Debt and Asset Purchase Activities of the Debt and Asset Trading Corporation (DATC)

1. What are the subjects of DATC’s receipt, purchase of debts and assets?

Under point (a), Clause 2, Article 5 of the Charter on organization and operation of the single-member limited liability company Debt and Asset Trading Corporation issued together with Circular No. 42/2021/TT-BTC (hereinafter referred to as the DATC Charter), the Debt and Asset Trading Corporation (DATC) carries out receipt and purchase activities for the following types of debts and assets:

– Receipt of debts and assets, including debts and assets excluded from enterprise value when converting ownership of enterprises 100% State-owned and single-member limited liability companies of enterprises 100% State-owned, and public service units as prescribed by the Government; receivables and assets as designated by the Government and the Prime Minister for continued investment, exploitation, or handling to recover capital for the State as prescribed in Decree No. 129/2020/ND-CP.

– Purchase of debts and assets (including land use rights, assets attached to land, and future assets attached to land that are security for the debts) of organizations and individuals.

2. When is DATC obligated to receive debts and assets?

DATC’s receipt of debts and assets is carried out as prescribed in the following cases:

(1) Receipt of debts and assets under the law on conversion of ownership of enterprises 100% State-owned and public service units as prescribed in Article 11 of Decree No. 129/2020/ND-CP:

– The handed-over and received debts and assets must have complete dossiers and physical existence (for assets). Where debts and assets lack complete dossiers or no longer have physical existence, DATC shall send a written notice to the owner’s representative agency and the enterprises or public service units stating the reasons for non-receipt, so that the enterprises or public service units continue to manage, monitor, or handle them in accordance with the law on conversion of ownership of enterprises and public service units.

– The handover and receipt of debts and assets shall be carried out in accordance with the law on conversion of ownership of enterprises 100% State-owned and public service units.

(2) Receipt of debts and assets as designated by the Government and the Prime Minister under Article 12 of Decree No. 129/2020/ND-CP:

– Receipt of receivables and assets:

DATC, the owner’s representative agency, and the organizations having debts and assets handed over shall carry out the handover and receipt to handle receivables and assets in the same manner as debts and assets excluded from enterprise value, ownership conversion, and consistent with the designation documents of the Government and the Prime Minister.

– Receipt of other assets:

• DATC shall receive other assets as designated by the Government and the Prime Minister for continued investment, exploitation, or handling to recover capital for the State;
• The subjects, conditions for receipt, and handover shall follow the plan approved by the competent authority in accordance with the law.

3. In what forms are DATC’s debt and asset purchase activities carried out?

Under Article 13 of Decree No. 129/2020/ND-CP, the above debt and asset purchase activities are regulated as follows:

– DATC purchases and handles debts and assets according to tasks and plans designated by the Government and the Prime Minister.

– DATC may purchase domestic and foreign debts (including bonds, bills of exchange, and other debt instruments held by organizations and individuals, including bills of exchange and bonds issued by DATC itself) and assets (including land use rights, assets attached to land, and future assets attached to land that are security for the debts) of organizations and individuals.

– Receivables arising from DATC’s debt purchase operations are a type of goods and shall be managed and monitored for each purchased debt.

The forms of DATC’s debt and asset purchases are regulated in Article 14 of Decree No. 129/2020/ND-CP, specifically as follows:

(1) Purchase as designated by the Government and the Prime Minister.

(2) Direct agreement with creditors and asset owners.

(3) Participation in bidding or auctions to purchase debts and assets.

In addition, the above debt and asset purchases are carried out based on the principles prescribed in Article 15 of Decree No. 129/2020/ND-CP as follows:

(1) For designated debt and asset purchases:

a) DATC is responsible for developing a debt and asset purchase plan (including projects requiring debt handling support) ensuring compliance with the law and the directions of the Government and the Prime Minister. DATC uses business capital or State-allocated capital as prescribed by the Government and the Prime Minister to implement the designated debt and asset purchase plan. In which:

– Debts and assets purchased as designated are debts and assets of enterprises associated with enterprise restructuring under the direction of the Government and the Prime Minister consistent with the prescribed authority;

– The designation content includes: the subjects of debt and asset purchases; the purchase prices of debts and assets; measures to support financial handling and asset handling (if needed);

– The owner’s representative agency of the enterprise having debts and assets is responsible for coordinating with DATC and relevant agencies to report to the Government and the Prime Minister for consideration and decision on the designation contents after obtaining the opinions of the Ministry of Finance.

b) Creditors, asset owners, and related organizations and individuals are responsible for coordinating with DATC to implement the plan developed under point (a), Clause 1 of this Article.

(2) For debt and asset purchases for business purposes:

a) The debt and asset purchase plan must be effective, with a feasible capital recovery plan that preserves and develops capital. The purchase prices of debts and assets are determined by DATC on the principle of ensuring the profitability of the debt and asset purchase plan;

b) The purchased debts and assets must have dossiers proving creditor rights and asset ownership rights;

c) Debt and asset purchases are only carried out when there is a plan approved under the prescribed delegated authority, and may be carried out for each debt or asset or for a group of different debts and assets of the same creditor or asset owner, or of multiple creditors or asset owners;

d) DATC may not use capital mobilized from the organizations and individuals prescribed in Clause 2, Article 27 of Decree No. 129/2020/ND-CP to repurchase the debts of those very organizations and individuals.

Accordingly, DATC carries out the receipt of debts and assets in cases prescribed by the law on conversion of ownership of enterprises 100% State-owned and public service units, or as designated by the Government and the Prime Minister. In addition, DATC’s debt and asset purchases are carried out based on the forms and principles prescribed by current law.