1)

Territorial Jurisdiction

In connection with Vietnam’s reorganization of administrative units and courts system in 2025, Article 6 of the 2025 R&B Law stipulates that the Regional People’s Courts will have first instance jurisdiction for rehabilitation and bankruptcy proceedings, while the Provincial and Supreme People’s Courts will have jurisdiction to review subsequent appeals. To determine the territorial jurisdictions of the Regional People’s Court, criteria such as location of debtor’s headquarters or assets have also been introduced.^[1]
  

2)

Centralized Decision

Under Article 114 of the 2014 Bankruptcy Law Vietnamese courts were required to split the disputed assets and handle the matter as a separate case under general civil procedure. This created a “bottleneck” where the bankruptcy procedure had to wait for the final outcome of a separate civil lawsuit. Further, if the parties were dissatisfied with judgments in such split off cases, they had to follow the standard, multi-level appeals process of the Civil Procedure Code, which could take years.

The 2025 R&B Law now streamlines such process by removing the requirement to split case (i.e., replacing Article 114 with the new Article 60). In other words, after a petition is accepted, all lawsuits or requests against the debtor can be resolved by the Regional People’s Courts currently handling the rehabilitation or bankruptcy case. The decision of the court will then become immediately effective^[2] and no longer be subject to pending decision of a separate civil lawsuit.
 

1)

Time-based Classification

Under the 2014 Bankruptcy Law, there was only one category of insolvent debtors, namely entities who fail to pay a debt after 3 months. The 2025 R&B Law adds a new concept of “at risk of being insolvent”, which applies to entities that are unable to pay their debts due within the next 6 months or who have had outstanding debts for no more than 6 months (the “At-risk Debtors”).^[3]   At-risk Debtors will become insolvent if they cannot settle their debts after such 6-month grace period (the “Insolvent Debtors”).^[4]

As noted below in more details, the rehabilitation procedure under the R&B Law provides both At-risk Debtors and Insolvent Debtors with opportunities for voluntary rehabilitation to avoid formal bankruptcy. As a result, the extended 6-month grace period under the 2025 R&B Law now provides At-risk Debtors with more time to prepare for rehabilitation, while affecting the timing for creditors to petition their payment claims.

In contrast, the Korea DRBA does not impose any time-based limitation but instead enumerating grounds for the commencement of rehabilitation or insolvency-related procedures.
 

2)

Rehabilitation Procedure & Management of Debtors

As a result of the revision in categorization, the rehabilitation procedure is also amended to provide At-risk Debtors with opportunities for voluntary rehabilitation to avoid formal bankruptcy. In other words, rehabilitation proceeding will apply to both At-risk Debtors and Insolvent Debtors; while bankruptcy proceeding will only apply to Insolvent Debtors.

The legal representative, board of directors, or owners of an At-risk Debtor or an Insolvent Debtor will have the right to file for rehabilitation under the 2025 R&B Law.^[5]

Once the rehabilitation application has been accepted, a suspension of civil judgment enforcement and payment of debts will be triggered subject to certain exceptions.^[6] The At-risk Debtor or Insolvent Debtor will then be required to operate under the supervision of an asset management officer or an asset management and liquidation enterprise, and the creditors’ representative board.
 

3)

Rehabilitation Plan & Threshold for Resolutions of Creditors Meeting

Under the 2014 Bankruptcy Law, a creditor’s meeting must be held first to approve a resolution to proceed with rehabilitation; within 30 days thereafter, the insolvent entity would prepare a rehabilitation plan to submit to the court and the creditor’s meeting, when it would be voted. The threshold for creditor’s meeting to approve such rehabilitation plan was (i) affirmative vote of more than half of the unsecured creditors and (ii) the vote by creditors representing at least 65% of the enterprise’s total debt.[7]

The 2025 R&B Law significantly shortens such process. Once the rehabilitation application has been accepted by the court, within 30 days, the At-risk Debtor or Insolvent Debtor must prepare its rehabilitation plan and submit to the court and the creditor’s meeting. Such rehabilitation plan, and any subsequent amendment, can now be passed by a simple resolution of creditors representing at least 65% of the enterprise’s total debt.^[8]
 

1)

Shortened Time Limits

Overall, the 2025 R&B Law truncates several procedures to address enterprises’ need for timely reorganization. For instance, the time to inventory assets of an Insolvent Debtor was shortened from 30 days^[9] to 15 days^[10]. Likewise, the time limit for creditors to file their debt claims has been cut from 30 days^[11]  down to 15 days from the date when the court decides to commence bankruptcy proceeding. In comparison, the Korea DRBA provides that filing period for creditors’ claims shall be set by the Korean courts no less than 2 weeks and no more than 3 months from the date on which the bankruptcy order is issued.

We note that the 2025 R&B Law explicitly stipulates that creditors will lose their rights under Vietnamese law to participate in the bankruptcy proceeding if failing to observe this 15-day limit, except in the case of force majeure.^[12]

Therefore, foreign creditors holding claims in a Vietnamese enterprise should be mindful of the new timing, in the event that such enterprise is an At-Risk Debtor who can become an Insolvent Debtor.
 

2)

Eligibility for Simplified Proceedings

Chapter IV of the 2025 R&B Law also revises the eligibility for simplified procedure for rehabilitation and bankruptcy proceedings based on quantitative criteria. Specifically, for both types of simplified proceedings, the At-risk Debtor or Insolvent Debtor must fall within one of the following categories:^[13]
 

• Debt size: Having fewer than 20 unsecured creditors, and total principal debt must be less than VND 10 billion.

• Small Enterprise: Being enterprises or cooperatives of small or micro size.

• Other: Other cases as provided by laws.

In addition to the above categories, the following types of Insolvent Debtors will also be able to proceed with simplified bankruptcy proceeding.^[14]
 

• Insufficient assets: Not having any assets or sufficient assets to pay court fee advances for bankruptcy proceedings.

• Credit institutions: Following the bankruptcy proceeding set forth in Article 72 of the 2025 R&B Law, of if not applicable, following regulations under the Law on Credit Institutions or other applicable laws.^[15]

• Insurance and reinsurance companies: Having failed to rectify the situation that made them subject to control measures (as prescribed in the Law on Insurance Business).
   

1)

Grounds for Refusal of Recognition

Unlike the 2014 Bankruptcy Law where there is no guidance on recognition and enforcement of foreign bankruptcy cases, the 2025 R&B Law introduces nine grounds for Vietnamese courts to refuse to recognize a foreign bankruptcy judgment, generally concerning the following situations:^[16]
 

• Enforcement is contrary to fundamental principles of Vietnamese law, prejudicial to Vietnamese national or public interest, or affecting legitimate rights of creditors in Vietnam;

• Improper notification of the judgment debtor;

• Existence of a prior legally binding Vietnamese judgment or a pending case in Vietnam involving the same matter;

• The judgment is being reviewed, or has been annulled or suspended, in the origin state; and

• The statute of limitations for enforcement in Vietnam has expired.
   

2)

Support and Assistance in Enforcement

Vietnamese courts may assist foreign bankruptcy proceedings by (i) verifying or liquidating assets within Vietnam, (ii) ordering payment from debtors in Vietnam, and (iii) providing other necessary supports. However, Vietnamese courts will refuse assistance if sufficient documents and fees are not submitted, or when assistance is contrary to fundamental principles of Vietnamese law, prejudicial to Vietnamese national or public interest, or affecting legitimate rights of creditors in Vietnam.^[17]