A garment factory in Binh Duong owned by a Japanese investor and employing around 120 workers decided to dissolve in early 2026 after two consecutive years of shrinking export orders. At the very first dissolution meeting the Japanese side asked a practical question: the company accounts hold VND 12.3 billion in cash and the sewing lines are expected to fetch roughly VND 5.8 billion at liquidation, so when may the owner remit its own money abroad, and may it do so in slices while liquidation is still running. Vietnamese law answers that scenario with an absolute sequence, and this article follows the money through a single dissolution case, from the start of liquidation to the moment the last amount leaves the country.
The dissolution sequence in Articles 207 and 208 seen from the Binh Duong factory
The Law on Enterprises 2020 (59/2020/QH14) places dissolution inside a rigid frame at Article 207 and Article 208, under which an enterprise may only dissolve when it guarantees payment of all debts and other property obligations, with debts settled in the order of priority that Article 208 lays down. Under that order, employee-related amounts such as unpaid wages, severance allowances, social insurance and benefits under the collective labour agreement come first, tax debts follow, and ordinary debts rank last. On the currency side, Circular 38/2026/TT-NHNN, effective 18 August 2026 and replacing Circular 06/2019/TT-NHNN, routes the investor money in a dissolution through the ICA instead of the former DICA account. The two layers meet at a single point: the sum that may leave the country is the residue left after the entire liquidation and payment process has closed, not any cash balance that happens to sit in the account along the way.
In other words, for the Binh Duong factory neither the VND 12.3 billion of cash nor the expected VND 5.8 billion from selling machinery belongs to the investor at any moment before the final stage. Throughout the dissolution the whole pool serves as one common payment fund, drawn in turn for the workforce, for the state budget and for creditors such as the fabric supplier and the factory landlord. Only when every priority tier has been paid and the tax finalization is complete does the remaining balance change character and become investor money eligible for transfer through the ICA.
Liquidation and finalization steps that must close before the ICA order opens
Step 1: The owner adopts the dissolution decision, sets up an asset liquidation team and notifies the decision to the business registration authority together with creditors and other interested parties in line with Article 207.
Step 2: The liquidation team inventories every asset of the factory, sells the sewing lines and the remaining inventory, and collects the proceeds into the common payment fund of the dissolution.
Step 3: The enterprise pays its debts in the exact priority order of Article 208, starting with wages, severance allowances and social insurance for the 120 workers, moving to tax debts, and finishing with the supplier and the landlord.
Step 4: Once the debts are settled, the enterprise completes tax finalization for the entire operating period and closes its tax code, the step that confirms no obligation toward the state budget remains.
Step 5: The balance surviving liquidation, debt payment and tax finalization is identified as investor money, and only at this moment is the transfer order through the ICA to Japan prepared and sent to the bank.
Scenario: machinery sold for VND 5.8 billion while a supplier debt remains open
Assume the liquidation team sells the sewing lines for VND 5.8 billion in May 2026, while the factory still owes the fabric supplier VND 2.2 billion, carries two final months of factory rent, and has not yet paid severance to the last group of workers. If the owner instructs an immediate partial transfer of the machinery proceeds abroad on the reasoning that the assets were its own, the bank will refuse the order, because the file does not yet prove that liquidation and payment under Article 208 are complete. Even where the supplier debt is disputed over fabric quality, the corresponding money must stay inside the payment fund until the dispute is resolved or a clear settlement arrangement exists. The scenario demonstrates that money movement in a dissolution follows the closing of obligations rather than the inflow of liquidation proceeds.
A smoother path appears when the enterprise negotiates a payment schedule with each creditor from the first month of dissolution and finishes tax finalization early. The whole liquidation can then close within two quarters, and the remaining investor balance moves through the ICA in one single transfer with a complete file, instead of dragging across years with debts whose end date nobody can name.
Why an early transfer looks like asset dissipation
Sending money abroad before liquidation and finalization are complete stacks two layers of risk on top of each other in the Binh Duong case. The first layer is purely procedural: the bank refuses the transfer order for failing the foreign exchange conditions, the cash stays trapped, and the file has to be rebuilt once the earlier steps close. The second layer is far more serious, because money leaving a dissolving enterprise while creditors remain unpaid can be characterised as dissipation of assets, triggering disputes with workers, the tax authority or suppliers still waiting for payment. Once a dispute erupts, the dissolution timetable stretches out, the dissolution decision itself may come under review, and the investor moves from a position of orderly withdrawal to a position of defending claims that demand the money back in Vietnam.
The action conclusion for the Binh Duong garment factory is to respect the rhythm of Article 207 and Article 208 without exception: liquidate the assets first, pay the debts in their priority order, finalize the tax position and close the tax code, and only then remit the residue through the ICA. An investor patient enough to walk all four stages receives the money in Japan in a clean state, with no creditor left holding a legal basis to chase the transferred amount.
This article has been quality-reviewed by the FLAW AI Legal Council