I) Summary of this Law:
Chapter I – General Provisions
This chapter includes:
• Defines the scope of regulation, fundamental principles, and State policies.
• Provides definitions of key terms: risk of insolvency, insolvency, recovery, bankruptcy, creditors, insolvency administrators, etc.
• Establishes the jurisdiction of the Court, duties of Judges, Insolvency Administrators, and enforcement agencies.
• Specifies rights and obligations of participants in recovery/bankruptcy procedures; establishment of the Creditors’ Committee; supervision by the Procuracy; fees and costs of recovery/bankruptcy.
Article 5. Interpretation of Terms
In this Law, the following terms are construed as follows:
-
- An enterprise or cooperative at risk of insolvency means an enterprise or cooperative that is unable to pay a debt that will fall due within 06 months, or a debt that has become due but has not exceeded 06 months past its due date.
- An insolvent enterprise or cooperative means an enterprise or cooperative that fails to perform its obligation to pay a debt after 06 months from the due date of payment.
- Recovery means the status in which an enterprise or cooperative is no longer at risk of insolvency and has been issued a court decision terminating recovery procedures, or is not insolvent and has been issued a court decision terminating recovery procedures.
- Bankruptcy means the status in which an enterprise or cooperative is insolvent and has been issued a court decision declaring bankruptcy.
- Creditor means an individual, agency, or organization entitled to request an enterprise or cooperative to perform its obligation to pay a debt, including unsecured creditors, partially secured creditors, and fully secured creditors.
- Unsecured creditor means an individual, agency, or organization entitled to request an enterprise or cooperative to perform its obligation to pay a debt that is not secured by assets of the enterprise, cooperative, or a third party.
- Secured creditor means an individual, agency, or organization entitled to request an enterprise or cooperative to perform its obligation to pay a debt that is secured by assets of the enterprise, cooperative, or a third party.
- Partially secured creditor means an individual, agency, or organization entitled to request an enterprise or cooperative to perform its obligation to pay a debt that is secured by assets of the enterprise, cooperative, or a third party, where the value of the secured assets is lower than the debt that the enterprise or cooperative must pay.
- Insolvency administrator means an individual practicing in the field of management and liquidation of assets of an enterprise or cooperative during the process of resolving recovery or bankruptcy cases.
- Asset management and liquidation enterprise means an enterprise practicing in the field of management and liquidation of assets of an enterprise or cooperative during the process of resolving recovery or bankruptcy cases.
- Persons conducting recovery or bankruptcy procedures include the Chief Justice of the Court, Judges, Court Clerks; the Chief Procurator, Procurators; Insolvency Administrators, asset management and liquidation enterprises; Heads of civil judgment enforcement agencies, Enforcement Officers, and other competent persons as prescribed by law during the process of resolving recovery or bankruptcy cases.
- Persons participating in recovery or bankruptcy procedures include creditors; employees; enterprises or cooperatives; shareholders or groups of shareholders of joint-stock companies; members or groups of members of limited liability companies; partners of partnerships; owners of private enterprises; members of cooperatives or member cooperatives of cooperative unions; debtors of the enterprise or cooperative; and other persons having related rights and obligations during the process of resolving recovery or bankruptcy cases.
- Recovery and bankruptcy fees mean the amount payable by the person requesting the application of recovery or bankruptcy procedures for the Court to accept the petition.
- Recovery and bankruptcy costs mean the amount payable for resolving recovery or bankruptcy cases, including fees for Insolvency Administrators, asset management and liquidation enterprises, audit costs, costs for enforcing court decisions, and other necessary and reasonable expenses for implementing recovery or bankruptcy procedures.
- Fees for Insolvency Administrators and asset management and liquidation enterprises mean the amount payable for their work in resolving recovery or bankruptcy cases.
- Advance payment of recovery and bankruptcy costs means the amount temporarily calculated by the Judge to cover costs during the implementation of recovery or bankruptcy procedures.
- Recovery and bankruptcy cases include requests for applying recovery or bankruptcy procedures; requests for assistance in foreign recovery or bankruptcy cases; and requests for recognition and enforcement of foreign court judgments or decisions on recovery or bankruptcy as prescribed in this Law.
- Debts related to compulsory social insurance, unemployment insurance, health insurance, occupational accident and disease insurance mean amounts of late payment or evasion of compulsory social insurance, unemployment insurance, health insurance, and occupational accident and disease insurance as prescribed by law.
Chapter II – Recovery Procedures
This chapter includes:
• Defines persons entitled to file a recovery petition, required documents, and procedures for acceptance.
• Verification of creditor lists; temporary suspension of asset-related obligations.
• The enterprise may continue operating under supervision; prohibited acts are specified.
• Creditors’ Meeting: convening, composition, voting rules, and resolutions.
• Recognition of resolutions; implementation of the recovery plan; amendments; termination of recovery procedures and consequences.
Chapter III – Bankruptcy Procedures
This chapter includes:
• Defines persons entitled and obligated to file for bankruptcy.
• Acceptance of bankruptcy petitions; temporary suspension of asset-related obligations.
• Decision to open bankruptcy procedures; supervision of enterprise operations after commencement.
• Handling secured debts, joint liabilities, and order of asset distribution.
• Voidable transactions; contract termination; set-off of obligations.
• Asset inventory, preparation of creditor lists; Creditors’ Meeting under bankruptcy procedures.
• Recognition of recovery plans within bankruptcy; termination of bankruptcy procedures; declaration of bankruptcy; review of bankruptcy decisions.
Chapter IV – Summary Recovery and Bankruptcy Procedures
This chapter includes:
• Conditions for summary procedures (≤20 unsecured creditors, debts ≤10 billion VND, small/micro enterprises, etc.).
• Time limits shortened to half of regular procedures.
• Creditors’ Meeting under summary procedures requires only 51% of debt approval.
• Special provisions for credit institutions and insurance/reinsurance enterprises.
Chapter V – Requests for Foreign Assistance; Assistance to Foreign Proceedings; Recognition and Enforcement of Foreign Judgments
This chapter includes:
• Vietnamese courts may request foreign authorities to assist in verification, inventory, and asset recovery.
• Vietnam may assist foreign recovery/bankruptcy proceedings upon request.
• Conditions for recognition and enforcement of foreign recovery/bankruptcy judgments and decisions.
Chapter VI – Enforcement of Bankruptcy Judgments
This chapter includes:
• Civil judgment enforcement agencies issue enforcement decisions for bankruptcy.
• Insolvency Administrators conduct valuation, sale, and recovery of assets.
• Handling leased assets, post-bankruptcy assets, disputes during enforcement, and completion of enforcement procedures.
Chapter VII – Responsibilities, Violations, Complaints, and Denunciations
This chapter includes:
• Handling violations during recovery/bankruptcy procedures.
• Prohibition on holding certain positions after bankruptcy for specific individuals.
• Complaints and denunciations regarding acts or decisions in recovery/bankruptcy procedures.
Chapter VIII – Implementation Provisions
This chapter includes:
• Effective date: March 1, 2026.
• Repeals the 2014 Bankruptcy Law (with transitional provisions).
• Transitional rules for ongoing cases.
II) Impact Analysis of the 2025 Recovery and Bankruptcy Law
The 2025 Recovery and Bankruptcy Law creates a comprehensive “reconstruction” of how Vietnam handles financially distressed enterprises. Its impact extends beyond legal procedures, influencing corporate behavior, creditor power, market transparency, and the investment environment. Below is an in-depth analysis by stakeholder group.
1. Impact on Enterprises
1.1. Enterprises gain a “second chance” before bankruptcy
For the first time, the 2025 Law establishes an independent recovery procedure, allowing enterprises to restructure without being labeled “bankrupt.” This changes enterprise behavior in three ways:
• Proactively seeking recovery early when facing a “risk of insolvency” (within 6 months).
• Reducing fear and stigma associated with bankruptcy, since recovery is not viewed negatively.
• Increasing the likelihood of saving enterprises, preserving jobs, and maintaining supply chains.
Practical impact: Enterprises will be more willing to seek legal support instead of prolonging bad debt situations.
1.2. Enhanced transparency and financial discipline
The Law requires:
• Supervision of business operations during recovery.
• Mandatory audits when necessary.
• Prohibition of asset dissipation and abnormal transactions within 6 months prior to proceedings.
This forces enterprises to:
• Improve risk management.
• Increase financial transparency.
• Prevent “running away from debt” or transferring assets before bankruptcy.
1.3. Reduced cost and time of proceedings
Summary procedures help:
• Small and micro enterprises resolve cases faster.
• Reduce legal and insolvency administrator costs.
• Minimize business disruption.
This is especially important for SMEs, which account for over 97% of Vietnamese enterprises.
1.4. Government support for restructuring
For the first time, the Law provides State support in:
• Taxes and fees
• Credit and interest rates
• Digital transformation
• Land and technology
This helps enterprises:
• Access resources for recovery.
• Reduce the risk of systemic bankruptcy.
• Increase the likelihood of successful restructuring.
1.5. Increased accountability of enterprise managers
The Law stipulates:
• A 3-year ban on holding certain positions if the enterprise is declared bankrupt.
• Increased personal liability for asset dissipation and fraud.
This creates pressure for:
• More professional corporate governance.
• Reduced “abandonment” of failing enterprises.
2. Impact on Creditors
2.1. Creditors gain greater power in recovery proceedings
The 2025 Law grants creditors:
• The right to participate in Creditors’ Meetings in both recovery and bankruptcy.
• The right to propose changes to insolvency administrators.
• The right to request recovery of debtor assets.
• The right to request interim emergency measures.
This helps creditors:
• Avoid passivity.
• Better control restructuring processes.
• Reduce the risk of capital loss.
2.2. Creditors’ Committee – a new mechanism protecting major creditors
The Law allows the establishment of a Creditors’ Committee (up to 5 members).
Impact:
• Major creditors gain stronger influence.
• Reduces situations where enterprises “game the system” to favor certain creditors.
• Enhances professionalism in recovery negotiations.
2.3. Increased ability to recover debts
Thanks to:
• Clear rules on voidable transactions.
• Stronger powers for insolvency administrators in asset recovery.
• Tight supervision by civil judgment enforcement agencies.
Creditors:
• Recover more assets.
• Reduce losses from asset dissipation.
• Receive better protection in asset distribution order.
2.4. Greater transparency in asset distribution
The 2025 Law standardizes:
• Asset distribution order.
• Valuation and sale procedures.
• Treatment of secured assets.
This helps creditors:
• Predict recovery amounts more accurately.
• Reduce disputes.
• Increase trust in the legal system.
3. Impact on the Market and the Economy
3.1. Reduced risk of chain bankruptcies
Recovery procedures help:
• Rescue weak enterprises early.
• Reduce spillover effects on suppliers, banks, and workers.
3.2. Increased investor confidence
The new Law is:
• More transparent.
• More protective of creditors.
• Lower in legal risk.
This leads to:
• Improved capital mobilization.
• Increased foreign investment.
• Higher national credit ratings.
3.3. A healthier business environment
Enterprises can no longer:
• Dissipate assets.
• Evade debts.
• Abuse bankruptcy to erase obligations.
Creditor protection → safer credit market.