Joint Circular No. 07/2018/TTLT-BTP-VKSNDTC-TANDTC on cooperation in enforcing court decisions to resolve bankruptcy

JOINT CIRCULAR

Regulations on cooperation in enforcing court decisions to resolve bankruptcy

                        _________________                  

Pursuant to the Bankruptcy Law No. 51/2014/QH13 dated June 19, 2014;

Pursuant to the Civil Enforcement Act No. 26/2008/QH12 dated November 14, 2008, amended and supplemented by some articles pursuant to Law No. 64/2014/QH13 dated November 25, 2014;

Pursuant to the Organization of People's Courts Law No. 62/2014/QH13 dated November 24, 2014;

Pursuant to the Organization of People's Procuracy Law No. 63/2014/QH13 dated November 24, 2014;

Pursuant to Decree No. 96/2017/NĐ-CP dated August 16, 2017, issued by the Government on the functions, tasks, powers, and organizational structure of the Ministry of Justice;

Pursuant to Decree No. 62/2015/NĐ-CP dated July 18, 2015 of the Government detailing and guiding the implementation of certain articles of the Civil Enforcement Law;

Pursuant to Decree No. 22/2015/NĐ-CP dated February 16, 2015 of the Government detailing implementation of certain provisions of the Bankruptcy Law regarding Judicial Insolvency Administrators and the practice of insolvency management and asset liquidation;

The Minister of Justice, the President of the Supreme People's Court, the Prosecutor General issue this Joint Circular regulating cooperation in enforcing court decisions to resolve bankruptcy.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Joint Circular regulates cooperation in implementing certain issues concerning procedures and formalities in enforcing court decisions to resolve bankruptcy.

Article 2. Applicability

This Joint Circular applies to people's courts, people's procuracies, civil enforcement management agencies, civil enforcement agencies, Enforcement Officers, Judicial Insolvency Administrators, enterprises managing and liquidating assets, enterprises, cooperatives, and organizations and individuals related to the enforcement of court decisions to resolve bankruptcy.

Chapter II

PROCEDURES FOR ENFORCING COURT DECISIONS TO RESOLVE BANKRUPTCY

Article 3. Suspension and cessation of enforcement

1. Upon receipt of the court's notice regarding acceptance of the application for initiating bankruptcy proceedings, the head of the civil enforcement agency shall issue a decision to temporarily suspend enforcement against assets of the enterprise or cooperative that has lost its ability to pay, which is the obligor under the judgment or decision, except where the judgment or decision orders the enterprise or cooperative that has lost its ability to pay to compensate for damage to life, health, reputation, or wages for employees.

The time limit for issuing the decision to temporarily suspend enforcement is five working days from the date of receipt of the court's notice.

2. In cases where the court has accepted the bankruptcy case, the civil enforcement agency has issued a decision to temporarily suspend enforcement, but subsequently the court issues a decision not to initiate bankruptcy proceedings as stipulated in Clause 1, Article 71 of the Bankruptcy Law, within five working days from the date of receipt of the court's decision, the civil enforcement agency shall issue a decision to revoke the temporary suspension of enforcement and continue enforcement according to Clause 1, Article 37 and Clause 3, Article 49 of the Civil Enforcement Act.

3. In cases where the court has issued a decision to initiate bankruptcy proceedings, the civil enforcement agency has issued a decision to cease enforcement according to Clause 2, Article 71 of the Bankruptcy Law, but subsequently the court issues a decision to cease bankruptcy proceedings as stipulated in Clause 1, Article 86 of the Bankruptcy Law and ceases the procedure to restore business operations as stipulated in Point a, Clause 1, Article 95 of the Bankruptcy Law, within five working days from the date of receipt of the court's decision, the civil enforcement agency shall issue a decision to revoke the cessation of enforcement and continue enforcement according to Clause 3, Article 137 of the Civil Enforcement Act.

Article 4. Enforcement in cases where a cooperative enterprise is declared bankrupt and is the judgment debtor

In cases where a business or cooperative enterprise declared bankrupt is the judgment debtor under other judgments or decisions that have taken effect, the civil enforcement agency shall continue to organize enforcement according to regulations. The enforcement officer simultaneously informs the results of enforcement to the Administrator, the enterprise managing and liquidating assets for their knowledge, and the Judge proceeds with bankruptcy proceedings to formulate a plan for distributing the obtained assets.

Article 5. Transfer, issuance of enforcement decision, authority of the Enforcement Officer in enforcing the court's decision on bankruptcy resolution

1. The court's decision on bankruptcy resolution shall be transferred to the competent civil enforcement agency within thirty days from the date it takes legal effect.

2. Within three working days from the date of receipt of the court's decision on bankruptcy resolution, the head of the competent civil enforcement agency shall proactively issue an enforcement decision and assign an Enforcement Officer.

3. The Enforcement Officer of the competent civil enforcement agency shall enforce the civil obligations related to assets, compel the performance of certain actions or prohibit certain actions as stipulated in the decision declaring the business or cooperative enterprise bankrupt, forcibly recover assets, transfer assets to the buyer according to the provisions of the Civil Enforcement Code, and request in writing the Administrator, the enterprise managing and liquidating assets which the Judge has designated to implement the remaining asset liquidation of the bankrupt business or cooperative enterprise.

Article 6. Interpretation of the court's decision on bankruptcy resolution

In cases where the court's decision on bankruptcy resolution contains unclear points, difficult to enforce, or cannot determine specific content, the civil enforcement agency shall request the court that issued the bankruptcy resolution decision to review and interpret according to Clause 2, Article 179 of the Civil Enforcement Code.

Article 7. Fees for transferring money

The fee for transferring money when the Administrator, Enforcement Officer, Court, or civil enforcement agency deposits the collected funds into an account opened by the Court or civil enforcement agency at a bank shall be paid from the value of the assets of the bankrupt business or cooperative enterprise at the time of the transfer.

Article 8. Entrusted enforcement

When enforcing the court's decision on bankruptcy resolution, the civil enforcement agency shall carry out entrusted enforcement according to Articles 55, 56, and 57 of the Civil Enforcement Code and Article 16 of Decree No. 62/2015/NĐ-CP dated July 18, 2015 of the Government detailing and guiding the implementation of certain provisions of the Civil Enforcement Code.

In cases where the entire enforcement decision of the court's bankruptcy resolution is entrusted solely to one civil enforcement agency, the entrusted agency shall open an account in the name of the competent civil enforcement agency enforcing the bankruptcy declaration decision to deposit the recovered funds of the bankrupt business or cooperative enterprise and implement the distribution plan according to the bankruptcy declaration decision. If the entrusting enforcement agency has already opened an account, after receiving the entrustment notice, the amount in the account (if any) shall be transferred to the new account of the entrusted agency for handling according to regulations; the account opened by the entrusting agency shall be canceled.

In cases where part of the court's bankruptcy resolution decision is entrusted, the civil enforcement agency accepting the entrustment shall issue an enforcement decision and organize the enforcement process according to regulations. Within three working days from the date of collecting money or assets, the civil enforcement agency accepting the entrustment must transfer the collected funds into the account of the entrusting civil enforcement agency and inform the entrusting civil enforcement agency to implement the asset distribution plan according to the bankruptcy declaration decision. The responsibility of the civil enforcement agency accepting the entrustment is completed after finishing the enforcement of the entrusted content and transferring the funds to the entrusting civil enforcement agency.

Article 9. Valuation and Revaluation of Assets

1. The valuation and revaluation of assets in cases where Enforcement Officers carry out compulsory debt recovery for bankrupt enterprises and cooperatives shall be implemented in accordance with the provisions of Clause 2, Article 73, Articles 98 and 99 of the Civil Execution Law, and Articles 17, 25, and 26 of Decree No. 62/2015/NĐ-CP.

2. The valuation and revaluation of assets in cases where Liquidators, management enterprises, and liquidation enterprises implement the liquidation of remaining assets of bankrupt enterprises and cooperatives shall be carried out in accordance with the provisions of Articles 122 and 123 of the Bankruptcy Law.

a) Liquidators, management enterprises, and liquidation enterprises select and sign service contracts with appraisal organizations on the provincial or centrally-administered municipal level where the assets to be liquidated are located within five working days from the date of receipt of the liquidation asset request document from the Enforcement Officer. In cases where it is not possible to sign a service contract with an appraisal organization on the provincial or centrally-administered municipal level where the assets to be liquidated are located, Liquidators, management enterprises, and liquidation enterprises may choose and sign a contract with an appraisal organization outside the provincial or centrally-administered municipal level where the assets to be liquidated are located.

b) In cases where an appraisal organization cannot be selected, Liquidators, management enterprises, and liquidation enterprises must report this in writing to the Enforcement Officer. Within three working days from the date of receipt of the report from the Liquidators, management enterprises, and liquidation enterprises, the Enforcement Officer decides on the selection of the appraisal organization.

c) In cases where the Enforcement Officer still cannot sign an appraisal contract, they require Liquidators, management enterprises, and liquidation enterprises to seek opinions from the financial authority at the same level or the specialized agency managing the industry or field of the asset before determining the price of the liquidated asset. Within three working days from the date of receipt of the request from the Enforcement Officer, Liquidators, management enterprises, and liquidation enterprises must implement the opinion-seeking process. The opinion-seeking process of the financial authority and related specialized agencies must be documented in writing or recorded in a protocol signed by the Liquidators, management enterprises, and liquidation enterprises and the financial authority and specialized agencies. Within fifteen days from the date of receipt of the request from the Liquidators, management enterprises, and liquidation enterprises, if the financial authority and specialized agencies do not provide their opinions in writing, the Liquidators, management enterprises, and liquidation enterprises must submit a written request to the Chairman of the People's Committee at the same level to instruct the specialized agencies to provide opinions so that the Liquidator can determine the value of the seized asset.

d) For assets to be liquidated that have a risk of being destroyed or significantly devalued, Liquidators, management enterprises, and liquidation enterprises must seek opinions from the financial authority at the same level or the specialized agency managing the industry or field of the asset before determining the price of the liquidated asset. The opinion-seeking process of the financial authority and related specialized agencies must be documented in writing or recorded in a protocol signed by the Liquidators, management enterprises, and liquidation enterprises and the financial authority and specialized agencies.

3. Enforcement Officers base their decision on the revaluation of assets for liquidation cases on the provisions of Clause 2, Article 123 of the Bankruptcy Law. The costs of revaluing liquidated assets are paid from the value of the assets of the bankrupt enterprise or cooperative. In cases where the revaluation of assets by Liquidators, management enterprises, and liquidation enterprises violates the provisions of the bankruptcy law or the asset valuation law, leading to inaccurate valuation results, the Enforcement Officer seeks opinions from the Court, the Prosecutor's Office, the financial authority at the same level, and other relevant agencies, and issues a written document clearly stating the fault of the Liquidator, the revaluation costs borne by the Liquidator, management enterprises, and liquidation enterprises, which will be deducted from the Liquidator's expenses.

Article 10. Sale of Assets

1. The sale of assets in cases where the Enforcement Officer carries out compulsory debt recovery for bankrupt enterprises or cooperatives shall be conducted in accordance with the provisions of Article 101 of the Civil Execution Law and Clause 27 of Decree No. 62/2015/NĐ-CP.

2. The sale of assets in cases where the Administrator, enterprise managing and liquidating assets implements the remaining asset liquidation of bankrupt enterprises or cooperatives shall be carried out in accordance with the provisions of Article 124 of the Bankruptcy Law.

a) In cases where the Administrator, enterprise managing and liquidating assets cannot select an organization to auction the assets, they must submit a written report to the Enforcement Officer. Within three working days from the date of receipt of the report from the Administrator, enterprise managing and liquidating assets, the Enforcement Officer decides on the selection of the organization to auction the assets.

b) Within five working days from the date of receiving the notification from the organization auctioning the assets about the first auction but there being no participants bidding or purchasing, or the auction not being successful within the announced period, the Administrator, enterprise managing and liquidating assets must submit a written report requesting the Enforcement Officer to issue a decision to reduce the price of the assets to continue the auction. The Enforcement Officer will implement the price reduction according to the civil execution laws and request the Administrator to continue organizing the auction of the assets in writing.

Article 11. Supervision of the Administrator's Activities by the Enforcement Officer when Implementing the Liquidation of Remaining Assets of Bankrupt Enterprises and Cooperatives

1. The Enforcement Officer is responsible for supervising the activities of the Administrator, enterprise managing and liquidating assets in the implementation of the liquidation of assets of bankrupt enterprises and cooperatives after submitting a written request to the Administrator, enterprise managing and liquidating assets to organize the liquidation of assets in accordance with Clauses 1 and 2 of Article 121 of the Bankruptcy Law.

The Enforcement Officer supervises the Administrator, enterprise managing and liquidating assets through reports submitted by the Administrator, enterprise managing and liquidating assets to the Enforcement Officer.

2. The contents of supervision by the Enforcement Officer are as follows:

a) Before selecting or changing the appraisal organization or auction organization, the Administrator, enterprise managing and liquidating assets must report to the Enforcement Officer. The report must clearly state the assets to be appraised or auctioned, the name and address of the appraisal or auction organization, and the reasons for selecting the appraisal or auction organization. If changing the appraisal or auction organization, the report must clearly state the reasons for the change.

b) In cases where no appraisal or auction organization can be selected, the Administrator, enterprise managing and liquidating assets must immediately report to the Enforcement Officer. The report must clearly state the assets to be appraised or auctioned, the process of selecting the appraisal or auction organization, and the reasons for not being able to select an appraisal or auction organization.

In cases where the Administrator, enterprise managing and liquidating assets seek opinions from financial agencies or specialized agencies, they must immediately report the results to the Enforcement Officer after receiving the opinions. The report must clearly state the opinions of the specialized agencies and the price chosen by the Administrator, enterprise managing and liquidating assets.

c) Before determining the price of the assets to be liquidated, in cases where the assets to be liquidated are at risk of destruction or significant depreciation in value, the Administrator, enterprise managing and liquidating assets must submit a written report to the Enforcement Officer. The report must clearly state the assets to be priced, the reasons for pricing, and the opinions of financial agencies and specialized agencies regarding the price of the assets to be liquidated.

d) Immediately after the auction of assets fails, the Administrator, enterprise managing and liquidating assets must report to the Enforcement Officer. The report must clearly state the assets to be auctioned, the name and address of the auction organization, the auction process, and the reasons for the failure of the auction.

đ) Before selling assets without going through the auction process, the Administrator, enterprise managing and liquidating assets must submit a written report to the Enforcement Officer. The report must clearly state the assets sold without going through the auction process and the basis for not putting them up for auction.

e) Results of Selling Assets

Immediately after selling the assets, the Administrator, enterprise managing and liquidating assets must submit a written report to the Enforcement Officer on the results of the asset liquidation. For assets that are not fully sold in one go, the Administrator must report to the Enforcement Officer on the portion sold.

The report on the results of the asset liquidation includes the following main contents: Date, month, year; name of the Administrator, enterprise managing and liquidating assets implementing the asset liquidation; the document requesting the Administrator, enterprise managing and liquidating assets to organize the asset liquidation; name and address of the bankrupt enterprise or cooperative; method of selling assets; assets sold and amount received; unsold assets.

g) Handling Money and Assets After Selling Assets

Immediately after receiving money from the sale of liquidated assets, the Administrator, enterprise managing and liquidating assets must submit a written report to the Enforcement Officer and transfer the money into a bank account opened by the civil execution agency named by the Enforcement Officer. Within ten days from the date the civil execution agency receives the money, the Enforcement Officer must complete the payment to the parties involved. Procedures for handling money not yet received by the parties are implemented according to the civil execution laws.

3. In cases where the Enforcement Officer discovers that the Administrator, enterprise managing and liquidating assets have violated legal regulations leading to unfairness during the asset liquidation process, the Enforcement Officer must submit a written request for the Administrator, enterprise managing and liquidating assets to comply with the regulations or submit a written proposal to the Court to replace the Administrator, enterprise managing and liquidating assets in accordance with Clause 4 of Article 17 of the Bankruptcy Law.

In case the violation of the law on bankruptcy or the law on asset valuation leads to distortion of the asset valuation results, it shall be implemented in accordance with Clause 2, Article 17 of Decree No. 22/2015/NĐ-CP dated February 16, 2015, guiding the implementation of certain provisions of the Bankruptcy Law regarding receivers and the practice of managing and liquidating assets.

Article 12. Handling of Assets Subject to Liquidation Sold Before the Bankruptcy Declaration of a Cooperative Enterprise

Where the Judge decides to sell the assets of a business or cooperative enterprise that has lost its ability to pay after initiating bankruptcy proceedings to ensure bankruptcy costs as stipulated in Clause 6, Article 9 of the Bankruptcy Law but fails to sell them, and subsequently issues a decision declaring the business or cooperative enterprise bankrupt and transfers the matter to the civil enforcement agency for execution, the Enforcement Officer shall request the Receiver to organize the valuation of the assets in accordance with Articles 122 and 123 of the Bankruptcy Law and auction the assets according to the regulations.

Article 13. Transfer of Assets and Documents to the Purchaser of Liquidated Assets

1. Within thirty days from the date when the purchaser of the asset has paid the full amount, if the Receiver or the entity managing and liquidating the assets cannot transfer the asset and documents to the successful bidder, the Receiver or the entity managing and liquidating the assets shall submit a written request and hand over all documents to the civil enforcement agency to enforce the transfer of the asset and documents.

2. Within a period not exceeding thirty days, and in complex cases, not exceeding sixty days from the date of receiving the handover from the Receiver, the civil enforcement agency shall enforce the transfer of the asset and documents to the purchaser of the liquidated asset in accordance with the law on civil enforcement. The Receiver, the entity managing and liquidating the assets, and the organization conducting the auction shall cooperate with the civil enforcement agency in enforcing the transfer of the asset and documents.

Article 14. Distribution of Assets After Auctioning Liquidated Assets

The Enforcement Officer shall implement the asset distribution plan according to the decision declaring the bankruptcy of a business or cooperative enterprise as provided in Point d, Clause 2, Article 120 of the 2014 Bankruptcy Law. In cases where the value of the liquidated assets is insufficient to cover payments due to unsold assets or a reduction in asset value, after deducting the prescribed expenses, the parties with the same priority shall be paid in proportionate shares.

Article 15. Handover of Assets That the Receiver or Entity Managing and Liquidating the Assets Cannot Sell

Within five working days from the expiration of the deadline for asset liquidation as stipulated in Clause 4, Article 121 of the Bankruptcy Law, the Receiver or the entity managing and liquidating the assets shall report in writing to the Enforcement Officer about the termination of asset liquidation, along with a list of the business or cooperative enterprise's unsold assets and hand over all documents and assets of the business or cooperative enterprise to the Enforcement Officer for handling and liquidation in accordance with the law. The Enforcement Officer shall carry out the valuation and sale of the assets of the bankrupt business or cooperative enterprise in accordance with the law on civil enforcement.

Article 16. Fees for Enforcement of Bankruptcy Settlement Decisions by the Court

The person entitled to enforcement under the bankruptcy settlement decision of the court must pay civil enforcement fees in accordance with Article 60 of the Civil Enforcement Law and Circular No. 216/2016/TT-BTC dated November 10, 2016 of the Ministry of Finance on the levels of collection, payment, management, and use of civil enforcement fees.

For amounts and assets paid to the person entitled to enforcement from the liquidation proceeds collected by the Liquidator or the enterprise managing and liquidating assets from the sale of liquidated assets, the civil enforcement agency shall not collect enforcement fees.

Article 17. Suspension and Termination of Enforcement of Bankruptcy Declaration Decisions

The suspension and termination of enforcement of bankruptcy declaration decisions concerning asset liquidation shall be carried out in accordance with the provisions of the Bankruptcy Law.

The suspension and termination of enforcement of bankruptcy declaration decisions concerning other obligations shall be carried out in accordance with the provisions of the Civil Enforcement Law.

Article 18. Sending Documents Requesting the Liquidator, Enterprise Managing and Liquidating Assets to Carry Out Asset Liquidation

Documents requesting the Liquidator, enterprise managing and liquidating assets to carry out asset liquidation must be sent to the court, the prosecution office, and participants in the bankruptcy procedure within three working days from the date of issuance of the document.

Article 19. Handling Complaints Regarding the Enforcement of Bankruptcy Settlement Decisions by the Court

1. The parties involved, those with rights and interests related to the case, and the Liquidator have the right to lodge complaints against the decisions or actions of the head of the civil enforcement agency or the Enforcement Officer if there is evidence that such decisions or actions violate the law and infringe upon their legitimate rights and interests in accordance with the Civil Enforcement Law.

2. The parties involved and those with rights and interests related to the case have the right to lodge complaints against the decisions or actions of the Liquidator.

The authority to handle complaints and denunciations against the Liquidator shall be implemented in accordance with Clause 8, Article 22 and point c, Clause 1, point d, Clause 2, Article 24 of Decree No. 22/2015/NĐ-CP.

Chapter III

IMPLEMENTING PROVISIONS

Article 20. Transitional Provisions

In cases where the Management and Liquidation Organization established under the Bankruptcy Law 2004 has not been dissolved, the Enforcement Officer shall request the competent court to appoint a Liquidator or enterprise managing and liquidating assets in accordance with Article 131 of the Bankruptcy Law 2014 and Clause 1, Article 28 of Decree No. 22/2015/NĐ-CP. If the court does not appoint a Liquidator, the Enforcement Officer shall continue to organize the enforcement proceedings in accordance with the Bankruptcy Law 2014.

For enforcement matters that have been partially enforced or not yet completed before this Joint Circular takes effect but have already carried out enforcement procedures in accordance with the Civil Enforcement Law, the Bankruptcy Law, and guiding documents, the results of the enforcement shall be recognized; subsequent enforcement procedures shall continue to be carried out in accordance with this Joint Circular.

Article 21. Effective Date

This Joint Circular shall take effect from August 1, 2018.

During implementation, if there are difficulties, the civil enforcement agencies, People's Courts, and People's Procuratorates at all levels shall promptly report to the Ministry of Justice, Supreme People's Court, and Supreme People's Procuratorate for appropriate solutions./.