Prohibiting businesses from spreading assets and dividing profits when the Court accepted the application

The National Assembly has passed the Law on Resolution and Bankruptcy. The law takes effect from March 1, 2026.

The law stipulates the business activities of enterprises and cooperatives after the Court receives the application.

Accordingly, after the Court accepted the request, the enterprise and cooperative continued to operate, but had to be supervised by the Governor, the enterprise managing and liquidating assets and the creditor representative board.

In case the legal representative of the enterprise or cooperative is found to be unable to operate or the enterprise or cooperative shows signs of violating regulations, according to the proposal of the Presenting Committee of the creditor, the Administrator, the enterprise manages and liquidates assets, and the person specified in this Law.

Judges can consider and decide to select another person as the legal representative of the enterprise or cooperative. The Government regulates the change of legal representatives of state-owned enterprises.

From the date of receipt of the application for recovery procedures, enterprises and cooperatives are allowed to deduct tax arrears as requested by the Court, and temporarily suspend payment to the pension and death fund.

The deadline for tax debt collection, temporarily suspending payment to pension and death funds shall comply with the provisions of law on tax management and law on social insurance.

From the date of receipt of the application, the debts will continue to be charged interest but the interest payment will be suspended until the Court recognizes the plan to restore business operations or suspends the procedures for restoring business operations, unless otherwise provided by law.

For new debts arising after the Court accepted the request for the purpose of restoring enterprises and cooperatives, the interest of that debt shall be determined according to the agreement but not contrary to the provisions of law.

The synchronous transfer of assets, transfer of part or all business lines and activities; transfer of part or all enterprises and cooperatives shall be considered and decided by the creditor conference. The order, procedures, and conditions for transferring assets are implemented in accordance with the provisions of law.

The Law on Restoration and Bankruptcy also clearly states that the activities of enterprises and cooperatives are prohibited after the Court accepted the request.

Accordingly, after the Court accepted the request, enterprises and cooperatives are not allowed to carry out the following activities:

Hiding, spreading, donating assets; giving up the right to collect debts; paying arising debts before the Court processes requests;

Transfer unsecured debt to secured debt or partially secured debt in assets of enterprises and cooperatives; divide profits and distribute income.

The Law also stipulates that after the Court receives the request, enterprises and cooperatives must report to the Management Agency, enterprises manage and liquidate assets for supervision before performing activities such as:

Activities related to borrowing; pledging, mortgaging, guaranteeing and measures to ensure the performance of other obligations; buying, selling, transferring, leasing assets; selling, transferring shares and contributed capital; transferring ownership of assets; terminating effective contracts;

Payment of debts arising after the Court accepted requests and salary payments to employees in enterprises and cooperatives; other transactions that are not in accordance with the interests of enterprises and cooperatives.

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