If a Company Owing Social Insurance Goes Bankrupt, Are Employee Rights Protected?

Short answer: When a company is declared bankrupt while still owing social insurance contributions, employees are protected on a priority basis: debts of compulsory social insurance, unemployment insurance, health insurance, and occupational accident and disease insurance are paid at 3rd place in the asset distribution order — only after bankruptcy costs and wage debts (Article 46 of the Law on Recovery and Bankruptcy 2025). Employees do not have to “queue” with ordinary creditors.

Legal basis

• Article 46 of the Law on Recovery and Bankruptcy 2025 (No. 142/2025/QH15, effective from 01/3/2026) — order of asset distribution;
• Note: Article 54 of this Law provides for “Assets of enterprises and cooperatives” — not the provision on the distribution order.

Priority order relating to employees

1. Bankruptcy costs;
2. Wage debts owed to employees;
3. Compulsory social insurance, unemployment insurance, health insurance, and occupational accident and disease insurance debts;
4. Severance allowances and other benefits under collective agreements and labor contracts;
5. Subsequent items: debts incurred for recovery, financial obligations to the State, unsecured debts.

What is the role of the social insurance agency?

• The social insurance agency has the right to file a request to open bankruptcy proceedings when an enterprise owes social insurance money;
• Participates as a creditor in the bankruptcy process to recover social insurance debts;
• Employees should coordinate with trade unions, the Department of Home Affairs, and the social insurance agency to protect their rights.

What should employees do?

1. Check their social insurance contribution history on the VssID app;
2. Request the company to finalize their social insurance records up to the date of resignation;
3. If the company stalls: complain to the social insurance agency and the Department of Home Affairs; sue for wage debts and record finalization;
4. Monitor the bankruptcy process to declare creditor rights on time.

If you need to determine the right approach for your specific situation, you should discuss it with a lawyer in advance for a review of your documents and advice on the course of action.

For quick advice, you can contact a lawyer at 0966.475.966.

Related articles

• Who is liable when an LLC goes bankrupt?
• What is the state of insolvency of enterprises and cooperatives?
• Severance and job-loss allowances