Dissolving With Mortgaged Land in Vietnam: Handling Collateral — The company wants to dissolve, but its land use rights and factory are mortgaged for a loan that has not been settled. The bank holds the certificate and the registered mortgage contract, so every closure plan must pass through handling of the collateral first.
The issue and its legal grounds
Mortgages of land use rights and land-attached assets are governed by the Civil Code 91/2015/QH13 (Articles 317 to 343 on mortgage) and the Law on Land 31/2024/QH15; security interests must be registered under Decree 99/2022/ND-CP on registration of security interests. The mortgagee may realise the collateral when the secured obligation falls due and is not performed, using the method agreed in the mortgage contract. For dissolution, Article 208 of the Law on Enterprises 59/2020/QH14 (amended by Law 76/2025/QH15) requires debts to be paid in a statutory order, with secured debts satisfied from the collateral itself.
The boundary with similar cases
This article differs from dissolving with outstanding bank loans, which centres on loan settlement agreements and guarantees. Here the focus is the specific collateral — land locked by a registered mortgage — including how to release the mortgage, sell the land during dissolution, and distribute the proceeds.
Answers to frequently asked questions
Can a company dissolve while its land is mortgaged?
It may start dissolution but cannot finish while the loan is unresolved, because the mortgaged land secures an unpaid debt and Article 207 of the Law on Enterprises 59/2020/QH14 requires all debts to be paid before dissolution. In practice the company must choose one of three routes: repay the loan to release the mortgage, sell the land with the bank’s consent to pay the debt, or let the bank realise the collateral under the mortgage contract.
How can mortgaged land be sold to repay the debt?
The mortgagee bank’s written consent is required, because a registered security interest prevents free transfer. The usual sequence is a tripartite agreement, the purchase price paid into a blocked account at the lending bank, the bank releasing and deregistering the mortgage, then notarisation of the transfer contract and land registration. Any surplus after repayment belongs to the dissolving company and is distributed in the statutory order.
What if the land sale price does not cover the loan?
The shortfall remains a debt of the company and must be paid from other assets before anything is distributed to owners. If total assets cannot cover total debts, voluntary dissolution is no longer suitable: the company is insolvent and should consider rehabilitation and bankruptcy proceedings under the Law on Rehabilitation and Bankruptcy 142/2025/QH15 so creditors are treated fairly instead of assets being divided privately.
Can the bank sell the land itself once dissolution begins?
The bank may realise mortgaged collateral when the obligation is breached, following the method agreed in the mortgage contract and the Civil Code 91/2015/QH13, even while dissolution is under way. It must still give notice and follow due process, and any proceeds above the debt and realisation costs must be returned to the company, not retained in full.
A concrete action plan
Practical steps: obtain the bank’s settlement statement and the latest mortgage registration status; commission an independent land valuation to know your negotiating position; agree the collateral plan in writing before adopting the dissolution decision; and record in the dissolution minutes that proceeds from the land sale first pay the secured debt, then tax, labour and unsecured creditors under Article 208 of the Law on Enterprises.
This article has been quality-reviewed by the FLAW AI Legal Council