Distributing the legacy of a credit institution after being declared bankrupt

1. Who has the right and obligation to file a request to open bankruptcy procedures for a credit institution?

According to Article 98 of the Bankruptcy Law 2014, the rights and obligations to file a request to open bankruptcy procedures are regulated as follows:

After the State Bank of Vietnam issues a document terminating special control or a document terminating the application or non-application of measures to restore solvency but the credit institution is still insolvent, the following people have the right and obligation to file a request to open bankruptcy procedures:

– 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.

– Employees, grassroots trade unions, and direct superior grassroots unions in places where grassroots unions have not yet been established have the right to file a request to open bankruptcy proceedings at the end of 03 months from the date of payment of salaries and other debts due to employees that the enterprise or cooperative does not fulfill its payment obligations.

– 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 procedures when the joint stock company becomes insolvent. A shareholder or group of shareholders owning less than 20% 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 in cases where the company’s Charter stipulates.

– 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.

– Credit institutions are obliged to file a request to open bankruptcy procedures; In case a credit institution does not submit a request to open bankruptcy procedures, the State Bank of Vietnam shall submit a request to open bankruptcy procedures for that credit institution.

2. When can a request to open bankruptcy procedures be accepted?

Pursuant to Article 99 of the Bankruptcy Law 2014, accepting a request to open bankruptcy procedures for a credit institution is stipulated as follows:

The People’s Court accepts a request to open bankruptcy procedures for a credit institution when there has been a document terminating special control or a document terminating apply or not apply measures to restore solvency of the State Bank of Vietnam but the credit institution is still insolvent.

3. Dividing the legacy of a credit institution after being declared bankrupt?

In essence, before being required to open bankruptcy procedures, a credit institution must have had a period of special control by the State Bank. At this stage, credit institutions are supported with a special loan. Therefore, if they are declared bankrupt, they must prioritize paying off this loan first. Specifically, Article 100 of the Bankruptcy Law 2014 has provisions on the repayment of special loans as follows:

“Credit institutions that receive special loans from the State Bank of Vietnam or other credit institutions according to the provisions of the Law on Credit Institutions that are declared bankrupt must repay this special loan to the State Bank of Vietnam and other credit institutions before carrying out the division of assets according to regulations. in Article 101 of this Law.”

Then, based on the order of asset division in Article 101 of the Bankruptcy Law 2014 to divide the remaining assets of the credit institution, specifically as follows:

– The division of the asset value of the credit institution is carried out in the following order:

+ Bankruptcy costs assets;

+ Salary debt, severance pay, social insurance, health insurance for employees, other benefits under the labor contract and signed collective labor agreement;

+ Deposits; The amount of money the deposit insurance organization must pay to depositors at bankrupt credit institutions according to the provisions of law on deposit insurance and instructions of the State Bank of Vietnam;

+ Financial obligations to the State; 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 value of the credit institution’s assets remains after fully paying the debt specified in Clause 1 of this Article, the remaining portion belongs to:

+ Members of the credit institution are cooperatives;

+ The owner of the credit institution is a one-member limited liability company;

+ Capital contributing members of the credit institution are limited liability companies with two or more members; The shareholder of the credit institution is a joint stock company.

– In case the asset value is not enough to pay according to the provisions of Clause 1 of this Article, subjects in the same order of priority will be paid in a percentage corresponding to the debt amount.