The bank announces it will auction the mortgaged factory at a starting price far below what the company believes it is worth. The law gives the security provider real rights — prior notice, a public auction, and return of any surplus after the debt — but those rights only protect value if used on time, before the auction takes place.
When the bank may enforce, and how
The right to realise secured assets arises when the secured obligation is breached, under Article 299 of the Civil Code 91/2015/QH13. The method follows the security contract first; failing agreement, the asset is sold at auction under the auction legislation — currently the Law on Asset Auctions as amended in 2024 — through an independent auction organisation, with public listing and a regulated starting price. The secured party must notify the security provider in writing before enforcement. Proceeds are applied in order: enforcement costs, the secured debt, and any remainder to the security provider — the bank may not keep value above the debt.
When a cheap sale can be challenged
A low price alone does not void the result: the market and bidder turnout are objective factors. An auction result is challengeable where procedural violations distorted the price: no or defective notice to the security provider, late or missing public listing, collusive bid suppression, ineligible bidders, or a private sale where auction was legally or contractually required. On such violations the provider may complain, seek annulment of the auction result and sue for the loss the violation caused. In parallel, the most practical door stays open throughout: negotiate an extension, repay part of the debt to release the asset, or find a better-priced buyer within the statutory window before auction.
Moves to make on receiving the enforcement notice
- Commission an independent valuation immediately, to benchmark the starting price and to hold evidence if the result must be challenged.
- Audit every procedural milestone — enforcement notice, auction listing, publication deadlines — and record any violation in writing the moment it is spotted.
- Open a parallel negotiation with the bank on partial repayment, restructuring, or a controlled private sale instead of a forced auction.
Frequently Asked Questions
May the bank sell our collateral cheaply?
It may enforce on breach of the secured obligation under Article 299 of the Civil Code, but only by the agreed method or a public auction under auction law, with prior notice to the provider and any surplus after the debt returned to the provider.
Can a low-price result be challenged?
Only where procedural violations affected the price — defective notice, late listing, bid suppression or bypassing a mandatory auction; a price that is low purely because of the market does not by itself invalidate the auction.
What remedies exist?
Complaint, annulment of the defective auction, and a damages claim; support them with an independent valuation and a timely documented record of the procedural violations.
What if proceeds exceed or fall short of the debt?
Proceeds pay enforcement costs, then the secured debt, and the surplus belongs to the security provider; if proceeds fall short, the company remains liable for the deficiency unless otherwise agreed.