Can a bankrupt LLC be excluded from property obligations?

According to Article 110 of the Bankruptcy Law 2014, regulations on property obligations after a decision to declare an enterprise or cooperative bankrupt are as follows:

Asset obligations after the decision to declare the enterprise or cooperative bankrupt
1. The decision to declare an enterprise or cooperative bankrupt specified in Articles 105, 106 and 107 of this Law does not exempt the property obligations of the owner of a private enterprise or general partner of a partnership to creditors whose debts have not been paid, unless the participants in the bankruptcy procedure have otherwise agreed or the law has other provisions.
2. Property obligations arising after the decision to declare an enterprise or cooperative bankrupt are resolved in accordance with the law on enforcement of civil judgments and other relevant laws.
Accordingly, even if there is a bankruptcy decision, the LLC will not be exempt from property obligations. That is, even if it goes bankrupt, the LLC will still have to fulfill its property obligations

Who will be responsible when the LLC goes bankrupt?

According to Article 50 of the Law on Enterprises 2020 as amended by Clause 2, Article 7 of the Law Amending the Law on Public Investment, the Law on Investment by Public-Private Partnership, the Law on Investment, the Law on Housing, the Law on Bidding, the Law on Electricity, the Law on Enterprises, the Law on Special Consumption Tax and the Law on Civil Judgment Enforcement 2022, the obligations of company members are stipulated as follows:

Obligations of company members
1. Contribute the committed capital in full and on time, and be responsible for the company’s debts and other property obligations within the amount of capital contributed to the company, except for the cases specified in Clauses 2 and 4, Article 47 of this Law.
2. Contributed capital must not be withdrawn from the company in any form, except for the cases specified in Articles 51, 52, 53 and 68 of this Law.
3. Comply with the Company Charter.
4. Comply with resolutions and decisions of the Board of Members.
5. Be personally responsible when performing the following acts on behalf of the company:
a) Violating the law;
b) Conducting business or other transactions that do not serve the interests of the company and cause damage to others;
c) Paying undue debts in the face of possible financial risks to the company ty.
…

According to Article 77 of the Law on Enterprises 2020, the obligations of LLC owners are as follows:

Obligations of company owners
1. Contribute the company’s charter capital in full and on time.
2. Comply with the Company Charter.
3. Must identify and separate the assets of the company owner from the assets of the company. Company owners who are individuals must separate their personal and family expenses from the expenses of the company President, Director or General Director.
4. Comply with the provisions of law on contracts and other relevant provisions of law in buying, selling, borrowing, lending, renting, leasing, contracts and other transactions between the company and the company owner.
5. The company owner is only entitled to withdraw capital by transferring part or all of the charter capital to another organization or individual; In case of withdrawing part or all of the contributed charter capital from the company in another form, the company owner and related individuals and organizations must be jointly responsible for the debts and other property obligations of the company.
6. Company owners are not allowed to withdraw profits when the company fails to pay all due debts and other property obligations.
7. Other obligations according to the provisions of this Law and the Company’s Charter.

Accordingly, when a LLC goes bankrupt, it still has to fulfill its property obligations. The specific responsibilities for the performance of the SBV company’s property obligations are as follows:

[1] LLC with 02 or more members

Company members are responsible for the debts and other property obligations of the company within the amount of capital contributed to the company when the company goes bankrupt.

[2] One-member limited liability company

The company owner will be responsible for the debts and other property obligations of the company within the amount of capital contributed to the company when the company goes bankrupt.

What do the assets of an insolvent LLC include?

According to Article 64 of the Bankruptcy Law 2014, the assets of an insolvent LLC include:

– Assets and property rights that enterprises and cooperatives have at the time the People’s Court decides to open bankruptcy procedures;

– Assets and property rights acquired after the date the People’s Court issues a decision to open bankruptcy procedures;

– The value of the secured assets exceeds the secured debt that the LLC must pay to the secured creditor;

– The value of land use rights of a limited liability company is determined according to the provisions of land law;

– Assets recovered from acts of hiding or dispersing assets of the LLC;

– Assets and property rights acquired due to recovery from invalid transactions;

– Other assets as prescribed by law.