DECREE NO. 10/2009/ND-CP ON ADMINISTRATIVE SANCTIONS IN THE PROCESS OF BANKRUPTCY PROCEEDINGS

DECREE

Provisions on administrative penalties for violations during the bankruptcy proceedings process

___________________

THE GOVERNMENT

Pursuant to the Law on Organization of the Government dated December 25, 2001;

Based on the Bankruptcy Law dated June 15, 2004;

Based on the Ordinance on Handling Administrative Violations dated July 2, 2002; the Ordinance amending and supplementing certain articles of the Ordinance on Handling Administrative Violations dated April 2, 2008;

Considering the proposal of the Minister of Justice,

DECREE:

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Decree stipulates acts of administrative violations, forms of penalties, penalty amounts, authority to impose penalties, and procedures for handling administrative violations during the bankruptcy proceedings process for enterprises and cooperatives.

Article 2. Applicability

1. Vietnamese individuals and organizations committing administrative violations during the bankruptcy proceedings process shall be subject to penalties as prescribed in this Decree.

2. Foreign individuals and organizations committing administrative violations during the bankruptcy proceedings process within the territory of Vietnam shall be subject to penalties as prescribed in this Decree.

3. In cases where international treaties to which the Socialist Republic of Vietnam is a party provide different provisions, such provisions shall apply.

Article 3. Principles of Administrative Penalties

The principles of administrative penalties during the bankruptcy proceedings process shall be implemented in accordance with Article 3 of the Ordinance on Handling Administrative Violations and Article 3 of Decree No. 128/2008/NĐ-CP dated December 16, 2008 detailing the implementation of certain articles of the Ordinance on Handling Administrative Violations in 2002 and the Ordinance amending and supplementing certain articles of the Ordinance on Handling Administrative Violations in 2008.

Article 4. Aggravating and Mitigating Circumstances

Aggravating and mitigating circumstances in administrative penalties during the bankruptcy proceedings process shall be implemented in accordance with Article 8, Article 9 of the Ordinance on Handling Administrative Violations and Article 6 of Decree No. 128/2008/NĐ-CP dated December 16, 2008 detailing the implementation of certain articles of the Ordinance on Handling Administrative Violations in 2002 and the Ordinance amending and supplementing certain articles of the Ordinance on Handling Administrative Violations in 2008.

Article 5. Statute of Limitations for Administrative Penalties

1. The statute of limitations for administrative penalties during the bankruptcy proceedings process is one year from the date the administrative violation was committed. If the administrative violation is discovered after the said period has expired, no penalty will be imposed but measures to mitigate consequences as prescribed in this Decree will still be applied.

If the person authorized to impose penalties fails to act within the statute of limitations for administrative penalties, they shall be dealt with according to Article 121 of the Ordinance on Handling Administrative Violations.

2. For individuals who have been indicted, prosecuted, or had a case decided to be brought to trial under criminal procedure but subsequently had a decision to terminate investigation or terminate the case, if their actions also constitute administrative violations during the bankruptcy proceedings process, they shall be subject to administrative penalties; within three days from the date of the termination decision, the person issuing the decision must send it to the person authorized to impose penalties; in this case, the statute of limitations for administrative penalties is three months from the date the person authorized to impose penalties receives the termination decision and the case file.

3. Within the time limits specified in Clause 1 and Clause 2 of this Article, if the violator commits new administrative violations during the bankruptcy proceedings process or deliberately evades or obstructs the imposition of penalties, the statute of limitations for administrative penalties specified in Clause 1 and Clause 2 of this Article shall not apply; the statute of limitations for administrative penalties shall be recalculated from the date of the new administrative violation or the date when the evasion or obstruction ends.

Article 6. Period Considered as Not Having Been Administered Administrative Sanctions

The period considered as not having been administered administrative sanctions shall be implemented in accordance with Clause 1 of Article 11 of the Ordinance on Handling Administrative Violations and Article 7 of Decree No. 128/2008/NĐ-CP dated December 16, 2008 detailing the implementation of certain provisions of the Ordinance on Handling Administrative Violations in 2002 and the Ordinance amending and supplementing certain provisions of the Ordinance on Handling Administrative Violations in 2008.

Article 7. Forms of Administrative Sanctions and Measures to Mitigate Consequences

1. For each administrative violation during the process of bankruptcy proceedings, the violator, whether an individual or an organization, must bear one of the following main forms of administrative sanction:

a) Warning;

b) Fine.

The maximum fine amount prescribed for a single act of violation during the process of bankruptcy proceedings is 15,000,000 VND.

2. Depending on the nature and degree of the violation, the violator may also be subject to one or more measures to mitigate consequences as specifically provided for in the relevant articles of Chapter II of this Decree.

3. In cases where a fine is imposed, the specific amount of the fine for a single administrative violation without aggravating or mitigating circumstances as stipulated in Articles 8 and 9 of the Ordinance on Handling Administrative Violations is the midpoint of the fine range; if the violation has mitigating circumstances, the fine amount may be reduced but not below the minimum level of the fine range; if the violation has aggravating circumstances, the fine amount may be increased but not exceeding the maximum level of the fine range. In cases where an administrative violation involves both aggravating and mitigating circumstances, the authority with jurisdiction may apply a higher, lower, or midpoint fine based on the nature and degree of such circumstances.

Chapter II

ADMINISTRATIVE VIOLATIONS AND FORMS OF SANCTIONS DURING THE PROCESS OF BANKRUPTCY PROCEEDINGS

Article 8. Acts Hindering or Creating Difficulties in the Exercise of the Right to File a Petition

Warning or imposing a fine from 500,000 VND to 1,000,000 VND for acts hindering or creating difficulties in the exercise of the right to file a petition by those entitled to request the initiation of bankruptcy proceedings against enterprises or cooperatives in a state of insolvency as stipulated in Articles 13, 14, 16, 17, and 18 of the Bankruptcy Law.

Article 9. Acts Violating Obligations to File a Petition

1. Imposing a fine from 1,000,000 VND to 3,000,000 VND for the act of the enterprise owner or the legitimate representative of the enterprise or cooperative failing to file a petition requesting the initiation of bankruptcy proceedings within the time limit specified in Article 15 of the Bankruptcy Law.

2. Measures to remedy consequences:

Compelling the enterprise owner or the legitimate representative of the enterprise or cooperative to file a petition at the request of the competent court.

Article 10. Acts Violating Obligations to Provide Documents and Produce Papers

1. Warning or imposing a fine from 500,000 VND to 1,000,000 VND for the person filing a petition to initiate bankruptcy proceedings who commits one of the following acts:

a) Failing to provide or providing incomplete or untimely documents as required by the court;

b) Failing to amend the petition or supplement documents or being overdue in amending the petition or supplementing documents as required by the court;

2. Warning or imposing a fine from 500,000 VND to 1,000,000 VND for the enterprise owner or the legitimate representative of the enterprise or cooperative who fails to produce papers or documents to the court within the time limit specified in Clause 2 of Article 23 of the Bankruptcy Law.

3. Measures to remedy consequences:

a) Compelling the provision of all necessary documents to the court for the act stipulated in Point a of Clause 1 of this Article;

b) Compelling the amendment of the petition and documents according to the court's requirements for the act stipulated in Point b of Clause 1 of this Article.

c) Compelling the production of papers and documents to the court for the act stipulated in Clause 2 of this Article.

Article 11. Violations of the responsibility of the applicant requesting the initiation of bankruptcy proceedings

1. A fine of from five million dong to ten million dong shall be imposed on the applicant requesting the initiation of bankruptcy proceedings for acting unobjectively, thereby adversely affecting the reputation, credibility, and business operations of the enterprise or cooperative.

2. A fine of from ten million dong to fifteen million dong shall be imposed on the applicant who engages in fraudulent behavior in requesting the initiation of bankruptcy proceedings, thereby adversely affecting the reputation, credibility, and business operations of the enterprise or cooperative.

3. Measures to remedy consequences:

The violator shall be ordered to publish a retraction in mass media for the violations stipulated in Clause 1 and Clause 2 of this Article.

Article 12. Violations of the provisions governing the activities of enterprises and cooperatives after receiving a decision to initiate bankruptcy proceedings

1. A fine of from five million dong to ten million dong shall be imposed on enterprises and cooperatives that, after receiving a decision to initiate bankruptcy proceedings, engage in any of the following acts without the written consent of the judge:

a) Pledging, mortgaging, transferring, selling, giving away, or leasing assets;

b) Accepting assets from transfer contracts;

c) Terminating the performance of effective contracts;

d) Borrowing money;

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

e) Paying newly incurred debts from business operations of the enterprise or cooperative, or paying salaries to employees of the enterprise or cooperative.

2. A fine of from ten million dong to fifteen million dong shall be imposed on enterprises and cooperatives that, after receiving a decision to initiate bankruptcy proceedings, engage in any of the following acts:

a) Concealing or disposing of assets;

b) Paying unsecured debts;

c) Abandoning or reducing claims;

d) Converting unsecured debts into secured debts with the assets of the enterprise.

3. Measures to remedy consequences:

The violator shall be ordered to restore the original status that was altered due to administrative violations as stipulated in Clause 1 and Clause 2 of this Article.

Article 13. Violations of the provisions regarding the time limit and obligation to inventory assets

1. A warning or a fine of from five hundred thousand dong to one million dong shall be imposed on enterprises and cooperatives that enter a state of bankruptcy but fail to conduct an asset inventory according to the detailed list submitted to the Court and determine the value of those assets within the prescribed time limit.

2. Measures to remedy consequences:

The violator shall be ordered to conduct an asset inventory according to the detailed list submitted to the Court and determine the value of those assets within the prescribed time limit for the violation stipulated in Clause 1 of this Article.

Article 14. Violations of the provisions regarding the obligations of credit organizations where enterprises and cooperatives have accounts subject to liquidation procedures

1. A fine of from five million dong to ten million dong shall be imposed on credit organizations where enterprises and cooperatives have accounts, starting from the day they receive the Court's decision to apply liquidation procedures, if they continue to settle debts of those enterprises or cooperatives, except when such settlement is approved in writing by the responsible judge overseeing the bankruptcy proceedings.

2. A fine of from ten million dong to fifteen million dong shall be imposed on credit organizations where enterprises and cooperatives have accounts, starting from the day they receive the Court's decision to apply liquidation procedures, if they engage in any act aimed at offsetting or settling debts owed by those enterprises or cooperatives to the credit organization.

3. Measures to remedy consequences:

The violator shall be ordered to recover any payments or offsets made contrary to regulations for the violations stipulated in Clause 1 and Clause 2 of this Article.

Article 15. Violation of Bankruptcy Status Notification

1. A fine of from VND 1,000,000 to VND 3,000,000 shall be imposed on enterprises and cooperatives that enter a state of bankruptcy but fail to publicly notify their employees and workers thereof after receiving the court's decision to initiate bankruptcy proceedings.

2. Measures to remedy consequences:

Order public notification of the decision to initiate bankruptcy proceedings for the violation stipulated in Clause 1 of this Article.

Article 16. Violation of Obligations of Employees and Workers Related to Bankruptcy Proceedings

1. A warning or a fine of from VND 500,000 to VND 1,000,000 shall be imposed on employees and workers who conceal assets of enterprises and cooperatives after being notified that the enterprise or cooperative has received a decision to initiate bankruptcy proceedings.

2. A fine of from VND 1,000,000 to VND 3,000,000 shall be imposed on employees and workers who dispose of or transfer assets of enterprises and cooperatives after being notified that the enterprise or cooperative has received a decision to initiate bankruptcy proceedings.

3. Measures to remedy consequences:

Order recovery of assets disposed of or transferred in violation of regulations for the violation stipulated in Clause 2 of this Article.

Article 17. Violation of Conditions for Application of Business Recovery Procedures

1. A warning or a fine of from VND 500,000 to VND 1,000,000 shall be imposed on enterprises and cooperatives that have entered a state of bankruptcy but fail to develop a business recovery plan according to the resolution of the Creditors' Meeting and submit it to the competent court within the prescribed time limit.

2. Measures to remedy consequences:

Order development of a business recovery plan and submission to the competent court within the prescribed time limit for the violation stipulated in Clause 1 of this Article.

Article 18. Violation of Regulations on Supervision of Implementation of Business Recovery Plans

1. A warning or a fine of from VND 500,000 to VND 1,000,000 shall be imposed on enterprises and cooperatives that have entered a state of bankruptcy but fail to submit reports on the implementation of business recovery plans to the competent court within the prescribed time limit.

2. Measures to remedy consequences:

Order submission of reports on the implementation of business recovery plans to the competent court within the prescribed time limit for the violation stipulated in Clause 1 of this Article.

Article 19. Violation of Regulations on Participation in Creditors' Meetings

A warning or a fine of from VND 500,000 to VND 1,000,000 shall be imposed on the acts of the enterprise owner or the lawful representative of the enterprise or cooperative that has entered a state of bankruptcy who does not participate in the Creditors' Meeting without a valid reason, or the person who files a request for initiation of bankruptcy proceedings as stipulated in Articles 15, 16, 17, and 18 of the Bankruptcy Law who does not participate in the Creditors' Meeting but does not authorize another person to participate in the Creditors' Meeting without a valid reason.

Chapter III

AUTHORITY TO IMPOSE FINES

Article 20. Authority of People's Court to Impose Fines

1. The judge conducting the bankruptcy proceedings has the authority:

a) To issue warnings;

b) Impose fines up to 10,000,000 VND;

c) Apply remedial measures as stipulated in Chapter II of this Decree.

2. The President of the People's Court at district level and the Chief Judge of the People's Court at provincial level have the authority:

a) To issue warnings;

b) Impose fines up to 15,000,000 VND;

c) Confiscate the objects and means used to commit administrative violations;

d) Apply remedial measures as stipulated in Chapter II of this Decree.

3. The President of the People's Court at provincial level and the Chief Judge of the Supreme People's Court have the authority:

a) To issue warnings;

d) Applying remedial measures as stipulated in Points d, e Clause 4 of this Decree."

c) Confiscate the objects and means used to commit administrative violations;

d) Apply remedial measures as stipulated in Chapter II of this Decree.

Article 21. Authority of the Head of the Asset Management and Liquidation Team to Impose Fines

1. To issue a warning;

2. To impose a fine up to VND 5,000,000;

3. To apply the measures to remedy consequences as stipulated in Chapter II of this Decree.

Chapter IV

PROCEDURES FOR IMPOSING ADMINISTRATIVE PENALTIES

Article 22. Suspension of Administrative Violation Acts

Upon discovering administrative violation acts or receiving reports, records regarding such acts during the process of bankruptcy proceedings, the competent authority executing official duties must immediately inspect, verify, and issue an order to suspend the violation act. The suspension decision may be made in writing or through other forms depending on the specific case of violation.

Article 23. Record of Administrative Violation

1. The competent authority executing tasks and official duties must promptly establish a record of administrative violation except in cases where a warning or fine up to VND 200,000 is imposed.

2. The establishment of a record of administrative violation must comply with the provisions of Article 55 of the Ordinance on Handling Administrative Violations and Article 22 of Decree No. 128/2008/NĐ-CP dated December 16, 2008 detailing the implementation of certain articles of the Ordinance on Handling Administrative Violations in 2002 and the Ordinance amending and supplementing certain articles of the Ordinance on Handling Administrative Violations in 2008.

Article 24. Decision on Administrative Sanction

1. The issuance of a simple procedure administrative sanction decision is carried out according to the provisions of Article 54 of the Ordinance on Handling Administrative Violations.

2. The issuance of an administrative sanction decision, except for the cases stipulated in Clause 1 of this Article, is carried out according to the provisions of Article 56 of the Ordinance on Handling Administrative Violations and Article 23 of Decree No. 128/2008/NĐ-CP dated December 16, 2008 detailing the implementation of certain articles of the Ordinance on Handling Administrative Violations in 2002 and the Ordinance amending and supplementing certain articles of the Ordinance on Handling Administrative Violations in 2008.

Article 25. Procedure for Imposing Fine and Collection of Fine

The procedure for imposing fine and collection of fine is implemented according to the provisions of Article 57, Article 58 of the Ordinance on Handling Administrative Violations and Article 27, Article 28 of Decree No. 128/2008/NĐ-CP dated December 16, 2008 detailing the implementation of certain articles of the Ordinance on Handling Administrative Violations in 2002 and the Ordinance amending and supplementing certain articles of the Ordinance on Handling Administrative Violations in 2008.

Article 26. Execution of Administrative Sanction Decision, Postponement of Execution of Fine Decision, Payment of Fine in Installments

1. Individuals and organizations subject to administrative sanction must execute the administrative sanction decision within ten days from the date they receive the decision, except when otherwise provided by law. After this period, if individuals and organizations subject to administrative sanction do not voluntarily execute the administrative sanction decision, they will be subject to compulsory enforcement.

After issuing the administrative sanction decision, the authority issuing the sanction must deliver the decision to the individual or organization subject to sanction or notify them to come and collect it; the time at which the individual or organization subject to sanction receives the administrative sanction decision is considered the time of delivery of the administrative sanction decision.

In cases where more than one year has passed and the authority cannot deliver the administrative sanction decision to the individual or organization subject to sanction due to their failure to collect it and their address being unknown or for other objective reasons, such cases shall be handled according to the provisions of Clause 3 of Article 24 of Decree No. 128/2008/NĐ-CP dated December 16, 2008 detailing the implementation of certain articles of the Ordinance on Handling Administrative Violations in 2002 and the Ordinance amending and supplementing certain articles of the Ordinance on Handling Administrative Violations in 2008.

2. Individuals fined VND 500,000 or more may postpone execution of the administrative sanction decision according to the provisions of Article 65 of the Ordinance on Handling Administrative Violations. Individuals who postpone execution of the decision are entitled to have seized documents or items returned according to the provisions of Article 29 of Decree No. 128/2008/NĐ-CP dated December 16, 2008 detailing the implementation of certain articles of the Ordinance on Handling Administrative Violations in 2002 and the Ordinance amending and supplementing certain articles of the Ordinance on Handling Administrative Violations in 2008.

3. Payment of fine in installments is carried out according to the provisions of Clause 5, Clause 6 of Article 57 of the Ordinance on Handling Administrative Violations and Article 27 of Decree No. 128/2008/NĐ-CP dated December 16, 2008 detailing the implementation of certain articles of the Ordinance on Handling Administrative Violations in 2002 and the Ordinance amending and supplementing certain articles of the Ordinance on Handling Administrative Violations in 2008.

Article 27. Enforcement of Administrative Violation Penalty Decisions and Transfer of Administrative Violation Penalty Decisions for Enforcement

1. The enforcement of administrative violation penalty decisions shall be carried out in accordance with the provisions of Articles 66 and 67 of the Administrative Violation Handling Ordinance 2002 and Decree No. 37/2005/NĐ-CP dated March 18, 2005 of the Government on procedures for applying coercive measures to enforce administrative violation penalty decisions.

2. The transfer of administrative violation penalty decisions for enforcement shall be carried out in accordance with the provisions of Article 68 of the Administrative Violation Handling Ordinance and Article 30 of Decree No. 128/2008/NĐ-CP dated December 16, 2008 detailing the implementation of certain articles of the Administrative Violation Handling Ordinance 2002 and the Ordinance amending and supplementing certain articles of the Administrative Violation Handling Ordinance 2008.

Article 28. Time Limit for Enforcing Administrative Violation Penalty Decisions

The time limit for enforcing administrative violation penalty decisions during the bankruptcy procedure is one year, calculated from the date of issuance of the penalty decision; if the decision is not enforced beyond this period, it will no longer be enforced, but the remedial measures recorded in the decision will still be applied.

In cases where individuals or organizations being penalized deliberately evade or delay, the aforementioned time limit shall be recalculated from the point at which such evasive or delaying actions cease.

Article 29. Decision to Compel Remedial Measures in Cases Where No Penalty Decision Is Issued

1. In cases where the time limit for imposing penalties as stipulated in Article 5 has expired, or where the deadline for issuing a penalty decision as stipulated in Article 24 of this Decree has been exceeded, the authorized authority may not issue a penalty decision but may still issue a decision to apply remedial measures.

2. The issuance of a decision to compel remedial measures shall be carried out in accordance with the provisions of Article 25 of Decree No. 128/2008/NĐ-CP dated December 16, 2008 detailing the implementation of certain articles of the Administrative Violation Handling Ordinance 2002 and the Ordinance amending and supplementing certain articles of the Administrative Violation Handling Ordinance 2008.

Article 30. Complaints, Accusations, and Administrative Litigation

1. Individuals or organizations subject to administrative violation penalties during the bankruptcy process, or their lawful representatives, have the right to lodge complaints against the penalty decisions made by the authorized authority.

Citizens have the right to report to competent state agencies any illegal acts concerning administrative penalties during the bankruptcy process.

2. Procedures for lodging complaints and accusations, and for resolving complaints and accusations, shall be conducted in accordance with the laws on complaints and accusations.

3. Administrative litigation regarding administrative violation penalty decisions, decisions to apply preventive measures, and guarantees for the enforcement of administrative violation penalties during the bankruptcy process shall be carried out in accordance with the laws on administrative litigation procedures.

Article 31. Handling of Authorized Authorities Imposing Administrative Violation Penalties During Bankruptcy Proceedings

Authorized authorities imposing administrative violation penalties during bankruptcy proceedings who engage in harassment, tolerance, cover-up for violators, failure to impose penalties, incorrect imposition of penalties, or imposition of penalties beyond their authority shall be subject to disciplinary action or criminal liability, as appropriate, based on the nature and severity of the violation; if such actions cause damage to the State, citizens, or organizations, they must provide compensation in accordance with the law.

Article 32. Handling of violations by persons subject to administrative sanctions

Persons subject to administrative sanctions during the process of bankruptcy proceedings, if they commit acts of resisting law enforcement officers, delaying, evading compliance, or other violations, shall be subject to administrative sanctions or criminal liability depending on the nature and severity of the violation; if damage is caused, compensation must be provided in accordance with the provisions of the law.

Chapter V

IMPLEMENTING PROVISIONS

Article 33. Effective Date

This Decree takes effect from March 23, 2009./.