What is the status of insolvent enterprises and cooperatives?

According to Clause 1, Article 4 of the Bankruptcy Law 2014, regulations on insolvent enterprises and cooperatives are as follows:

Explanation of terms
In this Law, the following terms are understood as follows:
1. An insolvent enterprise or cooperative is an enterprise or cooperative that fails to fulfill its debt payment obligation within 03 months from the payment due date.
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Accordingly, insolvency of an enterprise or cooperative means that the enterprise or cooperative fails to fulfill its debt payment obligation within 03 months from the payment due date.

At the same time, when an enterprise or cooperative becomes insolvent and has a Court decision declaring bankruptcy, that enterprise or cooperative goes bankrupt.

Who has the right to file a request to open bankruptcy procedures for businesses and cooperatives?

According to Article 5 of the Bankruptcy Law 2014, the rights and obligations to file a request to open bankruptcy procedures are prescribed as follows:

Person with the right and obligation to file a request to open bankruptcy proceedings
1. Unsecured creditors and partially secured creditors have the right to file a request to open bankruptcy proceedings at the end of 03 months from the due date of the debt and the enterprise or cooperative fails to fulfill its payment obligations.
2. Employees, grassroots trade unions, and direct superior unions in places where grassroots unions have not yet been established have the right to file a request to open bankruptcy proceedings upon the expiration of 3 months from the date of payment of wages and other debts due to employees that the enterprise or cooperative does not fulfill its payment obligations.
3. The legal representative of an enterprise or cooperative is obliged to file a request to open bankruptcy proceedings when the enterprise or cooperative becomes insolvent.
4. The owner of a private enterprise, the Chairman of the Board of Directors of a joint stock company, the Chairman of the Board of Members of a limited liability company with two or more members, the owner of a one-member limited liability company, and general partners of a partnership are obliged to file a request to open bankruptcy proceedings when the enterprise becomes insolvent.
5. A shareholder or group of shareholders owning 20% ​​or more of common shares for at least 6 consecutive months has the right to file a request to open bankruptcy proceedings when the joint stock company becomes insolvent. A shareholder or group of shareholders owning less than 20% of common shares for at least 06 consecutive months has the right to file a request to open bankruptcy proceedings when the joint stock company becomes insolvent in case the company’s Charter stipulates.
6. Cooperative members or legal representatives of cooperatives and members of cooperative unions have the right to file a request to open bankruptcy procedures when the cooperative or cooperative union becomes insolvent.

Accordingly, the following entities will have the right to file a request to open bankruptcy procedures for insolvent enterprises and cooperatives as follows:

[1] Unsecured creditors, partially secured creditors

[2] Employees, grassroots trade unions, direct superior grassroots unions in places where grassroots unions have not been established

[3] legal representative of the enterprise or cooperative

[4] Owner of a private enterprise, Chairman of the Board of Directors of a joint stock company, Chairman of the Board of Members of a limited liability company with two or more members, owner of a one-member limited liability company, general partner of a partnership

[5] Shareholder or group of shareholders owning 20% or more of common shares for at least 6 consecutive months

[6] Cooperative members or legal representatives of cooperative members of the cooperative union

What is the order of payment priority when an enterprise or cooperative goes bankrupt?

According to Article 54 of the Bankruptcy Law 2014, the order of asset division is prescribed as follows:

In case the Judge issues a decision to declare bankruptcy, the assets of the enterprise or cooperative are divided in the following order:

– Bankruptcy costs;

– Debts for wages, severance pay, social insurance, health insurance for employees, and other benefits under the signed labor contract and collective labor agreement;

– Debts arising after opening bankruptcy procedures for the purpose of restoring business operations of enterprises and cooperatives;

– Financial obligations to the State water; Unsecured debt must be paid to creditors in the creditor list; The secured debt has not been paid because the value of the secured assets is not enough to pay the debt.

In case the assets of the enterprise and cooperative are no longer enough to pay all of the above amounts, payment will be made based on the corresponding percentage.