Duty to File a Bankruptcy Petition When a Single-Member LLC Is Insolvent

Must the owner of a single-member limited liability company file a petition to open bankruptcy proceedings when the company is insolvent?

1. What is an enterprise that is insolvent?

Under Clause 1, Article 4 of the Law on Recovery and Bankruptcy 2025 on insolvent enterprises and cooperatives as follows:

“An enterprise or cooperative is insolvent when it fails to pay a debt within 03 months from the payment due date”

Under the above provisions, your enterprise is considered insolvent when it fails to pay a debt within 03 months from the payment due date.

2. Who is obliged to file a petition to open bankruptcy proceedings?

Under Clauses 3 and 4, Article 5 of the Law on Recovery and Bankruptcy 2025, the following persons are obliged to file a petition to open bankruptcy proceedings:

“3. The legal representative of an enterprise or cooperative is obliged to file a petition to open bankruptcy proceedings when the enterprise or cooperative is insolvent.

4. The owner of a private enterprise, the Chairman of the Board of Directors of a joint stock company, the Chairman of the Members’ Council of a multi-member limited liability company, the owner of a single-member limited liability company, and general partners of a partnership are obliged to file a petition to open bankruptcy proceedings when the enterprise is insolvent.”

Under the above provisions, when a single-member limited liability company is insolvent, the company owner is obliged to file a petition to open bankruptcy proceedings.

Thus, based on the information you provided, you are the owner of a single-member limited liability company. Therefore, when the company is insolvent, you are obliged to file a petition to open bankruptcy proceedings.

3. What methods are there for filing a petition to open bankruptcy proceedings?

Methods of filing a petition to open bankruptcy proceedings are prescribed in Clause 1, Article 30 of the Law on Recovery and Bankruptcy 2025, specifically:

“1. A person requesting opening of bankruptcy proceedings must submit the petition and accompanying documents and evidence to the competent People’s Court by one of the following methods:

a) Direct submission at the People’s Court;

b) Sending to the People’s Court by post.”

Under the above provisions, you may file the petition by one of the following two methods:

– Direct submission at the People’s Court

– Sending to the People’s Court by post

Note: When filing, you need to submit accompanying relevant documents and evidence.

4. Is the owner of a single-member limited liability company penalized for failing to file a petition to open bankruptcy proceedings?

Under Article 67 of Decree 82/2020/ND-CP on violations of the obligation to file a petition, as follows:

“A fine of from 1,000,000 dong to 3,000,000 dong for the act of the owner of a private enterprise, chairman of the board of directors of a joint stock company, chairman of the members’ council of a multi-member limited liability company, owner of a single-member limited liability company, general partner of a partnership or legal representative of an enterprise or cooperative failing to file a petition to open bankruptcy proceedings when the enterprise or cooperative is insolvent”

Accordingly, when your company is insolvent but you fail to file a petition to open bankruptcy proceedings, you may be fined from 1,000,000 dong to 3,000,000 dong.

Note: The above is the fine level for individuals. Where an organization commits the same administrative violation as an individual, the fine is 02 times the fine for an individual (under Clause 4, Article 4 of Decree 82/2020/ND-CP).

ANT Legal