Chapter III
INITIATION OF BANKRUPTCY PROCESS
Article 42. Decisions on the initiation of bankruptcy process or the refusal to initiate bankruptcy process
1. Within 30 days from the receipt of a written request for initiation of bankruptcy process, the Judge shall make a Decision on the initiation of bankruptcy process or refusal to initiate bankruptcy process, except the cases prescribed in Article 105 of this Code.
2. The Judge shall make the Decision on the initiation of bankruptcy process when the enterprise or cooperative is insolvent.
3. If necessary, before making the decision, the Judge may convene a meeting which is attended by the requester, the chairman or the legal representative of the entity forced to file for bankruptcy and other relevant individuals and organizations in order to examine the proof of insolvency of the entity.
4. The Decision on the initiation of bankruptcy process must contain:
a) Date;
b) Name of the People’s Court; full name of the Judge;
c) Date and reference number of the acceptance of written request for initiation of bankruptcy process; name and address of the requester;
d) Name and address of the insolvent entity;
dd) Time and place where the creditors make declarations and the legal consequences of not making declaration.
5. The People’s Court shall make the Decision on the refusal to initiate bankruptcy process if the enterprise or cooperative is deemed not to be the cases prescribed in Clause 2 of this Article.
In this case, the person submitting the written request for initiation of bankruptcy process shall be reimbursed for the bankruptcy advance; the request for fulfillment of the financial obligations that are suspended as prescribed in Article 41 of this Law shall be continued to be handled.
6. The Decision on the initiation of bankruptcy process or the refusal to initiate bankruptcy process shall take effect from the date on which it is made.
Article 43. Notification of Decisions on the initiation of bankruptcy process or the refusal to initiate bankruptcy process
1. The Decision on imitating bankruptcy process issued by the People’s Court must be sent to the requester, the insolvent entity, creditors, the People’s Procuracy at the same level, civil execution authorities, tax authorities, business registry where the headquarter of insolvent entity located and posted on the national enterprise registration portal , website of the People’s Court and 02 consecutive issues of the newspaper of the province where the headquarter of insolvent entity is located.
2. The Decision on the refusal to initiate bankruptcy process must be sent to the requester, the entity forced to file for bankruptcy and the People’s Procuracy at the same level.
3. The time for sending notification of the Decision on the initiation for bankruptcy process is within 03working days from the day on which the Decision is given by the People’s Court.
Article 44. Requests for reconsidering and appeals against Decisions on initiation of bankruptcy process or Decision on refusal to initiate bankruptcy process
1. Within 07 working days from the receipt of a Decision on the initiation of bankruptcy process, the involving entities may request reconsideration of the Decision, the People’s Procuracy at the same level may appeal against the Decision.
2. On receiving the request or the appeal, the People’s Court giving the Decision on the initiation of bankruptcy process shall send the dossier on the case to the superior People’s Court for settlement.
3. Within 03 working days from the receipt of the dossier on the case and the request for reconsideration and/or the appeal, the superior People’s Court shall appoint a group of 03 judges to handle the request and/or the appeal and forward the dossier to the People’s Procuracy at the same level.
4. Within 05 working days from the receipt of the dossier on the case forwarded by the People’s Court, the People’s Procuracy at the same level must return the dossier to the People’s Court.
5. Within 05 working days from the receipt of the dossier on the case returned by the People’s Procuracy at the same level, the group of judges must arrange a meeting for considering and settling the request and/or the appeal.
6. The meeting shall be attended by the representatives of the People’s Procuracy and the minutes of the meeting shall be taken by a court clerks. If necessary, other entities may be summoned in order to clarify unclear issues.
7. The group of judges may give one of the following decisions:
a) Uphold the Decision on the initiation of bankruptcy process or the refusal to initiate bankruptcy process;
b) Cancel the Decision on the refusal to initiate bankruptcy process and request the People’s Court given the Decision to make a Decision on the initiation of bankruptcy process;
c) Cancel the Decision on the initiation of bankruptcy process and notify the People’s Court given the Decision and the involving entities.
8. The decision of the group of judges is the final decision.
9. The executive judge of the Supreme People’s Court shall make the regulations on settling the request for reconsideration and/or appeal against the Decision on the initiation for bankruptcy process.
Article 45. Appointment of asset management officers and asset management enterprises
1. Within 03 working days from the day on which the Decision on the initiation of bankruptcy process, the judge is responsible for appointing asset management officers and asset management enterprises.
2. Criteria for appointing asset management officers and asset management enterprises:
a) The individuals must possess practice certificates of asset management officers and asset management enterprises;
b) The requester gives advice on selecting the asset management officers and/or asset management enterprises.
c) The asset management officers and the asset management enterprises do not have benefits related to the case;
d) The characteristics of the case are suitable;
dd) asset management officers and/or asset management enterprises must not the relatives of the involving entities.
3. The written appointment of the asset management officers and/or the asset management enterprises must contain:
a) Date
d) Name and address of the creditors; the insolvent entity;
c) Name and address of the asset management officers and/or asset management enterprises;
d) The summary content of the request for initiation of bankruptcy process;
dd) Criteria for appointing asset management officers and the asset management enterprises;
e) The amount of the bankruptcy advance for the asset management officers and/or the asset management enterprises
g) Tasks and powers of the asset management officer and/or the asset management enterprise
h) Signature and stamp of the judge of the People’s Court
Article 46. Replacement of asset management officers or asset management enterprises
1. A asset management officer or a asset management enterprise shall be replaced by the Judge if such asset management officer or asset management enterprise:
a) Violates any obligation prescribed in this Law;
b) Is proven not objective while performing duties;
c) Be incapable of performing duties in cases of force majeure;
2. The Decision on replacement of a asset management officer or a asset management enterprise must be made in writing and sent to the asset management officer, asset management enterprise, and involved entities. The handling of the advance paid to the asset management officer and asset management enterprise must be specified in such Decision
3. Within 03 working days from of the receipt of the Decision to replace the asset management officer or asset management enterprise, the involving entities and the asset management officer or asset management enterprise may request the executive judge of the People’s Court to reconsider the Decision.
4. Within 03 working days from of the receipt of the request for reconsideration of the replacement of the asset management officer or asset management enterprise, the executive judge of the competent People’s Court shall make one of the following Decisions.
a) Uphold the Decision to replace the asset management officer or asset management enterprise;
b) Cancel the Decision to replace the asset management officer or asset management enterprise.
5. The Decision of the executive judge of the People’s Court, which is prescribed in Clause 4 of this Article shall be the final decision.
6. If the replacement is made due to the regulations prescribed in Point a and Point b Clause 1 this Article, the replaced financial management or asset management enterprise must return all their paid advance . If the replacement is made due to the regulations prescribed in Point c Clause 1 this Article, the replaced financial management or asset management enterprise shall be paid in proportion to the work done.
7. Within 03 working days on which the Decision on the replacement is made, the asset management officer or asset management enterprise must transfer all the work done to the new asset management officer or asset management enterprise.
8. The asset management officer or asset management enterprise which is replaced due to the regulations prescribed in Point a and Point b Clause 1 this Article or does not transfer the works prescribed in Clause 7 this Article, shall be administratively sanctioned or liable to criminal prosecution depending on the nature and severity of the violations. If there is any damage, the replaced asset management officer or asset management enterprise must pay the compensation for such damage.
Article 47. Business operation of insolvent entities on initiation of bankruptcy process.
1. After the Decision on the initiation of bankruptcy process is made, the insolvent entity shall keep running the business operation but under the supervision of the judge and asset management officers and/or asset management enterprises.
2. On the perception that the insolvent entity is incapable of running the business operation or denoted to violate the regulations prescribed in Clause 1 Article 48 of this Law, the judge shall decide to replace the legal representative of the insolvent entity upon the request of creditors’ meeting or the asset management officers and/or asset management enterprises.
Article 48. Prohibited activities of insolvent entities on initiation of bankruptcy process.
1. After the Decision on the initiation of bankruptcy is made, the insolvent entity is prohibited from:
a) Dispersing and hiding assets;
b) Paying the unsecured debts, except the unsecured debts incurred after the initiation of bankruptcy process and the employees’ salaries prescribed in Point c Clause 1 Article 49 of this Law.
c) Renouncing the right over debt claim;
d) Making an unsecured debt into a secured or partly-secured debt with collateral which are assets of the entity.
2. Any transaction prescribed in Clause 1 this Article is invalid and shall be handled according to Article 60 of this Law.
Article 49. Supervising insolvent entities on initiation of bankruptcy process.
1. After the Decision on the initiation of bankruptcy process is made, the insolvent entity must notice the asset management officers and/asset management enterprises before:
a) Doing the activities related to loan, pledge, mortgage, sale, transfer or lease of assets; sale or exchange of shares; transfer of asset ownership;
b) Terminating a valid contract;
c) Paying the debts incurred after the initiation of bankruptcy process; paying employees’ salaries.
2. The notification shall be sent directly or in form of registered mail, normal mail, email, fax or telex.
3. Within 03 working days from the receipt of notification of the entity, the asset management officers and/or asset management enterprises must respond that whether the entity is permitted to do the activities mentioned in Clause 1 this Article or not, and be liable to their responses. The asset management officers and/or asset management enterprises must report on their responses to the judge.
4. If one of the activities prescribed in Clause 1 this Article is made without the permission of the asset management officers and/or asset management enterprises, it shall be stopped, recovered to the original state and handled according to the regulations of the Law.
Article 50. Authorizing bankruptcy settlement
1. During the bankruptcy settlement, the People’s Court may authorize another People’s Court in order to retrieve assets, collect statements of the involving entities, assess and valuate assets or take other measures to collect statements and evidences related to the case.
2. , It is required to state clearly the names and addresses of the involved entities related to the authorization and delegated tasks in the Decision on authorization.
3. The authorized People’s Court must perform the works within 30 days from the receipt of the authorization and send a written report on the results to the People’s Court giving the authorization; If the authorized People’s Court cannot perform the tasks, it must send an explanation to the People’s Court giving the authorization.
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