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Checklist for a Viable Business Recovery Plan

13 min readFLAT LAW FIRM
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Checklist for a Viable Business Recovery Plan Under the 2025 Law on Recovery and Bankruptcy

From 01/3/2026, Vietnam has a new law with a new philosophy: the 2025 Law on Recovery and Bankruptcy (No. 142/2025/QH15). For the first time in legislative history, "business recovery" is established as an independent procedure, with legal standing equal to and alongside the bankruptcy procedure — instead of being a small, rarely applied stage within bankruptcy as under the 2014 Bankruptcy Law. The lawmakers' message is clear: prioritise saving businesses that can still live, rather than rushing to "declare them dead".

For an owner running out of cash flow, this is a lawful, court-protected chance to "save yourself". But the opportunity only becomes real if the recovery plan is viable enough to persuade creditors. This article is a checklist of the 10 elements of a viable recovery plan, plus the full process from petition to implementation.

Contents

1. Context: why a new recovery law was needed

Under the 2014 Bankruptcy Law, "business recovery" was merely a stage within the bankruptcy procedure: only after the court opened bankruptcy proceedings could a recovery plan adopted by the creditors' meeting apply. In practice this mechanism barely worked — according to the Supreme People's Court, from 2014 to 2025 the whole country saw fewer than 10 cases successfully applying recovery. Once a business entered bankruptcy proceedings, creditors, partners and banks were already in "divide the assets" mode; nobody wanted to discuss rescue.

The 2025 Law on Recovery and Bankruptcy fixes this with two landmark changes. First, recovery as an independent procedure: businesses may petition directly for the recovery procedure without going through bankruptcy. Second, early intervention: businesses may petition as soon as there is a "risk of insolvency", while restructuring room still exists, rather than waiting for actual default. This is a shift from "handling consequences" to "early prevention" — aligned with international practice on effective bankruptcy.

2. Eligibility: who may seek rescue, and when

Subjects: enterprises, cooperatives and cooperative unions at risk of insolvency or already insolvent.

"Risk of insolvency" is defined in Article 5(1): the enterprise expects to be unable to pay debts due within the next 6 months, or has debts overdue for less than 6 months. This is a far lower entry threshold than the old law — and the point owners must grasp early: don't wait until accounts are empty, suppliers stop delivering and banks squeeze before turning to the law. The earlier the petition, the larger the negotiating room with creditors and the stronger the basis for a recovery plan.

Who may petition (Article 24): the right to petition belongs only to the enterprise or cooperative side — genuine "self-rescue": the legal representative; the Board of Directors (joint-stock company), the Members' Council (multi-member LLC, partnership); the members' congress (cooperatives); the private-enterprise owner or single-member LLC owner. Creditors and employees may NOT petition for the recovery procedure — a major difference from bankruptcy proceedings. The petition must be accompanied by: a recovery plan (draft), lists of creditors and debtors, and supporting evidence (Article 25(1)). In other words, from the moment of filing, the enterprise must already hold a draft recovery plan — no filing "empty-handed" and figuring it out later.

3. Checklist: 10 elements of a viable recovery plan

The Law sets plan contents as an "open list" — no rigid template, but a plan seeking creditor approval must convincingly answer these 10 questions:

1. An honest diagnosis of why the business ran dry. Creditors only trust a plan from someone who faces the causes squarely: losses from what — the market, management, excessive leverage, or strategic mistakes? A plan blaming "objective factors" without identifying internal causes will be rejected in the first round. Attach audited financial statements (if any) and 12–24 months of cash flow analysis.

2. A viability test of the business model. The core question: if debt is reduced, rescheduled and capital injected — will the business generate positive cash flow in the future? If the model is dead (obsolete products, vanished markets), no financial plan can save it — and honesty here saves everyone's time.

3. Debt restructuring: specific proposals for each creditor group. No vague "requesting rescheduling". Group them: secured/unsecured; banks/suppliers/employees/tax; and propose specifics per group: how many % reduced, how long rescheduled, debt-to-equity swap ratios. The unsecured creditor group decides the vote — the plan must convince them that recovery recovers more than bankruptcy.

4. A new capital mobilisation plan. Where does operating money come from during recovery? Owners' additional capital commitments, new loans (possibly priority "new money"), sale of non-core assets, receivables collection. Every source needs written commitments, not "expectations".

5. Business model change. Cutting loss-making segments, focusing on profitable margins, changing distribution channels, repositioning products — specific changes with post-change revenue and cost forecasts.

6. Management reorganisation. Creditors will ask: is the team that brought the business to the brink capable of bringing it back? The plan must answer: any key management changes, independent managers/supervisors hired, and how transparent reporting to creditors works.

7. A detailed time-bound repayment schedule. A quarterly repayment timetable tied to cash flow forecasts. The schedule must be realistic — promising full repayment in 12 months while cash flow barely covers interest is the fastest way to lose votes.

8. Commitments from owners and related parties. Will owners commit not to withdraw capital, not to move assets out, to personally guarantee part of the obligations? The owners' "skin in the game" is creditors' most important measure of trust.

9. A contingency plan (plan B). What if revenue reaches only 70% of forecast? What if a major creditor dissents? A viable plan always has backup scenarios — showing management has thought seriously, not written for show.

10. Transparent supervision and reporting mechanisms. Commit to periodic reports to the creditors' representative board, allow book inspections, and accept covenants during implementation: no off-plan investments, no borrowing beyond limits, all large transactions require approval.

4. Procedure: from petition to the creditors' meeting

The recovery procedure under the new Law has these main steps:

  • Step 1 — Petition (Articles 24, 25): the entitled petitioner files for the recovery procedure with a draft recovery plan, creditor and debtor lists, and supporting evidence. The court accepts the petition once the recovery fee and advance recovery costs are paid.
  • Step 2 — Complete the plan within 30 days (Article 28(3)): within 30 days from the date the court accepts the petition, the enterprise must complete the recovery plan for the asset administrator (or asset management/liquidation enterprise) to report to the judge. These are 30 decisive days — mobilise lawyers, auditors and financial advisers for focused work.
  • Step 3 — The creditors' meeting (Article 33): within 5 working days from receiving the plan, the judge convenes the creditors' meeting. The meeting votes with one of these conclusions: approving the recovery plan; proposing suspension of the recovery procedure; or proposing bankruptcy (where the enterprise is insolvent). A resolution passes when creditors representing at least 65% of the total debt of the creditors participating in the vote approve.
  • Step 4 — Recognition and implementation (Articles 34, 35): within 7 days from the resolution approving the plan, the judge issues a recognition decision; the resolution takes effect from the recognition date and binds all creditors. From the effective date, the prohibitions and supervision measures (Articles 31, 32) automatically cease. The enterprise implements the plan under the supervision of the asset administrator, the creditors' representative board and creditors, reporting every 3 months.
  • Step 5 — Close: plan completed (successful recovery) → the recovery procedure is suspended (terminated); during implementation the plan may be amended by agreement (an amendment resolution also needs 65% — Article 36); if the plan fails, conversion to bankruptcy follows (Article 37).

5. The creditors' meeting: rules of the life-or-death vote

The creditors' meeting is the "trial" deciding the enterprise's fate, with rules designed both to protect creditors and to give the business a real chance:

  • Composition: creditors on the list (may authorise in writing); employee and trade union representatives; the petitioner and the enterprise's legal representative must attend; the asset administrator chairs the session. An absent creditor whose written opinion reaches the judge before the meeting date counts as participating and voting.
  • Convening: within 5 working days from receiving the recovery plan, the judge convenes the creditors' meeting (Article 33(1)).
  • Adoption threshold — a single threshold: a resolution passes when creditors representing at least 65% of the total debt of the creditors participating in the vote approve (Article 33(6)). The new Law dropped the 2014 Bankruptcy Law's "double consensus" rule (more than half of unsecured creditors present + 65% of unsecured debt) and the 51% validity quorum — voting no longer distinguishes secured from unsecured debt.
  • Binding effect: the creditors' meeting resolution binds all creditors — including absentees and dissenters. This is the key: once a large enough majority agrees, the minority cannot sabotage.
  • Possible outcomes (Article 33(7)): approving the business recovery plan; proposing suspension of the recovery procedure; or proposing bankruptcy (with content on advancing bankruptcy costs).

Practical strategy: don't wait for the meeting to start persuading. Negotiate bilaterally with major creditors beforehand — especially banks and strategic suppliers — to secure the 65% before entering the room. The creditors' meeting should be where a reached agreement is "closed", not where negotiation begins.

6. Implementing and supervising the plan

Adoption is only the beginning. The implementation phase is where many plans "die young":

  • The creditors' representative board supervises regularly the enterprise's business operations throughout plan implementation. This is not formal supervision — the board may demand reports, inspect finances, and propose handling upon detecting violations. Every 3 months, the enterprise must prepare a report on plan implementation (Article 35(2)).
  • Execution discipline: strictly follow the repayment schedule, the restrictive covenants (no off-plan investments, no non-transparent related-party transactions), full periodic reporting. One serious breach may be grounds for conversion to bankruptcy.
  • Handling deviations: when reality diverges from forecasts, proactively report and propose plan adjustments rather than conceal — transparency is the only "capital" that keeps creditor trust during this phase. Note: a resolution amending the plan also requires the 65% threshold (Article 36(2)).

Notably, the new Law removed the hard 3-year cap of the 2014 Bankruptcy Law: the implementation term follows the creditors' meeting resolution; where the resolution sets no term, the default is no more than 3 years from the meeting's approval of the plan (Article 29(2)).

7. When to choose recovery, when to accept bankruptcy

Not every distressed business should recover. A decision framework:

Choose recovery when: the core business model remains viable (products still have markets, the brand still has value); distress stems mainly from leverage, short-term liquidity crisis or fixable management mistakes; owners are ready to commit more resources; and at least one major creditor group supports it.

Accept bankruptcy when: the business model is obsolete (outdated technology, permanently vanished markets); debt far exceeds asset value so no plan is viable; owners can no longer or will no longer rescue; or the business is effectively long "dead" (a zombie enterprise) — prolonging only increases harm to creditors and employees.

This decision needs independent assessment (auditors, financial advisers), not the owner's sentiment. And it needs to be made early — each month of hesitation erodes enterprise value and narrows the recovery door.

Frequently Asked Questions

Which businesses may use the recovery procedure under the 2025 Law on Recovery and Bankruptcy? Enterprises and cooperatives at risk of insolvency or already insolvent. The key innovation: petitions may be filed as soon as there is a 'risk' — i.e. debts due within the next 6 months are expected to go unpaid, or debts overdue for less than 6 months (Article 5(1)). This is an 'early intervention' mechanism, unlike the 2014 Bankruptcy Law which only admitted cases of actual insolvency.

Who may petition to open a recovery procedure? Only the enterprise or cooperative side — a major difference from bankruptcy proceedings. The petition may be filed by: the legal representative; the Board of Directors (joint-stock company), the Members' Council (multi-member LLC, partnership); the members' congress (cooperatives); the private-enterprise owner or single-member LLC owner (Article 24(1)). Creditors and employees may NOT petition for the recovery procedure. The petition file must be accompanied by a draft recovery plan, lists of creditors and debtors, and supporting evidence (Article 25(1)).

What must a recovery plan contain? The Law sets an 'open list' of contents: the plan must state the recovery measures not contrary to law, and the conditions, time limit and schedule for debt repayment (Article 28(1)). The repayment schedule must respect the priority order: recovery costs; wages, social insurance and employee benefits; debts incurred for the recovery purpose; secured debts; other debts (Article 28(2)). On timing: within 30 days from the date the court accepts the petition for the recovery procedure, the enterprise must complete the plan for the asset administrator to report to the judge (Article 28(3)) — note the petition must already include a draft plan (Article 25), so these 30 days are for completion, not for starting to write.

On what principle does the creditors' meeting adopt a recovery plan? Under Article 33(6): a resolution of the creditors' meeting passes when creditors representing at least 65% of the total debt of the creditors participating in the vote approve — a single threshold calculated on the total debt of participating creditors, with no headcount requirement and no secured/unsecured distinction, unlike the 2014 Bankruptcy Law. The resolution binds all creditors, including those absent or dissenting.

Who supervises implementation of the recovery plan? The creditors' representative board supervises the enterprise's business operations during plan implementation. This ongoing supervision mechanism is an important innovation, helping detect non-compliance early for timely handling.

What if the recovery plan fails? The creditors' meeting may adopt a resolution: approving the recovery plan; proposing suspension of the recovery procedure; or proposing bankruptcy where the enterprise is insolvent. In other words, recovery is an opportunity — but if unviable, the procedure converts to bankruptcy for a clean resolution, avoiding prolonged 'zombie enterprise' status.

When did the 2025 Law on Recovery and Bankruptcy take effect? From 01/3/2026, replacing the 2014 Bankruptcy Law (No. 51/2014/QH13). Bankruptcy cases accepted by courts before 01/3/2026 but unresolved continue under the new Law's provisions, except certain transitional cases (Articles 87, 88).

When to work with counsel

The recovery procedure is a judicial procedure with strict requirements on files, deadlines and creditor negotiation strategy — not something an exhausted management can handle alone. Businesses should have counsel from the first moment insolvency risk appears: assessing whether to petition for recovery, drafting a persuasive recovery plan, representing negotiations with major creditors before the meeting, and accompanying the whole implementation and supervision process. For cases with foreign elements (foreign creditors, international loans), counsel also handles recognition and enforcement of cross-border recovery and bankruptcy decisions under the new Law's provisions.

FLAT Law Firm advises on debt restructuring and enterprise recovery and bankruptcy procedures under the 2025 Law on Recovery and Bankruptcy. Contact our hotline at 0988424851 for advice on your business's specific situation.

References

  1. Law on Recovery and Bankruptcy No. 142/2025/QH15 dated 11/12/2025, effective 01/3/2026 (Articles 5, 24, 25, 28, 29, 33–37, 87, 88).
  2. Bankruptcy Law No. 51/2014/QH13 dated 19/6/2014 (expired 01/3/2026, except transitional cases).