A finance company wants to sell its portfolio of SME loans to a debt investor, while one factory in the portfolio objects that its debt cannot be sold without its consent. What procedures does assigning debts to a third party require in Vietnam, and can the debtor block the sale?
Legal basis at the time of writing
Assignment of the right to demand performance (including a debt claim) is governed by Article 365 of Civil Code 91/2015/QH13: the entitled party may assign its claim to a substitute creditor without the obligor’s consent, except for rights attached to personal identity or where law or agreement provides otherwise; the assignor must notify the obligor. Debt trading by credit institutions also follows the State Bank’s debt purchase and sale regulations (Circular 09/2015/TT-NHNN and amendments) and Law on Credit Institutions 32/2024/QH15. Where the debt is secured, rights over the security follow the assignment under Decree 21/2021/ND-CP on secured transactions.
Procedure and the role of notifying the debtor
The practical sequence: review the debt files (credit or commercial contracts, disbursement evidence, security), agree a framework and portfolio pricing, sign assignment contracts for each loan or the whole portfolio, and notify each debtor in writing of the new creditor and the new payment account. Notice is not a permission step but a key legal milestone: before receiving notice, a debtor paying the old creditor is still deemed to have performed; after notice, the debtor is discharged only by paying the debt buyer. For secured debts, the buyer should register the change of secured party at the secured-transactions registry to preserve priority.
Pricing debts and common disputes
A debt’s price is its expected recovery value: the debtor’s payment capacity, collateral value after a liquidation discount, expected recovery time and litigation costs. Debts of operating businesses trade at moderate discounts; debts of ceased businesses with disputed collateral may be worth only a small fraction of face value. The most common disputes are debtors invoking a no-assignment clause in the original contract — effective if clearly agreed — and disagreements over the outstanding balance due to different interest and fee calculations between seller and debtor. Professional buyers always require the seller to warrant the existence and balance of the debts, with a buy-back mechanism for non-conforming loans.
Recommended actions
1. The seller should prepare a complete debt data room (contracts, disbursement, security, payment history) — the cleaner the files, the lower the discount.
2. The sale contract should warrant the debts’ existence and balances, with price adjustment and buy-back of defective debts, rather than transferring every unverified risk outright.
3. Notify each debtor in writing with proof of delivery, and register the change of secured party to preserve payment priority.
Businesses facing a similar situation should speak with counsel early to settle the approach before signing documents or filing applications.
Frequently asked questions
Can the debt be sold?
Yes. Article 365 of Civil Code 91/2015/QH13 lets a creditor assign its claim without the debtor’s consent, except for personal rights or where the original contract contains a no-assignment clause. Debt trading by credit institutions also follows State Bank regulations.
What is the procedure?
Steps: review the debt files, agree and price, sign the assignment contract, notify the debtor in writing, and register the change of secured party if the debt is collateralised. After notice, the debtor must pay the debt buyer to be discharged.
How is the price determined?
Price follows expected recovery: the debtor’s payment capacity, collateral value after discount, recovery time and costs. Debts of operating businesses sell closer to face value; distressed debts with disputed collateral are deeply discounted. Portfolios are usually priced by risk bucket.
Must the debtor be notified?
Notice is mandatory but the debtor’s consent is not required. Notice decides payment validity: paying the old creditor before notice is still valid; after notice, payment must go to the buyer. Use a provable channel (bailiff service or registered mail) to avoid disputes.
This article has been quality-reviewed by the FLAW AI Legal Council
