The order in which assets of enterprises and cooperatives are divided according to the law

If a business goes bankrupt, how will employees be paid? Besides, if an enterprise goes bankrupt, in what order is the enterprise’s assets divided?

1. Do employees have the right to request to open bankruptcy procedures for businesses that owe wages?

Pursuant to Article 5 of the 2014 Bankruptcy Law, which stipulates:

Persons have the right and obligation to file a request to open bankruptcy procedures

1. 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 obligation.

2. Employees, grassroots trade unions, and direct superior unions in places where grassroots unions have not yet been established have the right to file a request to open bankruptcy proceedings upon the expiration of 3 months from the date of payment of wages and other debts due to employees that the enterprise or cooperative does not fulfill its payment obligations.

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

4. The owner of a private enterprise, the Chairman of the Board of Directors of a joint stock company, the Chairman of the Board of Members of a limited liability company with two or more members, the owner of a one-member limited liability company, and general partners of a partnership are obliged to file a request to open bankruptcy proceedings when the enterprise becomes insolvent.

5. 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 proceedings 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.

6. 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.

Thus, employees have the right to request to open bankruptcy procedures for businesses that owe wages at the end of 03 months from the date of payment obligation. salary.

2. If an enterprise goes bankrupt, will employees’ salaries be given priority in payment?

Meanwhile, according to Article 54 of the Bankruptcy Law 2014, it is stipulated as follows:

Order of asset division

1. In case the Judge issues a decision to declare bankruptcy, the assets of the enterprise or cooperative are divided in the following order:

a) Bankruptcy costs;

b) Salary debt, severance pay, social insurance, health insurance for employees, other benefits according to the labor contract and signed collective labor agreement conclusion;

c) Debts arising after opening bankruptcy procedures for the purpose of restoring business activities of enterprises and cooperatives;

d) 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.

2. In case the value of the assets of the enterprise or cooperative remains after fully paying the amounts specified in Clause 1 of this Article, the remainder belongs to:

a) Cooperative members, member cooperatives;

b) Owners of private enterprises;

c) Owners of single-member limited liability companies member;

d) Member of a limited liability company with two or more members, shareholder of a joint stock company;

dd) Member of a partnership.

3. If the asset value is not enough to pay according to the provisions of Clause 1 of this Article, each subject in the same order of priority will be paid according to the percentage corresponding to the debt amount.

Thus, the employee’s salary is in the second priority for payment, after the bankrupt enterprise sells and liquidates its existing assets.

3. Who has the authority to resolve bankruptcy of an enterprise?

Pursuant to Article 8 of the 2014 Bankruptcy Law, it is stipulated as follows:

The authority to resolve bankruptcy of the People’s Court

1. The People’s Court of a province or centrally run city (hereinafter referred to as the Provincial People’s Court) has the authority to resolve bankruptcy for enterprises registered for business or enterprise registration, cooperatives registered for business or cooperative registration in that province and falling into one of the following cases:

a) Bankruptcy cases with assets abroad or persons participating in bankruptcy proceedings abroad outside;

b) Insolvent enterprises and cooperatives have branches and representative offices in many districts, towns and cities in different provinces;

c) Insolvent enterprises and cooperatives have real estate in many different districts, towns and cities in different provinces;

d) Bankruptcy cases fall under the jurisdiction of the State. People’s Courts of districts, towns, and provincial cities (hereinafter collectively referred to as district-level People’s Courts) that the Provincial People’s Court takes up to resolve due to the complex nature of the case.

2. The district-level People’s Court has the authority to resolve bankruptcy for enterprises and cooperatives with headquarters in the district, town, or city of that province and not falling into the cases specified in Clause 1 of this Article.

3. The Supreme People’s Court guides the implementation of this Article.

Accordingly, the People’s Courts of provinces and centrally run cities (hereinafter collectively referred to as the Provincial People’s Courts) have the authority to resolve bankruptcy for businesses registered for business or business registration, cooperatives registered for business or cooperatives registered in that province.

Thus, when an enterprise goes bankrupt, the application must be filed locally. Locality where the unit has a company to carry out the settlement and the jurisdiction of the People’s Court in that place to resolve.