Circular No. 38/2006/TT-BTC guiding the procedures, formalities, and financial handling for the activities of purchasing, selling, transferring, receiving, and processing debts and surplus assets of enterprises.

CIRCULAR

Guidelines on the sequence, procedures, and financial handling for the activities of purchasing, selling, transferring, receiving, and processing debts and surplus assets of enterprises.

Guidelines on the sequence, procedures, and financial handling for the activities of purchasing, selling, transferring, receiving, and processing debts and surplus assets of enterprises.

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Pursuant to Decree No. 77/2003/NĐ-CP dated July 1, 2003 of the Government on the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to Decree No. 69/2002/NĐ-CP dated July 12, 2002 of the Government on management and handling of overdue debts of state-owned companies;

Pursuant to Decree No. 187/2004/NĐ-CP dated November 16, 2004 of the Government on converting state-owned companies into joint-stock companies;

Pursuant to Decree No. 80/2005/NĐ-CP dated June 22, 2005 of the Government on transferring, selling, leasing, and entrusting management of state-owned companies;

Pursuant to Decision No. 109/2003/QĐ-TTg dated June 5, 2003 of the Prime Minister on establishing the Company for Purchasing and Selling Debts and Surplus Assets of Enterprises;

The Ministry of Finance hereby provides guidelines on the sequence, procedures, and financial handling for the activities of purchasing, selling, transferring, receiving, and processing debts and surplus assets of enterprises as follows:

Part One

GENERAL PROVISIONS

1. Scope of application: This Circular guides the sequence, procedures, and financial handling for the following activities: purchasing, selling, and processing debts and surplus assets of enterprises, economic organizations, and individuals with the Company for Purchasing and Selling Debts and Surplus Assets of Enterprises based on mutual agreement; purchasing, selling, and processing debts and surplus assets according to the designation of the Prime Minister; transferring, receiving, and processing debts and surplus assets that have been excluded from the value of enterprises when implementing ownership conversion of state-owned companies.

第二条 组织和实施奖励工作的支出水平，如政府第152/2025/NĐ-CP号决定关于分级授权和奖励领域的分权规定

2.1. The Company for Purchasing and Selling Debts and Surplus Assets of Enterprises established pursuant to Decision No. 109/2003/QĐ-TTg dated June 5, 2003 of the Prime Minister (hereinafter referred to as the Debt Purchase Company).

2.2. Enterprises having receivables and surplus assets sold to the Debt Purchase Company.

2.3. Enterprises, organizations, and individuals purchasing debts and surplus assets from the Debt Purchase Company.

2.4. Enterprises, organizations, and individuals having payables.

2.5. Enterprises, organizations currently holding debts and assets excluded from the value of enterprises during the process of ownership conversion of state-owned companies.

3. The terms used in this Circular shall be understood as follows:

3.1. "Overdue debt" refers to receivables and payables that have exceeded the payment deadline but remain unpaid.

3.2. "Creditor" refers to enterprises, organizations, and individuals having receivables.

3.3. "Debtor" refers to enterprises, organizations, and individuals having payables.

3.4. "Asset owner" refers to enterprises, organizations, and individuals having ownership rights over assets.

3.5. "Surplus asset" refers to finished products, raw materials, goods, fixed assets belonging to enterprises that remain in stock or stagnant but are not needed by the enterprise.

3.6. "Purchasing and selling debts and surplus assets" refers to the act where creditors with receivables and asset owners with surplus assets sell their debts and assets to the Debt Purchase Company. The Debt Purchase Company becomes the new creditor of the debtor and the new owner of the asset.

3.7. "Purchasing and selling debts and surplus assets by designation" refers to the act of purchasing and selling debts and surplus assets designated by the Prime Minister.

4. The Debt Purchase Company has the right to purchase, sell, and handle debts and surplus assets including the value of land use rights at agreed prices and by designation; it also has the right to sell collateral and pledged assets for debts purchased by the company, including the value of land use rights as stipulated by current regulations.

5. When the contract for purchasing and selling debts and surplus assets becomes effective, the parties have the following rights and obligations:

- All rights and obligations of the creditor (seller of debt), asset owner (seller of asset) are transferred to the buyer.

- Creditors and asset owners are responsible for transferring all debts and assets along with related documents in accordance with the provisions of the contract and current laws. They must also notify the debtor about the change of creditor for the sold debt.

- The buyer inherits all rights and obligations of the creditor for the purchased debt and has the rights and obligations of the asset owner for the purchased asset.

- Debtors are responsible for fully fulfilling their debt repayment obligations; providing relevant documentation and information about the debt to the buyer as required by law.

6. For debts and assets excluded from the value of enterprises, after signing the Transfer Record, the Debt Purchase Company inherits all rights and obligations of the creditor for the received debts; it also has full rights and obligations of the asset owner for the received assets. Debtors are responsible for fully fulfilling their debt repayment obligations and other obligations to the Debt Purchase Company.

7. For debts and surplus assets already purchased or assigned by the State for handling, the Debt Purchase Company is permitted to handle them through the following methods:

- Collecting debts, selling debts, selling, exploiting secured assets;

- Selling, leasing surplus assets;

- Using debts and surplus assets to contribute capital to joint-stock companies, joint ventures, or business cooperation;

- Other methods not prohibited by law.

The Debt Purchase Company is allowed to repair and upgrade surplus assets to enhance the effectiveness of handling surplus assets through the aforementioned methods.

The sequence, procedures, and authority for handling debts and surplus assets of the Debt Purchase Company are specified in the Financial Management Regulations of the Debt Purchase Company.

8. Activities of purchasing and selling debts and surplus assets must be documented in accordance with current regulations.

9. The buyer of debts and surplus assets is responsible for fully recording and accounting for the costs of purchasing debts and surplus assets, including: the purchase price of debts, the purchase price of surplus assets recorded on the documents, transportation costs, repair and upgrade costs of assets (if any), and tracking the original value of the debt on the off-balance sheet account.

10. Enterprises and economic organizations purchasing debts and surplus assets from the Debt Purchase Company shall conduct such purchases at market prices through negotiated agreements, bidding, or tendering as stipulated by current regulations. The sequence, procedures, and financial handling of purchased debts and surplus assets shall be carried out in accordance with the regulations for purchasing and selling debts and surplus assets through negotiated agreements by the Debt Purchase Company.

11. The Debt Purchase Company is responsible for paying taxes in accordance with current tax laws.

Part Two

SPECIFIC PROVISIONS

I. REGARDING THE ACTIVITY OF PURCHASING AND SELLING DEBTS AND INVENTORY AS PER AGREEMENT

1. Procedure and formalities for purchasing and selling debts and inventory

1.1. The purchase and sale of debts and inventory shall be carried out on the basis of a contract signed between the two parties.

1.2. The purchase and sale of debts and inventory shall be conducted at market prices through negotiated methods, bidding, and auction as prescribed by current regulations.

2. Financial treatment for purchasing and selling activities

2.1. For the Company purchasing and selling debts:

Acquired debts shall be treated as a special type of goods. Financial management procedures are stipulated in the Financial Management Regulation of the Company purchasing and selling debts.

2.2. For the debt seller:

a. In cases where the sold debt is a receivable that has no possibility of recovery and the creditor has processed it according to state regulations and is monitoring it outside the balance sheet, the proceeds from selling this debt shall be included in other income of the seller.

b. In cases where the sold debt is being monitored within the balance sheet (on-sheet), the proceeds from selling the debt shall not be counted as revenue of the debt seller but recorded as a reduction in the corresponding receivable. The difference between the proceeds from selling the debt and its book value shall be offset by the following sources in sequence:

- Provision for doubtful receivables, risk provision (for credit organizations), financial reserve fund.

- If the provision for doubtful receivables or risk provision, financial reserve fund is insufficient to cover the shortfall, the remaining amount shall be recorded as business expenses.

+ For state-owned enterprises: In cases where it is recorded as business activity expenses for two consecutive years resulting in losses that cannot be covered and the enterprise does not fall under the circumstances requiring dissolution or bankruptcy, the enterprise shall prepare a report to submit to the competent state authority for examination and decision to reduce the state capital in the enterprise according to current regulations.

+ For state-owned enterprises undergoing ownership conversion: In cases where it is recorded as business expenses resulting in losses, it can be deducted from the state capital in the enterprise before conversion corresponding to the loss amount.

2.3. For the debtor:

After completing the debt payment, if the actual payment accepted by the Company purchasing and selling debts is lower than the book value of the debt, the difference shall be recorded as other income.

In cases where the actual value of the debt used for share capital contribution, joint venture capital contribution, or business cooperation contribution accepted by the Company purchasing and selling debts is lower than the book value of the debt, the difference shall be recorded as other income.

3. Financial treatment for purchasing and selling inventory

3.1. For the Company purchasing and selling debts:

Purchased assets shall be treated as goods. Financial management shall be carried out according to the Financial Management Regulation of the Company purchasing and selling debts.

3.2. For the asset seller who is a business entity:

Proceeds from selling assets shall be recorded as other income of the business entity. The remaining value of the asset recorded in the books and the selling costs shall be recorded as other expenses according to current regulations.

II. REGARDING THE ACTIVITY OF PURCHASING AND SELLING DEBTS AND INVENTORY AS PER DIRECTIVE

1. Objectives eligible to sell debts and inventory as per directive

1.1. State-owned companies undergoing shareholding reform, in cases where the value of state capital in the enterprise is insufficient to cover accumulated losses and unrecoverable debts, or after reducing the value of state capital in the enterprise, the remaining value is insufficient to ensure the required state capital participation in the joint-stock company according to the approved plan under current regulations.

1.2. State-owned companies that need to remain as 100% state-owned enterprises according to the restructuring, modernization, and development plan for enterprises approved by the Prime Minister, which are suffering losses, unable to pay debts, and have debts and inventory arising from the following reasons:

- Due to implementing decisions of competent state authorities.

- Due to changes in state mechanisms and policies directly affecting the enterprise.

- Due to other objective and force majeure factors such as natural disasters, epidemics.

1.3. Other entities as decided by the Prime Minister.

2. Form of purchasing and selling debts and inventory as per directive: The Prime Minister designates the entity to sell debts and inventory to the Company purchasing and selling debts. The buyer and seller negotiate to determine the purchase price for debts and inventory.

3. Procedure and formalities for purchasing and selling debts and inventory as per directive

3.1. Enterprises with debts and inventory falling under the provisions of point 1, section II, part two of this Circular shall be responsible for preparing relevant files related to debts and inventory, including:

- A proposal for handling debts and inventory: clearly stating the reasons for requesting to sell debts and inventory as per directive.

- An effective business plan approved by the competent authority (for cases under item 1.2, point 1, section II, part two of this Circular).

- Legal documents and relevant materials concerning debts and inventory.

- Financial statements of the last three years.

3.2. The file shall be submitted to the representative of the enterprise's owner (Minister, Head of an agency equivalent to a ministry, Chairman of the People's Committee of provinces and centrally-administered cities, Board of Directors of State-owned Corporations).

3.3. Within 45 days from the date of receipt of the file, the representative of the enterprise's owner shall lead together with relevant functional agencies to review the conditions for purchasing and selling as per directive and submit to the Ministry of Finance for presentation to the Prime Minister for decision or the Minister of Finance for decision pursuant to the delegation of the Prime Minister.

3.4. The Company purchasing and selling debts shall be responsible for organizing the handling of designated debts and inventory through negotiated methods, bidding, and auction as prescribed by current regulations.

3.4. The company purchasing and selling debts shall be responsible for organizing the disposal of debts and surplus assets purchased through negotiation, bidding, or auction in accordance with current regulations.

Necessary assets purchased under directive must be repaired and upgraded to increase their value and facilitate the disposal of surplus assets for capital recovery. The company buying and selling debts uses its own funds to carry out repairs and upgrades on surplus assets. Investment and repair activities are conducted in accordance with regulations governing investment management and construction.

4. Financial handling of activities related to purchasing, selling debts, and surplus assets under directive

4.1. For the company buying and selling debts

a. The company buying and selling debts uses operating capital to pay the seller according to the signed economic contract;

b. The recovered value from purchased debts and surplus assets under directive is handled as if they were bought and sold through agreement as stipulated in Points 2 and 3, Section I, Part II of this Circular;

c. Quarterly, the company buying and selling debts reports to the Ministry of Finance on the results of purchasing, selling, and handling debts and surplus assets under directive.

4.2. For enterprises selling debts and surplus assets

For enterprises selling debts and surplus assets, financial handling is carried out in accordance with the provisions at Subsection 2.2, Point 2, Section I, Part II and Subsection 3.2, Point 3, Section I, Part II of this Circular.

4.3. For debtors

For debtors, financial handling is carried out in accordance with the provisions at Subsection 2.3, Point 2, Section I, Part II of this Circular.

III. FOR ACTIVITIES RELATED TO HANDOVER, ACCEPTANCE, AND HANDLING OF DEBTS AND ASSETS NOT INCLUDED IN THE VALUE OF THE ENTERPRISE WHEN TRANSFERRING STATE OWNERSHIP OF STATE ENTERPRISES

1. Handover and acceptance

1.1. The party handing over:

1.1.1. The representative of the owner of debts and assets excluded from the enterprise's value when transferring state ownership of state-owned enterprises is the Ministries and ministerial-level agencies for enterprises directly under them, the Chairmen of People's Committees of provinces and centrally-administered cities for enterprises established by decisions of provincial and centrally-administered city People's Committees, and the Boards of Directors of State-owned Corporations for member enterprises of those corporations. The owner's representative may delegate authority to the enterprise currently holding the debts and assets to perform the handover.

1.1.2. The enterprise transferring ownership currently holds the debts and assets excluded from the enterprise's value.

1.2. The party accepting is the company buying and selling debts.

1.3. Content of handover and acceptance:

a. Receivables: including receivables that have been excluded from the value of the enterprise being privatized and not yet processed up to the time of the decision on the enterprise's value.

The party handing over classifies receivables based on whether they have complete documentation and the debtor still exists; those without complete documentation or where the debtor no longer exists, and hands over all to the company buying and selling debts.

b. Assets: including unused, stagnant, and pending liquidation assets of the enterprise up to the time of the decision on the enterprise's value that have not been processed. Prior to handover, the enterprise must classify these according to the following criteria:

- Assets with recoverable value and can be sold;

- Assets without recoverable value and cannot be sold, requiring demolition and destruction;

c. The enterprise must submit to the company buying and selling debts the amount recovered from processing receivables and surplus assets required to be handed over as stipulated in Subsection 1.3(a) and Subsection 1.3(b), Point 1, Section III, Part II of this Circular.

2. Procedures for handover and acceptance

2.1. The representative of the owner (or the person authorized) together with the enterprise currently holding the debts and assets excluded from the enterprise's value or the enterprise undergoing ownership transfer which has decided on the enterprise's value (collectively referred to as the enterprise) shall hand over the debts and assets to the company buying and selling debts.

2.2. When handing over and accepting, a Handover Record must be established. The Record must bear signatures of all three parties (the owner's representative, the enterprise, and the company buying and selling debts). The main contents of the Record include:

a. Quantity and value according to accounting records of debts and assets excluded from the enterprise's value at the time of determining the enterprise's value.

b. Quantity and value according to accounting records of debts and assets excluded from the enterprise's value that the enterprise has self-handled during the period from the time of determining the enterprise's value to the time of announcing the enterprise's value.

c. Quantity and value according to accounting records of debts and assets excluded from the enterprise's value to be handed over to the company buying and selling debts at the time of announcing the enterprise's value (determined by subtracting the quantity and value of debts and assets at Subsection 2.2, Point 2, Section III, Part II from the quantity and value of debts and assets at Subsection 2.2, Point 2, Section III, Part II of this Circular), classified as: receivables with complete documentation and existing debtors; receivables without complete documentation and non-existing debtors; assets with recoverable value and can be sold; assets without recoverable value, requiring demolition and destruction.

d. Quantity and value according to accounting records of debts and assets excluded from the enterprise's value actually handed over to the company buying and selling debts, classified as: receivables with complete documentation and existing debtors; receivables without complete documentation and non-existing debtors; assets with recoverable value and can be sold; assets without recoverable value, requiring demolition and destruction.

đ. The difference between the quantity and value according to accounting records of debts and assets to be handed over and the quantity and value according to accounting records of debts and assets actually handed over (determined by subtracting the quantity and value of debts and assets at Subsection 2.2(c), Point 2, Section III, Part II from the quantity and value of debts and assets at Subsection 2.2(d), Point 2, Section III, Part II of this Circular); reasons for the difference, including:

- Differences due to self-handling by the enterprise during the period from the time of the decision on announcing the enterprise's value to the time of handing over to the company buying and selling debts; actual amounts recovered from handling debts and assets; amounts already submitted according to regulations, amounts still to be submitted to the company buying and selling debts.

- Differences due to loss and other reasons (specifying the cause for each specific case).

3. Responsibilities of the parties handing over and accepting

3.1. The party handing over:

3.1.1. Agency representing the owner: Directs the enterprise to prepare files and documents related to debts and assets to be transferred; jointly with the debt buying and selling company and the enterprise, develop and implement a plan for transferring all debts and assets not included in the enterprise's value when ownership is transferred; take the lead in handling any shortage of assets arising before the transfer date to the debt buying and selling company according to the current state regulations.

3.1.2. Enterprise: Prepare complete files and documents, classify debts and assets in accordance with Section 1.3, Point 1, Chapter III, Part Two of this Circular to carry out the transfer of all debts and assets not included in the enterprise's value when transferring state-owned enterprise ownership to the debt buying and selling company; continue to hold assets at the request of the debt buying and selling company and bear responsibility for compensating the debt buying and selling company for any lost assets during the management and holding period; cooperate with the debt buying and selling company in the disposal of transferred assets.

3.1.3. Within thirty days from the date of the enterprise valuation decision, the transferring party must transfer all debts and assets excluded when determining the enterprise's value (along with relevant files) to the debt buying and selling company.

3.2. The receiving party:

- Agree with the transferring party on the acceptance plan.

- Shall immediately accept debts, assets, and accompanying files when the transferring party transfers them, open accounting books to track received debts and assets.

- Implement debt recovery and asset disposal according to Point 3.5, Chapter II, Part Two of this Circular.

- Quarterly, the debt buying and selling company reports to the Ministry of Finance on the results of debt recovery and sale of accepted assets.

4. Principles for handling debts and remaining assets upon receipt:

4.1. The revaluation of debt and remaining asset values before disposal and the sale of remaining assets (including collateral assets), the debt buying and selling company shall conduct as follows:

- Hire an organization with appraisal functions to appraise assets before disposal. For a batch of remaining assets of one enterprise at one location with a remaining value under five hundred million dong according to accounting records, before selling, leasing, or contributing to joint stock, joint venture, or associated companies, the debt buying and selling company may self-appraise or conduct an appraisal through organizations or enterprises with appraisal functions.

- Auction remaining assets and collateral assets. For a batch of remaining assets of one enterprise at one location with a total value under one hundred million dong as determined by the appraisal agency, the debt buying and selling company may choose a sales method to expedite capital recovery and ensure transparency and effectiveness.

- Hire a professional auction organization to conduct auctions or organize auctions itself according to regulations. Enterprises with excluded assets may participate in auctions to purchase assets. If the asset cannot be sold through auction as stipulated by law (no buyer registers or no successful bidder), the debt buying and selling company may determine a new starting price to continue the auction.

4.2. Handling of debts and assets without recovery value:

- For unrecoverable debts due to the debtor no longer existing, or the debtor still existing but unable to repay, or insufficient legal documentation, the debt buying and selling company reports to the Ministry of Finance for debt write-off.

- For assets without recovery value that need to be scrapped, the debt buying and selling company organizes scrapping in collaboration with the enterprise or hires external organizations or individuals to scrap them.

5. Financial treatment for debts and assets when transferring and receiving:

5.1. For the debt buying and selling company:

The proceeds from debt recovery, sale, and exploitation of remaining assets; using received debts and assets to convert into equity contributions, joint ventures, and business cooperation are used as follows:

- To cover repair and upgrade costs of assets (if applicable).

- Retain twenty percent of recovered debt and asset proceeds for the debt buying and selling company to cover acceptance, management, and disposal costs; cover appraisal and auction costs (if applicable); cover costs of scrapping non-recovery value assets and encourage prompt and effective disposal of assigned debts and assets to recover capital for the state.

- Transfer ten percent of recovered debt and asset proceeds to the enterprise holding assets to cover management and holding costs.

- The remainder is submitted to the state budget by the debt buying and selling company.

5.2. For enterprises: Based on the handover record of debts and assets, enterprises process the reduction of corresponding handed-over asset and debt values. Enterprises benefit from the proceeds from holding and participating in asset sales as stipulated in Section 5.1, Point 5, Chapter III - Part Two of this Circular.

5.3. For State-owned Corporations: When transferring debts and assets excluded from the enterprise's value to the debt buying and selling company, the owner shall account for a corresponding reduction in capital.

5.4. For debtors: For debtors, financial treatment is carried out according to Section 2.3, Point 2, Chapter I, Part Two of this Circular.

Part Three

IMPLEMENTATION

This Circular shall take effect fifteen days from the date of publication in the Official Gazette and shall supersede Circular No. 39/2004/TT-BTC dated May 11, 2004.

During implementation, if there are any difficulties, they are requested to be reported to the Ministry of Finance by relevant ministries, sectors, localities, and enterprises for study and resolution./.