VietNamNet Bridge – The National Assembly Standing Committee discussed amendments to the 2004 Bankruptcy Law on Friday.

Illustrative image. (Photo: VNN)

They agreed that in the nine years since it was enacted, the law had provided a valuable legal foundation for poorly-performing enterprises, co-operatives and co-operative alliances to declare bankruptcy.

However, they also pointed out that some of the regulations in the law were not specific enough, which made it difficult for the courts to settle bankruptcy petitions lodged by business enterprises or co-operatives.

Under the existing law, some State owned enterprises that performed poorly and sought to declare bankruptcy could not do so. The law also failed to encourage these enterprises to restructure and bring their production back to normal levels.

The proposal made by the Supreme People's Court to revise the 2004 Bankruptcy Law, deputies agreed, aimed to bring the law more in line with international practice and improve the health of Viet Nam's economy.

"The current law does not offer equivalent benefits to employers and employees when enterprises declare bankruptcy," said Ksor Phuoc, Chairman of the Committee for Ethnic Minority Affairs.

Several deputies said that the revised law should also apply to individuals, households or a group of people – in short, anyone with a business licence. However, Nguyen Van Hien, Chairman of the National Law Committee, objected, "If we include these subjects under the jurisdiction of the law, I'm afraid we won't be able to implement it because we don't have enough staff."

As a result, the Standing Committee agreed to limit the law to enterprises, co-operatives and alliances. Other cases would be covered under the Civil Code and Economic Law.

Deputies also expressed concern over Article 3 of the draft amendments, which defines a bankrupt enterprise or co-operative as one that cannot pay the matured debts of more than VND200 million (almost $10,000) for three months.

Truong Thi Mai, chairwoman of the Committee for Social Affairs, expressed anxiety about defining bankruptcy in these terms and Chairman Hien said bluntly that such a regulation was not feasible.

"The drafting committee should not declare that an enterprise is bankrupt based on how much debt it has. Capital registration varies from one firm to another. A big firm could have trillions of dong while a small one might have far less," Hien said.

Phung Quoc Hien, chairman of the Financial and Budgetary Committee, said the proposed amendments were too simple. He suggested that the amendment specify that a bankrupt enterprise must have "lost the capacity to repay its debts".

Constitution revisions

The same day, the NA Standing Committee members discussed revisions to the 1992 Constitution with focuses on five key issues, which are still drawing controversy, including economic components, land ownership, land reclamation, the model of local authorities and the need for a Constitutional Council.

Source: VNS