests to open bankruptcy proceedings under the Bankruptcy Law 2014 has been improved. However, the effectiveness of applying legal provisions on bankruptcy in general
and the regulations on bankruptcy liquidation in particular are still not as desired.
STATISTICS ON THE RECEIVING AND RESOLVING BANKRUPTCY REQUESTS
NATIONWIDE BY THE END OF 2016
(Data compiled by the Department of Statistics - Supreme People's Court)
Year
Accepting the application to open bankruptcy proceedings | Return order | Decision not to open bankruptcy proceedings | Decision to open bankruptcy proceedings | ||
Total | Decision to declare bankrupt | ||||
2014 | 207 | 21 | 29 | 80 | 15 |
2015 | 202 | 8 | 39 | 64 | 15 |
2016 | 299 | 10 | 41 | 88 | 29 |
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In one of the largest economic centers of our country, Hanoi, since the 2014 LPS took effect, only a very small number of applications for declaring bankruptcy proceedings have been received. Specifically, at the Hanoi People's Court in the first 6 months of 2015, the Hanoi People's Court received 47 applications for declaring bankruptcy of enterprises (an increase of 02 applications = 4.4% compared to the same period in 2014), resolved 02 applications, leaving 45 applications. In the first 6 months of 2016, the Hanoi People's Court received 46 applications for declaring bankruptcy of enterprises (a decrease of 01 application compared to the same period in 2015), resolved 03 applications, leaving 43 applications under consideration and resolution.
The above practice shows that the application of bankruptcy law in general and regulations on liquidation of bankruptcy assets in particular has given rise to many problems:
- The rate of enterprises and cooperatives required to open bankruptcy proceedings is still low, not reflecting the actual financial situation of business entities. The 2014 Bankruptcy Law has been effective in improving the production and business environment, partially overcoming the situation where many enterprises have actually lost their ability to pay and should have ceased operations but still exist, causing negative impacts on the operations of other enterprises as before. Through the results of bankruptcy settlement by the People's Court, it can be seen that there has been an increasingly positive change in the implementation of the Bankruptcy Law. However, compared to the number of existing enterprises and cooperatives, the rate of enterprises and cooperatives required to open bankruptcy proceedings is very small, not reflecting the actual financial situation of enterprises and cooperatives. According to the Department of Business Registration Management, Ministry of Planning and Investment:
In 2014, the country had 74,842 newly registered enterprises. Of these, 9,501 enterprises completed dissolution procedures and ceased business operations.
In 2015, the country had 94,754 newly registered enterprises. Of these, 9,467 enterprises completed dissolution procedures and ceased business operations.
In 2016, the whole country had 136,789 newly registered enterprises and enterprises returning to operation. Of which, the number of enterprises temporarily suspending business without registration or waiting for dissolution was 40,750 enterprises.
Comparing the number of existing enterprises and the number of enterprises that are insolvent and request to open bankruptcy proceedings, it can be seen that the number of enterprises that are insolvent and request to open bankruptcy proceedings is very small.