Bankruptcy Advisory Services at 7S Law

1. When does a business need bankruptcy procedures?

In today’s volatile business environment, many companies fall into a state of insolvency. Bankruptcy procedures are not only a mandatory legal solution but also a transparent mechanism to settle outstanding financial obligations, protect the rights of creditors and employees, and create opportunities for business restructuring.

With an experienced team of lawyers, 7S Law provides consulting and representation services in bankruptcy proceedings, accompanying clients from the filing of the petition to the court’s final decision.

2. Legal grounds for corporate bankruptcy

2.1. Conditions for a business to be declared bankrupt

According to Article 214 of the Law on Enterprises 2020, bankruptcy is handled in accordance with the Law on Bankruptcy 2014. Clause 2, Article 4 of the Law on Bankruptcy 2014 defines bankruptcy as the status of an enterprise that has lost the ability to pay debts and is declared bankrupt by a People’s Court.

Thus, for a business to be recognized as bankrupt, it must meet two conditions simultaneously:

• Insolvency (failure to fulfill debt obligations within three months from the due date).
• A court decision declaring bankruptcy.

2.2. Bankruptcy procedures under the Law on Bankruptcy 2014

1. 1. Filing a petition for the initiation of bankruptcy proceedings.
   2. The Court reviews the petition and requests payment of fees and an advance on bankruptcy expenses.
   3. The Court accepts the petition.
   4. The Court initiates bankruptcy proceedings, inventories assets, and prepares a list of creditors and debtors.
   5. Convening and organizing the Creditors’ Meeting.
   6. Issuing a decision to declare bankruptcy or applying measures for business recovery.
   7. Enforcing the decision, liquidating assets, and distributing them according to priority order.

2.3. Key legal notes

• Jurisdiction: District-level People’s Courts handle bankruptcy of businesses with headquarters in their locality, except for cases under provincial-level jurisdiction.
• Eligible petitioners: Creditors, employees, trade unions, legal representatives of the enterprise, or shareholders/groups of shareholders holding at least 20% of ordinary shares continuously for six months or more.
• Bankruptcy fees: VND 1.5 million as per Resolution 326/2016/UBTVQH14; some cases are exempt.
• Bankruptcy costs: Include remuneration for trustees, asset liquidation, auditing, publication costs, and others under Decree 22/2015/ND-CP.
• Order of priority for debt repayment:
  (i) Bankruptcy costs;
  (ii) Wages, severance, insurance, and other employee entitlements;
  (iii) Debts incurred after initiation of bankruptcy proceedings;
  (iv) State tax obligations and remaining unsecured debts;
  (v) Finally, the owner of a private enterprise.

3. Practical experience of 7S Law

Our associate lawyers have participated in several notable bankruptcy cases, such as:

1. 1. A food-processing enterprise in the Mekong Delta, declared bankrupt by the Court in 2019.
   2. An agricultural production and processing company in the Mekong Delta, resolved in 2019.
   3. An import-export business in Ho Chi Minh City, declared bankrupt in 2018.
   4. Currently assisting a mechanical and construction company in Northern Vietnam in preparing its bankruptcy dossier.

4. Bankruptcy advisory services at 7S Law

4.1. Consulting and filing support

• Assessing the company’s legal status.
• Guiding the preparation and reviewing of documents.
• Drafting powers of attorney, introduction letters, and other necessary papers.
• Filing the petition and monitoring court acceptance.

4.2. Representation in bankruptcy proceedings

• Representing clients before the Court, Trustees, creditors, and related parties.
• Attending creditors’ meetings and protecting clients’ rights.
• Receiving and handling all documents and decisions from the Court throughout the process.

Clients benefit from the support of a highly experienced legal team, practical and effective solutions, transparency, strict confidentiality, and long-term commitment not only during bankruptcy proceedings but also in post-bankruptcy restructuring and recovery.

If your business is facing financial difficulties, or if you are a creditor seeking to protect your rights, let 7S Law be your trusted partner.