Decree No. 05/2010/NĐ-CP on the application of the Bankruptcy Law to credit institutions

DECREE

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation and Applicability

1. This Decree stipulates the application of the Bankruptcy Law to credit institutions regarding conditions and procedures for filing for bankruptcy proceedings; determination of property obligations and measures to secure assets during bankruptcy proceedings; conditions and procedures for business recovery, asset liquidation, and declaration of bankruptcy; rights, obligations, and responsibilities of the party requesting the initiation of bankruptcy proceedings, of the credit institution subject to the declaration of bankruptcy, and of participants in resolving the request for the declaration of bankruptcy.

2. This Decree applies to credit institutions established and operating under the Law on Credit Institutions.

Article 2. Bankruptcy Proceedings

1. Except for the cases provided for in Clause 2 of this Article, bankruptcy proceedings shall be applied to credit institutions that have entered a state of insolvency, including:

a) Filing for and initiating bankruptcy proceedings;

b) Business recovery;

c) Asset liquidation, debt settlement;

d) Declaration of the credit institution's insolvency.

2. In cases where the State Bank of Vietnam has issued a document terminating special supervision or a document concerning the termination of measures to restore payment capacity for a credit institution, after the initiation of bankruptcy proceedings, the Judge shall decide to apply the asset liquidation and debt settlement procedures as provided for in Point c, Clause 1, without applying the business recovery procedure as provided for in Point b, Clause 1 of this Article.

3. Where this Decree does not provide for it, matters related to the bankruptcy proceedings of credit institutions shall be governed by the Bankruptcy Law and guiding documents implementing the Bankruptcy Law.

Article 3. Explanation of Terms

In this Decree, the following terms shall be understood as follows:

1. "Special Supervision"Special supervision" means placing a credit institution under direct control by the State Bank of Vietnam due to the risk of loss of payment capability or the risk of loss of solvency.

2. ""Matured debts"means amounts of money or assets that a credit institution owes others (hereinafter referred to as creditors) without security or partially secured (only the unsecured portion) which have become due for payment according to agreement or as prescribed by law.

Article 4. Conditions for Determining a Credit Institution in a State of Insolvency

A credit institution is considered to be in a state of insolvency when it lacks the ability to pay matured debts upon demand by creditors, after the State Bank of Vietnam has issued a document refusing to apply or terminating the application of measures to restore payment capacity or terminating special supervision.

Article 5. Jurisdiction of the Court

1. Provincial People's Courts (hereinafter collectively referred to as Provincial People's Courts) have jurisdiction to conduct bankruptcy proceedings against credit institutions registered for business with the provincial registration authority.

2. The People's Court of the province where the headquarters of a foreign-invested credit institution is located has jurisdiction to conduct bankruptcy proceedings against such a foreign-invested credit institution.

Article 6. Asset Management and Liquidation Team

1. Simultaneously with the decision to initiate bankruptcy proceedings, the Judge or the Bankruptcy Panel (hereinafter referred to as the Judge) responsible for the bankruptcy of credit institutions shall issue a decision to establish the Asset Management and Liquidation Team to perform the tasks of managing and liquidating the assets of credit institutions that have entered into bankruptcy.

2. The members of the Asset Management and Liquidation Team include:

a) One enforcement officer from the enforcement agency at the same level as the court with jurisdiction over the application for initiation of bankruptcy proceedings as the Team Leader;

b) One staff member of the court with jurisdiction over the application for initiation of bankruptcy proceedings;

c) One representative of the creditor organization or individual with the largest debt among creditors;

d) A legally authorized representative of the credit institution subject to bankruptcy proceedings;

đ) One representative of the State Bank of Vietnam;

e) One representative of the Vietnam Deposit Insurance Corporation in cases where the Vietnam Deposit Insurance Corporation has made payments under deposit insurance to customers of the credit institution;

g) In cases where the credit institution entering bankruptcy has outstanding wages or other debts owed to employees, the Judge shall consider and decide on the participation of trade union representatives and employee representatives in the Asset Management and Liquidation Team.

3. The organizations specified in Clause 2 of this Article shall be responsible for nominating representatives to participate in the Asset Management and Liquidation Team upon the request of the Judge.

4. Where a credit institution entering bankruptcy has branches operating in provinces or centrally administered cities, the Asset Management and Liquidation Team may establish a support unit to perform the task of managing and liquidating the assets of such branches.

The Asset Management and Liquidation Team shall specify the composition, duties, and powers of this support unit.

Article 7. Duties, Powers, and Working System of the Asset Management and Liquidation Team

1. The Asset Management and Liquidation Team shall carry out the duties and powers as prescribed in Articles 10 and 11 of the Bankruptcy Law.

2. The working system of the Asset Management and Liquidation Team shall be implemented according to the provisions of Article 20 and from Article 22 to Article 33 of Decree No. 67/2006/NĐ-CP dated July 11, 2006 of the Government guiding the application of the Bankruptcy Law to special enterprises and the operation of the Asset Management and Liquidation Team.

Chapter II

SUBMITTING APPLICATIONS FOR BANKRUPTCY AND INITIATING BANKRUPTCY PROCEEDINGS

Article 8. Persons with Rights and Obligations in Submitting Applications for Initiation of Bankruptcy Proceedings

1. The following persons have the right to submit applications for initiation of bankruptcy proceedings:

a) Unsecured or partially secured creditors of credit institutions;

b) Employees working in credit institutions;

c) Owners of state-owned credit institutions, shareholders of joint-stock credit institutions.

2. Legally authorized representatives of credit institutions have the obligation to submit applications for initiation of bankruptcy proceedings when they recognize their institution has entered into bankruptcy.

3. While performing their functions and duties, if they recognize that a credit institution has entered into bankruptcy, the State Bank of Vietnam and relevant agencies as stipulated by law have the duty to notify in writing the persons mentioned in Clause 1 of this Article so that they may consider submitting applications for initiation of bankruptcy proceedings. The notifying agency shall bear responsibility for the accuracy of the notification.

4. Persons submitting applications for initiation of bankruptcy proceedings as specified in Clauses 1 and 2 of this Article shall have obligations and responsibilities as prescribed in Article 19 of the Bankruptcy Law.

Article 9. Petition for Initiation of Bankruptcy Proceedings

1. The petition for initiation of bankruptcy proceedings shall be prepared and submitted in accordance with the provisions from Article 13 to Article 17 of the Bankruptcy Law.

2. The petition for initiation of bankruptcy proceedings must be submitted to the court having jurisdiction as provided for in Article 5 of this Decree.

Article 10. Bankruptcy Fees

The payment of bankruptcy fees and advance payment of bankruptcy fees shall be carried out in accordance with the provisions of Article 21 of the Bankruptcy Law.

Article 11. Acceptance of Petitions for Initiation of Bankruptcy Proceedings

The acceptance of petitions for initiation of bankruptcy proceedings shall be carried out in accordance with the provisions of Article 22 of the Bankruptcy Law.

Article 12. Notification of Acceptance of Petitions for Initiation of Bankruptcy Proceedings

1. Within five (05) days from the date of accepting the petition, the court must notify the State Bank of Vietnam. At the latest, within fifteen (15) days from the date of receiving the court's notification, the State Bank of Vietnam must issue a document regarding whether or not to apply or terminate the application of measures to restore the ability to pay of credit institutions or terminate special supervision.

2. In cases where the petitioner is neither the owner nor the legal representative of the credit institution facing bankruptcy, within five (05) days from the date of accepting the petition, the court must notify such credit institution. Within fifteen (15) days from the date of receiving the court's notification, the credit institution must present to the court the documents and materials specified in Clause 4, Article 15 of the Bankruptcy Law; if the credit institution facing bankruptcy is a guarantor for another party, within five days from the date of receiving the court's notification, the credit institution must inform those parties concerned about its being requested to initiate bankruptcy proceedings.

Article 13. Return of Petitions for Initiation of Bankruptcy Proceedings

1. The court issues a decision to return the petition for initiation of bankruptcy proceedings in the following cases:

a) The petitioner has not paid the advance bankruptcy fee within the time limit set by the court;

b) The petitioner does not have the right to submit the petition;

c) Another court has already initiated bankruptcy proceedings against that credit institution in a state of bankruptcy;

d) There is clear evidence indicating that the submission of the petition for initiation of bankruptcy proceedings was not objective, affecting the reputation, credibility, and business operations of the credit institution, or there is fraud in requesting the initiation of bankruptcy proceedings;

đ) The credit institution is currently under special supervision by the State Bank of Vietnam or there is a decision to apply measures to restore the ability to pay which remains effective;

e) The credit institution proves that it is not in a state of bankruptcy.

2. The person who filed the petition has the right to appeal the decision to return the petition for initiation of bankruptcy proceedings in accordance with Article 25 of the Bankruptcy Law.

Article 14. Temporary Suspension of Resolution of Requests for Performance of Property Obligations Against Credit Institutions in a State of Bankruptcy

The temporary suspension of resolution of requests for performance of property obligations against credit institutions in a state of bankruptcy shall be carried out in accordance with the provisions of Article 27 of the Bankruptcy Law.

Article 15. Decision to Open or Not Open Bankruptcy Proceedings

1. The court issues a decision to open bankruptcy proceedings when the following conditions are met:

a) The State Bank of Vietnam has issued a document regarding the non-application or termination of the application of measures to restore the ability to pay of the credit institution or a document terminating special supervision.

b) The credit institution still lacks the ability to pay maturing debts.

2. The decision to open bankruptcy proceedings must include the contents stipulated in Clause 3, Article 28 of the Bankruptcy Law.

3. The court issues a decision not to open bankruptcy proceedings when the conditions specified in Clause 1 of this Article are not met. Appeals against the decision not to open bankruptcy proceedings shall be made in accordance with Article 32 of the Bankruptcy Law.

Article 16. Notification of the Decision to Initiate Bankruptcy Proceedings

1. The decision of the Court on initiating bankruptcy proceedings shall be sent to the credit organization in a state of insolvency, the same-level People's Procuracy, the State Bank of Vietnam, the Deposit Insurance of Vietnam, and published in local newspapers where the credit organization has its main office and branches, and in central daily newspapers for three consecutive issues.

2. The decision of the Court on initiating bankruptcy proceedings must be notified to creditors and debtors of the credit organization in a state of insolvency.

3. The time limit for sending and notifying the decision to initiate bankruptcy proceedings as stipulated in Clause 1 and Clause 2 of this Article is seven (07) days from the date the Court issues the decision.

Article 17. Business Operations of Credit Organizations After the Decision to Initiate Bankruptcy Proceedings

1. All business operations of credit organizations after the decision to initiate bankruptcy proceedings shall be conducted under the supervision and inspection of the Judge and the Asset Management and Liquidation Team. In cases of initiating bankruptcy proceedings as provided for in Clause 2 of Article 2 of this Decree, the credit organization shall not conduct any business operations.

2. If it is found that the management of the credit organization lacks the ability to manage or if continuing to manage business operations would not benefit the preservation of the credit organization's assets, upon the request of the Creditors' Meeting, the Judge shall issue a decision appointing a manager who meets the conditions prescribed by the State Bank of Vietnam to manage the business operations of the credit organization.

3. From the date of receiving the decision to initiate bankruptcy proceedings, credit organizations are strictly prohibited from carrying out the following activities:

a) Concealing or disposing of assets;

b) Paying unsecured debts;

c) Abandoning or reducing claims;

d) Converting unsecured debts into secured debts guaranteed by corporate assets.

4. After receiving the decision to initiate bankruptcy proceedings, the following activities of credit organizations must be approved in writing by the Judge before implementation:

a) Pledging, mortgaging, transferring, selling, gifting, leasing assets;

b) Receiving assets from a transfer agreement;

c) Terminating an effective contract;

d) Borrowing money;

đ) Selling, converting shares, or transferring ownership rights to assets;

e) Paying newly incurred debts from business operations and salaries to employees within the credit organization.

Chapter III

ASSET LIABILITIES

Article 18. Determination of Asset Liabilities

The asset liabilities of credit organizations in a state of insolvency shall be determined in accordance with Article 33 of the Bankruptcy Law.

Article 19. Handling Unmatured Debts and Secured Debts Guaranteed by Mortgages or Pledges

The handling of unmatured debts and secured debts guaranteed by mortgages or pledges shall be carried out in accordance with Articles 34 and 35 of the Bankruptcy Law.

Article 20. Return of Assets

Credit organizations that have received special loans from the State Bank of Vietnam, other credit organizations, or financial support from the Deposit Insurance of Vietnam to restore business operations prior to the Court accepting the petition but still failed to recover and had to apply for liquidation procedures must return the value of the special loan to the State Bank of Vietnam and other credit organizations, and the financial support to the Deposit Insurance of Vietnam before implementing the provisions of Article 21 of this Decree regarding the distribution of assets.

Article 21. Order of Distribution of Assets

1. The order of distribution of assets shall be carried out in accordance with the provisions of Article 37 of the Bankruptcy Law.

2. The Vietnam Deposit Insurance Corporation shall become a creditor of credit institutions participating in deposit insurance with the amount of insurance paid out and shall be entitled to share in the value of assets according to the payment order as if it were a depositor in the event that the credit institution goes bankrupt.

Article 22. Determination of Value of Non-Monetary Obligations

The determination of the value of non-monetary obligations shall be carried out in accordance with the provisions of Article 38 of the Bankruptcy Law.

Article 23. Obligation on Property in Cases of Joint Liability or Guarantee

The obligation on property in cases of joint liability or guarantee shall be carried out in accordance with the provisions of Article 39 of the Bankruptcy Law. Guarantees under this provision include: guarantee commitments, commitment to pay Letters of Credit not yet due, except for Letters of Credit that have been confirmed.

Article 24. Return of Assets when Credit Institution is Subject to Liquidation Procedure

1. The return of leased or borrowed assets when a credit institution is subject to liquidation procedures shall be carried out in accordance with the provisions of Article 40 of the Bankruptcy Law. This provision also applies to the return of amounts of money and assets deposited, held, or entrusted at credit institutions through deposit, entrustment, and asset management contracts. Deposits on current accounts shall also be considered as deposited assets under this provision.

2. In cases where the assets mentioned in Clause 1 of this Article are insufficient to return, the owner has the right to claim compensation for the shortfall as a secured debt. This provision also applies to the return of assets to debtors with secured assets at credit institutions.

Article 25. Prohibition on Recovery of Assets

The prohibition on recovery of assets shall be carried out in accordance with the provisions of Article 41 of the Bankruptcy Law.

Article 26. Recovery of Sold Goods

The recovery of sold goods shall be carried out in accordance with the provisions of Article 42 of the Bankruptcy Law.

Chapter IV

MEASURES TO SECURE ASSETS

Article 27. Transactions Deemed Void

1. Transactions deemed void in accordance with the provisions of Article 43 of the Bankruptcy Law, except as provided in Clause 2 of this Article.

2. If within three months prior to the court accepting the application to initiate bankruptcy proceedings, the credit institution is placed in a special control status or measures to restore payment capacity are applied by the State Bank of Vietnam, or the Vietnam Deposit Insurance Corporation provides financial support, then payments of debts not yet due, realization of collateral or pledge for debts, payment of deposits, and inter-bank settlement transactions under the supervision of the State Bank of Vietnam shall not apply the provisions regarding void transactions.

3. Unsecured creditors, the Asset Management and Liquidation Committee have the right to request the court to declare transactions deemed void in accordance with the provisions of Article 44 of the Bankruptcy Law.

Article 28. Suspension of Execution of Valid Contracts

The suspension of execution of valid contracts shall be carried out in accordance with the provisions of Articles 45, 46, and 47 of the Bankruptcy Law.

Article 29. Set-off of Obligations

The set-off of obligations shall be carried out in accordance with the provisions of Article 48 of the Bankruptcy Law.

Article 30. Assets of credit organizations entering bankruptcy status

1. The assets of credit organizations entering bankruptcy status shall be determined in accordance with Article 49 of the Bankruptcy Law.

2. Assets processed in accordance with Article 24 of this Decree shall not be considered as the assets of credit organizations.

Article 31. Inventory of assets of credit organizations entering bankruptcy status

1. The inventory of assets of credit organizations shall be carried out in accordance with Article 50 of the Bankruptcy Law.

2. The asset inventory list of credit organizations must identify the assets of credit organizations, assets deposited by customers for safekeeping, entrusted collateral, and pledged assets of customers.

3. After completing the asset inventory, the Asset Management and Liquidation Team shall return the deposited assets to customers based on proof of ownership before distributing the assets according to the bankruptcy procedure.

Article 32. Sending debt collection notices, compiling and posting creditor lists, and debtor lists

1. The sending of debt collection notices, compilation of creditor lists, and debtor lists shall be carried out in accordance with Clause 1 of Article 51, Clause 1 of Article 52, and Clause 1 of Article 53 of the Bankruptcy Law.

2. Creditor lists and debtor lists must be publicly posted at the headquarters of the court handling the bankruptcy proceedings and at the main office and branches of credit organizations entering bankruptcy status. Complaints related to these lists shall be handled in accordance with Clause 2 and Clause 3 of Article 52 of the Bankruptcy Law.

Article 33. Registration of secured transactions of credit organizations entering bankruptcy status

The registration of secured transactions of credit organizations entering bankruptcy status shall be carried out in accordance with Article 54 of the Bankruptcy Law.

Article 34. Application of provisional emergency measures

1. The application of provisional emergency measures shall be carried out in accordance with Article 55 of the Bankruptcy Law.

2. Persons subject to provisional emergency measures may appeal in accordance with Article 56 of the Bankruptcy Law.

Article 35. Suspension of civil enforcement or resolution of cases

The suspension of civil enforcement or resolution of cases shall be carried out in accordance with Article 57 of the Bankruptcy Law.

Article 36. Resolution of suspended cases in bankruptcy proceedings

The resolution of suspended cases in bankruptcy proceedings shall be carried out in accordance with Article 58 of the Bankruptcy Law.

Article 37. Obligations of banks where credit organizations entering bankruptcy status have accounts

The obligations of banks where credit organizations entering bankruptcy status have accounts shall be carried out in accordance with Article 59 of the Bankruptcy Law.

Article 38. Obligations of employees

The obligations of employees of credit organizations entering bankruptcy status shall be carried out in accordance with Article 60 of the Bankruptcy Law.

Chapter V

CREDITORS' MEETING

Article 39. Creditors' Meeting

1. Except in the case provided for in Clause 1 of Article 40 of this Decree, the Judge shall decide to convene the Creditors' Meeting when the State Bank of Vietnam has issued a document regarding the non-application of measures to restore payment capacity of credit organizations in accordance with Article 98 of the Law on Credit Organizations.

2. Matters related to the Creditors' Meeting shall be carried out in accordance with Articles 61 to 77, 79, and 80 of the Bankruptcy Law.

Chapter VI

ASSET PAYMENT PROCEDURES

Article 40. Decision to Initiate Liquidation Proceedings in Special Cases

1. In cases where a credit organization has been placed under special supervision by the State Bank of Vietnam or measures to restore its payment capacity have been applied but it still fails to recover and cannot repay maturing debts when creditors demand, the Court shall decide to initiate liquidation proceedings for the credit organization without convening a Creditors' Meeting to consider applying recovery procedures.

2. The State Bank of Vietnam shall be responsible for transferring the results of special supervision and the results of applying measures to restore payment capacity, while the Deposit Insurance Corporation of Vietnam shall be responsible for transferring the results of financial support (assets, files, related documents) to the Asset Management and Liquidation Team immediately after the Asset Management and Liquidation Team is established.

3. After the Asset Management and Liquidation Team receives the results of special supervision and the results of applying measures to restore payment capacity from the State Bank of Vietnam, and the results of financial support from the Deposit Insurance Corporation of Vietnam, the Court shall issue a decision to initiate liquidation proceedings for the credit organization.

Article 41. Contents of the Decision to Initiate Liquidation Proceedings

1. The decision to initiate liquidation proceedings must include the main contents as prescribed in Clause 1 of Article 81 of the Bankruptcy Law.

2. Credit organizations that fall into bankruptcy, creditors, and debtors of credit organizations that fall into bankruptcy have the right to lodge complaints, and the People's Procuracy at the same level has the right to file objections against the decision to initiate liquidation proceedings according to Articles 83 and 84 of the Bankruptcy Law.

3. The decision to initiate liquidation proceedings for credit organizations that fall into bankruptcy must be sent and publicly announced by the Court according to Article 16 of this Decree.

Article 42. Activities of Credit Organizations During the Liquidation Process

The activities of credit organizations during the liquidation process shall be carried out in accordance with Article 82 of the Bankruptcy Law.

Article 43. Suspension of Liquidation Proceedings

The Judge shall issue a decision to suspend liquidation proceedings in the following cases:

1. The credit organization no longer has assets to implement the asset distribution plan.

2. The asset distribution plan has been fully implemented.

Chapter VII

DECLARATION OF CREDIT ORGANIZATION BANKRUPTCY

Article 44. Decision on Declaration of Credit Organization Bankruptcy

1. The Judge shall issue a decision declaring the bankruptcy of the credit organization simultaneously with the decision to suspend liquidation proceedings.

2. Matters related to the declaration of credit organization bankruptcy shall be carried out in accordance with Chapter VII of the Bankruptcy Law.

Chapter VIII

Article 20. Handling Violations

Article 45. Handling Violations

Handling violations during the implementation of bankruptcy proceedings shall be carried out in accordance with Articles 93 and 94 of the Bankruptcy Law.

Article 46. Effective Date

1. This Decree takes effect from March 15, 2010.

2. During the period when the Court examines and resolves bankruptcy proceedings for credit organizations, the State Bank of Vietnam, the Deposit Insurance Corporation of Vietnam, and related organizations shall be responsible for providing necessary files and documents upon request of the Court.

3. The Governor of the State Bank of Vietnam, Ministers, Heads of Ministries equivalent to Ministries, Heads of Government Agencies, the Chairman of the Board of Directors and General Director of the Deposit Insurance Corporation of Vietnam, Chairmen of Provincial People's Committees directly under the Central Government shall be responsible for implementing this Decree./.