Scenario: three months before bankruptcy proceedings opened, a company quietly repaid in full a debt owed to a family member’s company, converted an unsecured loan into a mortgaged one for a «friendly» bank, and sold a production line cheaply to an affiliate. The Law on Rehabilitation and Bankruptcy 142/2025/QH15 has an article built for exactly this script: Article 49 on transactions deemed invalid — with a six-month look-back, stretched to 18 months where the counterparty is a related person.
Article 49 of Law 142/2025: six groups of transactions deemed invalid
Article 49(1) of the Law on Rehabilitation and Bankruptcy 142/2025/QH15 provides that transactions of the enterprise made within six months before the date the Court issues the decision opening bankruptcy proceedings are deemed invalid if they fall into one of these groups: (a) transferring assets not at market price; (b) converting an unsecured debt into a secured or partly secured one using the enterprise’s assets; (c) paying or setting off in favour of one creditor for a debt not yet due, or in an amount greater than the due debt; (d) gifting assets; (e) transactions not aimed at the enterprise’s profit purpose; (f) other transactions aimed at dissipating the enterprise’s assets.
Head (c) is the «preferential payment» foreign investors ask about: paying early, paying extra, or paying selectively for one creditor on the edge of bankruptcy all sit in the crosshairs. A technical point: these transactions are «deemed invalid» through the bankruptcy mechanism — the asset manager bears the duty to review them (Article 49(4)) and petition the Court to declare invalidity under Article 50; it is not an ordinary individual lawsuit each creditor files separately.
Related persons: the look-back stretches to 18 months
Article 49(2) extends the reach sharply: the same transaction groups, when made with a related person of the enterprise, are examined over 18 months before the opening decision. «Related persons» are determined under the law and Supreme Court guidance — in practice covering parent and subsidiary companies, managers and their families, and entities under common control.
The clawback consequence: once a transaction is declared invalid, the asset or its equivalent value is recovered into the bankruptcy estate (Article 54 of Law 142/2025 lists assets recovered from invalid transactions as part of the enterprise’s assets), security attached to the transaction is cancelled, and the once-«preferred» creditor returns to the distribution line at its true rank — amounts received may have to be paid back. The invalidity decision is enforceable from the date it is issued (Article 50).
Manager liability, and how ordinary creditors protect themselves
Preferential transactions rarely happen by themselves: they need a manager’s signature. Once a transaction is declared invalid, the next question is the personal liability of whoever decided to move assets out of the enterprise in the twilight period — from compensation liability toward the enterprise to scrutiny in connected proceedings. For ordinary creditors, the only protection is documenting the abnormal: when you spot selective repayment or transfers to affiliates, record it in writing and hand it to the asset manager the moment proceedings open — transaction review is the manager’s statutory duty, and creditor information is its most important input.
Conversely, a struggling enterprise must steer clear of every Article 49 category inside the 6/18-month zone: pay debts on time, in the exact amount, at market value, and keep valuation evidence — that is the line between lawful crisis management and clawback exposure.
Frequently asked questions
Can a selective pre-bankruptcy repayment to one creditor be undone?
Yes — it can be declared invalid under Article 49(1)(c) of Law 142/2025 if the payment or set-off within six months before the opening decision favoured one creditor for a debt not yet due or exceeded the due amount. The recipient faces recovery of what it received into the common estate.
How far back are transactions examined?
Six months for ordinary transactions in the Article 49(1) catalogue, and 18 months where the transaction was with a related person under paragraph 2. Outside those windows Article 49 does not reach (though other civil rules may still apply).
Who petitions to declare a preferential transaction invalid?
The asset manager or asset management and liquidation enterprise must review the enterprise’s transactions and petition the Court to declare invalidity (Articles 49(4) and 50 of Law 142/2025). Participants in the proceedings may also request it under Article 50 — creditors should feed abnormal-transaction information to the asset manager early.
What liability does a manager who signed a dissipation transfer face?
Beyond the transaction being invalidated and assets recovered, the manager faces compensation liability toward the enterprise for the damage caused and other legal consequences depending on the conduct. That is why every asset decision in the twilight period needs an economic rationale and market-price evidence.
This article has been quality-reviewed by the FLAW AI Legal Council