Vietnam’s Supreme People’s Court has authored an impact assessment report into the 2014 Bankruptcy Law finding very few bankruptcies have been completed since the law came into effect. This is mostly due to firms running out of money and assets before bankruptcy proceedings can be completed. The court suggests creating pathways by which firms are encouraged to enter voluntary administration before they run out of assets and cash so that creditors might recover at least some of what is owed.
For context, it is not unusual for Vietnamese firms in financial distress to try and hold out for as long as possible offloading assets and leaving bills unpaid for months at a time–note that a firm in Vietnam is not considered insolvent until its debts are more than 90 days past due. This can be off-putting for foreign firms doing business in Vietnam with respect to working with local firms–it increases risks and subsequently costs.
With this in mind, this impact report may be a first step toward seeing some much needed reform. #monitoring
See also: Insolvency in Vietnam 2024: Unpacked