Corporate Bankruptcy

Corporate bankruptcy: who is this service for?

• Enterprises at risk of insolvency or already insolvent, considering recovery proceedings or bankruptcy proceedings under the Law on Recovery and Bankruptcy 2025.
• Legal representatives, boards of directors and boards of members facing the obligation to file a petition when the enterprise is insolvent.
• Creditors — banks, suppliers, counterparties — seeking to recover debts through recovery or bankruptcy proceedings and to supervise asset distribution.
• Employees and trade unions owed overdue wages and other debts that have fallen due.
• Shareholders, groups of shareholders, or company members holding sufficient capital to qualify for filing a petition under the law.
• Investors interested in acquiring assets or the enterprise during recovery or bankruptcy proceedings.
• Enterprises with foreign elements needing recognition and enforcement in Vietnam of foreign court judgments and decisions on recovery and bankruptcy.

Common legal issues clients face

Many enterprises only think about bankruptcy once they are already depleted, whereas the Law on Recovery and Bankruptcy 2025 establishes the principle of prioritising recovery proceedings (Article 3). Filing early, while still at the “at risk of insolvency” stage, may open a path to restructuring instead of shutting down.

Legal representatives and management often do not know they have an obligation to file a petition when the enterprise is insolvent, and may be liable for damages arising after the insolvency point caused by the failure to file (Article 38). This is a personal risk, not just a company risk.

Transactions such as transfers, gifts and preferential payments to one creditor made within 06 months before the date the Court issues its decision to open bankruptcy proceedings — or 18 months for related persons — may be declared void, pulling the assets back for distribution (Article 49). Dealing with assets during a difficult period without legal advice easily creates further liability.

Creditors often do not know the asset distribution priority order and miss the steps of debt declaration and confirmation, resulting in the loss of their priority or non-payment while the assets have already been distributed.

How does FLAT LAW FIRM help?

• Legal–financial assessment: whether the enterprise is at the “at risk of insolvency” stage or has already become insolvent under Article 5 of the Law.
• Advice on choosing the right procedure: recovery, simplified recovery, bankruptcy or simplified bankruptcy, based on debt size, number of creditors and restructuring prospects.
• Drafting the petition, the business recovery plan, the list of creditors and debtors in compliance with the statutory requirements on petition contents.
• Representing clients in filing the petition and working with the competent Regional People’s Court and the Asset Administrator or asset management/liquidation enterprise throughout the process.
• Participating in the Creditors’ Meeting: negotiating, voting on the recovery plan and supervising implementation of the adopted resolution.
• Protecting creditors’ rights: declaring and confirming debts, supervising asset distribution in the correct priority order, and handling secured assets.
• Reviewing transactions made within 06 months (18 months for related persons) before proceedings were opened to assess the risk of being declared void.
• Advising on the obligations of legal representatives, boards of directors and boards of members when the enterprise becomes insolvent, including compensation liability.
• Supporting requests for recognition and enforcement of foreign court and competent authority judgments and decisions on recovery and bankruptcy.

Implementation process

1. Assessment: comparing overdue payment obligations against the definitions of “at risk of insolvency” and “insolvency” (Article 5), and determining who has the right and who has the obligation to file (Article 38).
2. Choosing the procedure: recovery, bankruptcy or a simplified procedure (thresholds: no more than 20 unsecured creditors and total principal debt of no more than VND 10 billion, or a small or micro enterprise — Articles 68, 70).
3. Preparing the file: the petition, the business recovery plan (for recovery proceedings), the list of creditors and debtors, and supporting evidence.
4. Filing the petition and paying the fee and cost advance; employees, tax authorities, social insurance agencies and enterprises with no remaining assets are exempt from filing fees, with the State budget guaranteeing the advance (Articles 19, 20).
5. Court acceptance; within 30 days from the acceptance date, the Judge issues a decision to open or not to open bankruptcy proceedings (Article 41); the Asset Administrator is appointed within 03 working days from the acceptance date (Article 11).
6. Creditors’ Meeting: the Judge convenes it within 05 working days from receipt of the recovery plan; a resolution approving the plan is adopted when at least 65% of the total debt of creditors participating in the vote approves it (51% in simplified proceedings) (Articles 33, 69).
7. Implementing the recovery plan within the time limit set by the Creditors’ Meeting — or, if the Meeting does not set one, no more than 03 years — or switching to asset liquidation and distribution in the order set out in Article 46.
8. The Court issues a decision terminating the recovery proceedings once the enterprise has recovered, or a decision declaring bankruptcy when recovery is no longer possible.

Documents clients should prepare

• Enterprise Registration Certificate, company charter, register of members or shareholders, and the resolution on filing the petition.
• Financial statements for the last 02–03 years, bank account statements and available accounting books.
• List of creditors, each debt, and the contracts and original documents evidencing payment obligations.
• List of the enterprise’s debtors, loan contracts and receivables.
• Asset inventory: real estate, machinery, inventories, and assets under mortgage, pledge or guarantee.
• Labour files: labour contracts, payroll records, and the status of social insurance, health insurance and unemployment insurance contributions.
• Tax files and administrative sanction decisions and financial obligations owed to the State (if any).
• Files of asset transfer transactions and debt payments made in the last 06–18 months to review the risk of being declared void.

Expected timeline

The law sets specific milestones: within 30 days from the acceptance date, the Judge must issue a decision to open or not to open bankruptcy proceedings (Article 41); the Judge convenes the Creditors’ Meeting within 05 working days from receipt of the recovery plan (Article 33). The implementation period of the recovery plan is set by the Creditors’ Meeting; if the Meeting does not set one, it is no more than 03 years (Article 29). Simplified proceedings take half the time of ordinary proceedings, and the Court may declare bankruptcy within 30 days from the acceptance date if the enterprise has no remaining assets (Article 71).

In practice, the total time to resolve a case depends on the number of creditors, the volume of assets to be liquidated, the level of disputes over debts and secured assets, and the progress of the Asset Administrator. Cases with many creditors or complex assets may last for years. Each case has its own characteristics regarding the deciding authority, the number of creditors and the volume of assets — to obtain a realistic timeline estimate for your case, you should discuss directly with a FLAT LAW FIRM lawyer.

Common legal risks

• Legal representatives, boards of directors and boards of members filing late when the enterprise has already become insolvent and being liable for damages arising after that point.
• Dissipation of assets, gifts, below-market transfers or preferential payments to one creditor within 06 months (18 months for related persons) before proceedings are opened being declared void.
• Wage arrears and employee social insurance not handled early, triggering collective complaints during the proceedings.
• Creditors failing to declare and confirm debts through the proper process and therefore being excluded from the asset distribution list.
• Skipping recovery proceedings and going straight to bankruptcy, losing the chance to restructure while the enterprise could still be saved.
• A recovery plan that is not feasible failing to be approved by the Creditors’ Meeting with 65% of the total voting debt.
• Failing to clearly distinguish secured assets from common assets in distribution, leading to disputes with secured creditors.

Legal update as of September 2026

The Law on Recovery and Bankruptcy 2025 (No. 142/2025/QH15), passed by the National Assembly on 11/12/2025, took effect on 01/3/2026 and replaces the 2014 Bankruptcy Law (No. 51/2014/QH13) (Article 87). It is the legal framework currently applicable to all newly arising recovery and bankruptcy cases.

Notable changes compared to the 2014 Bankruptcy Law: the principle of prioritising recovery proceedings (Article 3); the new concept of “at risk of insolvency” so that enterprises can file proactively (Article 5); the period for determining insolvency increased from 03 months to 06 months from the due date of the debt (Article 5); simplified procedures for enterprises with no more than 20 unsecured creditors, total principal debt of no more than VND 10 billion, or small or micro enterprises (Articles 68, 70); the social insurance agency may file a petition after 03 years of unanswered reminders (Article 38); the tax administration authority files petitions under the Law on Tax Administration, applicable from 01/7/2026 (Articles 38, 87).

Guidance documents issued: Decree 65/2026/ND-CP on Asset Administrators and the practice of asset management and liquidation (replacing Decree 22/2015/ND-CP); Decree 64/2026/ND-CP on the enforcement of decisions declaring enterprises and cooperatives bankrupt; Resolution 02/2026/NQ-HDTP of the Council of Judges of the Supreme People’s Court guiding certain articles of the Law, including simplified procedures and the petition template.

On jurisdiction: the Regional People’s Court where the enterprise has its head office resolves requests to apply recovery and bankruptcy proceedings; territorial jurisdiction is determined by the National Assembly Standing Committee (Article 6). The specific territorial scope may change from time to time and from place to place — contact us to identify the competent Court for your file.

On transition: bankruptcy cases accepted by the Court before 01/3/2026 but not yet fully resolved are governed by the new Law to continue resolution, except where a civil enforcement authority is enforcing a decision declaring bankruptcy and where requests or recommendations concerning a decision declaring bankruptcy under Article 113 of the 2014 Bankruptcy Law have not yet been resolved (Article 88).

The full texts of the documents above can be found on the Government’s legal normative documents system. The contents of this page should be cross-checked against the documents in force at the time the procedure is carried out.

Why choose FLAT LAW FIRM?

FLAT LAW FIRM handles recovery and bankruptcy files from both sides: representing enterprises and managers in proceedings, while also protecting the rights of creditors and employees. We give a straightforward assessment of an enterprise’s recovery prospects before recommending a procedure, rather than defaulting to bankruptcy. Our team works in Vietnamese, Chinese and English, suiting cases involving foreign investors or foreign creditors.

Frequently asked questions

Useful links

You should talk to a lawyer if:

• The enterprise cannot pay its due debts and it is unclear whether it is at the “at risk of insolvency” stage or already insolvent.
• You are a legal representative, a board of directors member or a board of members member and are concerned about the filing obligation and personal compensation liability.
• The enterprise has transferred or plans to transfer assets or make selective payments to certain creditors during a difficult period.
• You are a creditor and wish to declare debts, attend the Creditors’ Meeting or supervise asset distribution.
• The enterprise can still be restructured and you wish to build a recovery plan instead of going straight to bankruptcy.
• The case has foreign elements: foreign creditors, assets abroad, or the need to recognise foreign court judgments and decisions on recovery and bankruptcy.