Should you proceed which legal procedures for the business recovery1
Business recovery procedures are considered as “the way out” for enterprises to get out of debt, to reorganize business activities, to avoid the risk of being declared bankrupt. Nowadays, bankruptcy procedures of many countries in general, Vietnam in particular, always are regulated to create conditions for enterprises to recover production and business, instead of letting enterprises go bankrupt and causing negative effects not only to creditors, workers, but also to the economy and society.
Successful application of rehabilitation procedures will save a business on the brink of bankruptcy, allowing them to return to operation after receiving help with production technology, support from creditors, business solutions, ect,…The most important thing is that after a successful recovery, creditors have the opportunity to be paid 100% of the debt by the business.
After the creditors’conference is properly organized and the Resolution on the application of business recovery measures for enterprises is approved, the enterprise must urgently develop the business recovery plan to submit to Judges, creditors and trustees. This plan must clearly state the measures to recover the business as well as the conditions, deadline, and payment plan for the debt. Measures to resume business are specified in Clause 2, Article 88 of the 2014 Bankruptcy Law, including:
“a) Capital mobilization;
b) Debt reduction, debt exemption, debt delay;
c) Change in goods produced or traded;
d) Innovation of production technology;
đ) Reorganization of the management apparatus, merger or division of the production division;
e) Selling shares to creditors and others;
g) Sale or lease of property;
h) Other measures not contrary to the provisions of law ”.
When the restoration plan has been completed and accepted by the Judge, the Judge will convene the Creditors Conference. The creditors conference will offer the business recovery plan, which is discussed by the parties. In case the creditors conference cannot be reorganized or a resolution is not passed, the People’s Court shall issue a decision to declare bankruptcy.
If the Resolution of the Creditors Conference on the business recovery plan is passed, the enterprise will proceed the recovery plan under the supervision of the asset manager, the asset management enterprise and creditors. The implementation of the rehabilitation can result in the following:
– Enterprises and cooperatives have completed the recovery plan. After that, the enterprise is automatically considered being notin insolvency. People’s Court suspend the bankruptcy proceedings.
– In case the enterprise or the cooperative fails to implement the recovery plan or still being ininsolvencyafter completing the recovery plan, the Judge shall issue a decision to declare the enterprise or cooperative bankrupt.
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