Can debt after purchasing and receiving from the Vietnam Debt Trading Company be converted into capital contribution in the enterprise?

Can debt after purchasing and receiving by the Vietnam Debt Trading Company be converted into capital contribution at the enterprise?

Some forms of handling for debt purchased and received by the Vietnam Debt Trading Company are listed in Article 16 Decree 129/2020/ND-CP:

– Direct debt recovery from the debtor and related parties in money, assets, debt instruments (bonds, bills of exchange).

– Manage, invest, exploit and handle security assets (including debt assets) to recover debt.

– Selling debt by methods: auction or competitive bidding, direct agreements with organizations and individuals (excluding the debtor). Vietnam Debt Trading Company sells debt by direct agreement with the buyer when one of the following cases is met:

+ After selling debt by public auction or competitive bidding but unsuccessfully;

+ Before the Vietnam Debt Trading Company signed the debt purchase contract, the customer committed to buy back 51% or more or all of that debt, and at the same time met the conditions of the Vietnam Debt Trading Company regarding price, payment and deposit, ability to participate in business restructuring or support the business to stabilize after restructuring.

– Receive transfer of debt repayment obligations from the debtor to a third party.

– Entrust debt collection or collect debt through a debt collection service provider legally operating in Vietnam.

– Convert debt into capital contribution at the enterprise.

– Debt restructuring in the following forms: adjusting debt repayment term, extending debt, freezing debt, adjusting debt interest rates.

– Partial or total reduction of debt repayment obligations.

– Debt collection with discounts.

– Other forms in accordance with the provisions of law and decisions of competent authorities.

Based on the above regulations, it can be seen that the debt after purchasing and receiving of the Vietnam Debt Trading Company can be processed in the form of conversion into capital contribution at the enterprise according to the provisions of law.

The content of handling purchased debt of the Vietnam Debt Trading Company is stipulated as follows Which?

Pursuant to Clause 1, Article 17 of Decree 129/2020/ND-CP, the content of handling purchased debt of the Vietnam Debt Trading Company is prescribed as follows:

– Adjusting debt repayment terms, freezing debt, extending debt and adjusting debt interest rates in accordance with the debtor’s ability and market conditions;

– Reduce the obligation to pay interest and part of the principal debt to the debtor but must ensure that the debt purchase plan is effective;

– Agreement with the debtor and related parties to collect debt using assets (including: land use rights, assets attached to land, assets attached to land formed in the future; projects, including real estate projects). Debt collection assets must be valued through an organization with valuation function and ensure there are sufficient documents and conditions to transfer ownership between parties according to the provisions of law;

– Agreement with the debtor and third party to exercise the right to transfer debt repayment obligations to a third party on the principle of ensuring greater convenience for DATC in debt handling and debt recovery;

– Agreement with the business owner on converting debt into contributed capital to participate in restructuring the business according to the provisions of Section 5 Chapter II of this Decree;

– The handling of debt security assets is carried out in accordance with the provisions of law and the provisions of this Decree.

How does the Vietnam Debt Trading Company handle the debt received according to the law?

Pursuant to Clause 2, Article 17 of Decree 129/2020/ND-CP, the content of handling debt received from the Vietnamese Debt Trading Company Nam is defined as follows:

– Adjust debt repayment term, freeze debt, extend debt and adjust debt interest rate in accordance with the debtor’s ability and market conditions;

– Reduce the obligation to pay interest and use part of the fee as prescribed to reduce part of the obligation to repay the principal to encourage the debtor to repay the debt early;

– Agreement with the debtor and related parties to collect debt using assets (including: land use rights, assets attached to land, assets attached to land formed in the future; projects, including real estate projects). Debt collection assets must be valued through an organization with valuation function and ensure there are sufficient documents and conditions to transfer ownership between parties according to the provisions of law;

– Agreement with the debtor and third party to transfer debt repayment obligations to a third party on the principle of ensuring greater convenience for the Vietnam Debt Trading Company in handling and recovering debt;

– Agreement with the owner of the debtor enterprise on converting debt into contributed capital to participate in restructuring the debtor enterprise according to the provisions of Section 5 Chapter II of this Decree;

– The disposal of assets securing the debt shall be carried out in accordance with the provisions of law and the provisions of this Decree;

– For debts that are determined to be unrecoverable according to regulations (including debts handled before the time of handover) that have been monitored off-balance sheet by the Vietnam Debt Trading Company for 10 years or more (including the time the enterprise monitored off-balance sheet before transferring to the Vietnam Debt Trading Company, if any), the Vietnam Debt Trading Company decides to exclude and not continue to monitor on the accounting books after obtaining opinions from the Ministry of Finance. DATC is responsible for excluding and not continuing to monitor the above debts.

*Note: For debt received and debt purchased under designation, Vietnam Debt Trading Company will base on the designated debt purchase, sale and handling plan approved by the competent authority (if any) and the forms and contents of debt handling specified in this Decree to handle according to the provisions of Clause 4, Article 17 of Decree 129/2020/ND-CP

Thus, the debt after purchasing and receiving the Vietnam Debt Trading Company can be converted into capital contribution at the enterprise. Some of the handling contents for the Company’s purchased and received debt are specifically stipulated in Article 17 of Decree 129/2020/ND-CP above.