The new mechanism handle CIs bankruptcy under the Bankruptcy Law 2014

On 19.06.2014, the National Assembly of the Socialist Republic of Vietnam XIII, 7th session adopted the Law on Bankruptcy (Amendment). Bankruptcy Law was enacted in 2014 to remedy the shortcomings that arose during the implementation of the Bankruptcy Act 2004 and the creation of new mechanisms handle business bankruptcy more efficient, better protect the rights and interests of the other stakeholders. Scores basic new bankruptcy law was legislated in 2014 as provisions on bankruptcy credit institutions (CIs), develop mechanisms for handling bankruptcy in accordance with the credit institutions, including some basic content :
1. On filing the petition for bankruptcy proceedings against banks
Bankruptcy Act 2014 has overcome previous shortcomings, defined more clearly about filing the petition for bankruptcy proceedings against banks:
First, about the time of filing the petition for bankruptcy. Unlike bankruptcy procedures now common, bankruptcy law in 2014 specifies that applicants for opening of bankruptcy proceedings against banks only made after State Bank of Vietnam (SBV) has one of the documents the following and credit losses remained solvency: (i) written termination of special control, or (ii) written termination application recovery measures solvency or (iii) The text does not apply restoration measure of solvency.
This provision consistent with the provisions of the Law on Credit Institutions 2010.Theo, when banks at risk of losing solvency or liquidity, the central bank will consider and decide to apply control measures particularly for That credit; and the opening of bankruptcy proceedings for the credit will be made when the banks can not afford to restore its solvency and the central bank in writing to terminate the special control or termination of applicable documents or documents not apply measures to restore solvency.
Thus, the provisions on the time of filing the petition for bankruptcy proceedings against banks under bankruptcy law in 2014 guaranteed the submission of applications for opening of bankruptcy proceedings shall be conducted only when banks actually incapable Apparel recovery, prevent the CI was filing for bankruptcy without actually falling into the state disability payments, thereby causing mental confusion, affect the operation of that particular credit and the credit system general.
Second, the subjects have the right and obligation to submit the petition for bankruptcy
Bankruptcy Act 2014 specifies the persons entitled to apply for a credit opening of bankruptcy proceedings, including: (i) an unsecured creditor, the creditor has secured a portion applicants for opening of bankruptcy proceedings Is the expiration of 03 months from the due debts that banks do not perform the payment obligations; (Ii) Workers, unions grassroots, unions immediate superior establishments where not unionized base of applicants for opening of bankruptcy proceedings the expiration of 03 months from the date must be the obligation to pay wages and other debts due to the employees that the CI did not perform its payment obligations; (Iii) the shareholder or group of shareholders owning 20% ​​of the common shares or more in a continuous period of at least 06 months of filing the petition for bankruptcy if banks lose liquidity; A shareholder or group of shareholders owning more than 20% of the common shares in the period of at least 06 months to submit the petition for bankruptcy if banks lose liquidity in the event of credit Charter provisions; (Iv) Members or representatives of the cooperative law filed the petition for bankruptcy proceedings as cooperatives lost solvency.
2014 Bankruptcy Law also stipulates the obligation of banks to apply for a credit opening of bankruptcy proceedings after the central bank in writing to terminate the special control or text application termination or non-application recovery measures available liquidity that banks are losing liquidity.
In addition, the 2014 Bankruptcy Law also regulates cases banks did not apply for the opening of bankruptcy proceedings, the central bank may file a petition for bankruptcy proceedings against that credit.
2. On the petition for the opening of bankruptcy proceedings against banks
Consistent with the provisions on the time of filing the petition for bankruptcy, bankruptcy law in 2014 stipulated People’s Court accepting the petition for bankruptcy proceedings had written credit when termination of special control or in writing to terminate the application or non-application of measures to restore the solvency of the central bank but banks still losing solvency.
3. Special loan repayments
As stipulated in Article 151 of the Law on Credit Institutions in 2010, banks in the state of inability to pay, threatening the stability of the credit system, credit risk losing the ability to pay by other serious incidents shall be special loans of the State Bank and other credit institutions. Special loans are repaid with priority before all other debts, including the debt security assets of banks.
Based on the nature of special loans and in accordance with provisions of the Law on Credit Institutions, 2010, 2014 Bankruptcy Law clearly provides special loans to be repaid to the State Bank and other financial institutions before making the distribution of the remaining assets of the bankrupt credit institutions as prescribed.
4. Regarding the division of property order
Due to the nature of banking, asset division order in bankruptcy and other credit institutions with common enterprise. To ensure the benefits for those deposits at banks and deposit insurance organization has to pay insurance money to depositors, Bankruptcy Law 2014 provides for the deposit, the amount of deposit insurance institutions must paid to depositors in banks bankrupt prioritized pre-payment of financial obligations to the State; unsecured debts to be paid to creditors in the list of creditors; unsecured debts unpaid by the security property value is insufficient to pay the debt. Accordingly, the order of division of property in the bankrupt credit institutions shall comply with the following order: (i) Costs of bankruptcy; (Ii) Debt salaries, allowances, social insurance, medical insurance for employees, other benefits under labor contracts and collective bargaining agreements were signed; (Iii) deposit; funds held to pay deposit insurance to depositors in banks bankruptcy stipulated by the law on deposit insurance and the guidance of the central bank; (iv) financial obligations to the State; unsecured debts to be paid to creditors in the list of creditors; unsecured debts unpaid by the security property value is insufficient to pay the debt.
Where the value of the property is insufficient to pay the debts mentioned above, the objects of the same order of priority to be paid in the percentage corresponding to the amount owed.
5. On the return of the entrusted assets, kept for the CI is declared bankrupt and bankruptcy liquidation of assets
Under current regulations, the banks are performing operations entrusted, safe-keeping, management and preservation of assets. Accordingly, clients transferred assets to the banks kept or contractual status management service provider of credit or transfer of assets to the banks under the trust contract. This property is not included as assets of the banks that have returned to the property owner when the banks went bankrupt. Therefore, Article 102 of the Bankruptcy Act 2014 provides: Within 10 working days from receipt of the decision to declare bankruptcy credit, property owners entrust banks, post banks kept or assigned credit management management through trust contract, kept or asset management must produce proof of ownership and records, documents relating to the civil judgment enforcement agencies to receive their property back.
6. credit transactions during the period under special control
Article 59 Bankruptcy Act 2014, the provisions of the transaction shall be considered invalid in order to prevent cases deliberately dispersed enterprise assets prior to bankruptcy, ensure the rights of the creditors of the bankrupt institutions. However, for credit in the period under special control, credit transactions are carried out under the control of state authorities and the central bank are the transactions necessary for ensuring the solvency of credit institutions. Therefore, Article 103 Bankruptcy Law 2014 provisions of the CI transaction done in phase SB applies control measures or apply special measures to restore solvency to the control of the central bank will not apply regulations invalid transactions specified in Article 59 of the Bankruptcy Act 2014.
7. On the decision to declare bankruptcy credit
According to the Law on Credit Institutions in 2010, when banks risk losing the ability to pay, disability pay, the central bank will consider adopting special control procedures for credit institutions. During the application of the special control procedure, the central bank applies various measures to restore normal functioning of credit but banks do not recover, the central bank can send documents to the bankruptcy court. Therefore, when opened bankruptcy proceedings against credit, bankruptcy law in 2014 stipulated court not to apply the procedure meeting of creditors and procedures for recovery of business activity. Within 30 days after the arbitrator Management, business management and liquidation of assets and finalize the list of creditors, the list of debtors, lists of assets of banks, the People’s Court decision declaring CI bankruptcy. This regulation aims to accelerate the settlement of the bankruptcy of credit institutions and to ensure the rights and interests to the creditors of banks and credit-specific fit.
Bankruptcy Act 2014 will come into force from 1.1.2015, is expected to be limited to the minimum the consequences of bankruptcy caused, protect the legitimate rights and interests of the parties to the relationship Economic risks before trading.
Nguyen Luong Tra – PC