Many Vietnamese companies facing spiralling debts or in the midst of power disputes are filing for bankruptcy.
 |
| Authorities currently can’t ratify a company’s debt when they are filing for bankruptcy |
Sudden bankruptcy
The Hung Binh Gia Limited Company in the Central Highlands province of Gia Lai recently applied for bankruptcy when faced by a lawsuit over their debts with the Phu Nhuan Service Joint Stock Company (Maseco) in Ho Chi Minh City.
Maseco had previously signed a contract to buy over 500 tonnes of coffee from Hung Binh Gia and paid nearly VND4.4 billion (USD211,091) as a deposit. However, the seller failed to deliver the goods as agreed, which forced Maseco into cancelling the contract. Their dispute became so tense that Maseco sued Hung Binh Gia after failing to get their money back as the seller still owed nearly VND3.2 billion (USD153,521).
With the lawsuit yet to be settled, the Hung Binh Company applied for bankruptcy.
In its declaration of bankruptcy sent to the Gia Lai Provincial Department of Planning and Investment, the Hung Binh Company claimed that it had settled all debts to its partners and that it had gave notice of its dissolution in three newspaper editions. Finally, it received approval for dissolution.
In the meantime, Maseco complained to the department that the Hung Binh Company has yet to pay off its debts and had fraudulently claimed bankruptcy to avoid its obligations.
Fraud
According to Gia Lai Department of Planning and Investment, they were only responsible for checking the accuracy of the paperwork filed, but couldn’t verify whether enterprises were being honest about their debts. Enterprises were responsible for any fraudulent statements in their paperwork.
Under the current law, if the Hung Binh Company still owes debts even if dissolved, its shareholders must be responsible for settling the debts based on their stake ownership. This means that the company Director Le Thi Thanh Binh has to pay 99.63% of the company’s debts as she has a 99.63% stake in the company while the remaining shareholder pays the rest.
Maseco lodged a lawsuit against the Hung Binh Company’s two shareholders. According to the results of the first hearing, Hung Binh Company committed fraud in its bankruptcy proceedings and its two shareholders must pay the debt.
Prevention methods
The Ministry of Planning and Investment\'s Department of Business Registration said local departments of planning and investment can’t ratify whether or not a company that applies for bankruptcy have fulfilled their debts. In order to prevent possible fraud, creditors should provide a list of the debts to local authorities.
Nguyen Son Tung, a lawyer from Legal United Law Company, said companies often notified local departments of planning and investment to intervene in cases where there are disputes between businesses or internal partners in order to prevent them claiming bankruptcy, or transferring assets or changing legal representatives.
The Department of Business Registration said that they are developing a new portal for business registration in which any warning about a company’s debt and dispute status would be made public to prevent possible fraud.
It also plans to require companies to publish information about their bankruptcy on a common national business portal, instead of advertising in different newspapers.
Authorities currently can’t ratify a company’s debt when they are filing for bankruptcy.
