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When a business becomes insolvent, determining expense destroy business This is one of the top concerns for management and the accounting department. Many business owners mistakenly believe that bankruptcy only involves a small fee paid to the court, or worry that when the business runs out of finances, it will be unable to handle the legal procedures. Understanding the cost structure, advance payment obligations, and payment order according to legal regulations will help businesses proactively assess financial options and comply with the correct legal procedures.
Please note the regulations effective from March 1, 2026. All content in this article has been reviewed and updated in accordance with the legal framework at Law on Bankruptcy and Recovery No. 142/2025/QH15 (Effective from March 1, 2026, check here) National database of legal documents), Decree No. 65/2026/ND-CP detailed regulations on bankruptcy administrators and the practice of managing and liquidating assets, together Decree No. 64/2026/ND-CP The regulations on the enforcement of bankruptcy declarations are officially published at Official Gazette Portal.
What are the costs of business bankruptcy?
According to Article 3 of the Law on Rehabilitation and Bankruptcy No. 142/2025/QH15, rehabilitation and bankruptcy costs are the necessary and reasonable amounts to be paid for the process of resolving requests for the application of rehabilitation or bankruptcy procedures. In current legal documents, the official legal term used is “"Recovery and bankruptcy costs"”.
Unlike regular operating expenses, recovery and bankruptcy costs arise directly from the litigation process and the management of litigation assets. Any bankruptcy case accepted by the People's Court requires funding for inventory, valuation, preservation, and distribution of assets. Therefore, understanding the true nature of this cost group helps businesses prepare their financial resources well before filing a claim for resolution.
What are the costs of business bankruptcy?
According to Article 3 of the Law on Bankruptcy and Recovery No. 142/2025/QH15, the costs of business bankruptcy include the costs of the Receiver, the enterprise managing and liquidating assets, auditing costs, costs of enforcing decisions of the People's Court, and other necessary and reasonable costs serving the process of resolving the case.
Costs for the trustee and the company managing and liquidating the assets.
Based on the Law on Bankruptcy and Recovery No. 142/2025/QH15, Decree No. 65/2026/ND-CP, and guidelines for managing professional practice from Ministry of Justice's online portal, The fees paid to the Receiver, the business managing and liquidating the assets, include remuneration and reasonable actual expenses incurred. The remuneration is determined based on the time, effort, and results of the task performed. chest liquidate assets or restore business operations throughout the litigation process.
Audit costs
During the process of resolving the case, if it is necessary to audit the financial statements or review the financial situation of the insolvent enterprise, the independent audit costs will be included in the total recovery and bankruptcy costs as prescribed by law.
Costs of enforcing a court decision.
Based on the Law on Bankruptcy and Recovery No. 142/2025/QH15 and Decree No. 64/2026/ND-CP, the costs of enforcing the decision are included. jurisdiction to handle bankruptcy proceedings Issues arising from the People's Court during the process of organizing and implementing procedural decisions, decisions on applying interim emergency measures, or the execution of decisions declaring a business bankrupt.
Other necessary and reasonable expenses
This group includes direct payments for the legally mandated process of resolving the case, such as the cost of publishing notices, public postings, property valuation fees, and the cost of organizing creditors' meetings.
What is the difference between bankruptcy fees and bankruptcy costs?
Based on Articles 19 and 20 of the Bankruptcy Law No. 142/2025/QH15, bankruptcy fees are the amount paid according to the law on court fees and charges when filing a request, while bankruptcy costs are the total actual expenses incurred to cover the management, liquidation of assets, and litigation. For a more detailed analysis, please refer to the article. Comparison of dissolution and bankruptcy To understand the differences in procedures.
The comparison table below clarifies the differences between these two financial obligations:
| Comparison criteria | Rehabilitation and bankruptcy fees | Recovery and bankruptcy costs |
|---|---|---|
| Legal basis | Article 19 of the Law on Bankruptcy and Recovery No. 142/2025/QH15. | Article 20 of the Law on Bankruptcy and Recovery No. 142/2025/QH15. |
| Concept | The fee is paid when submitting the application for the procedure. | Total expenses incurred in the process of resolving the case. |
| The party with the obligation | The applicant (except in cases where exempted). | The guarantee is based on the asset value of the enterprise or cooperative, or the state budget in cases where the law so stipulates. |
| Time of execution | According to the law on court fees and charges and the notice of the People's Court. | Initial deposit and final payment will be made during the asset liquidation process. |
| How to determine | According to the law on court fees and charges. | Determined according to legal regulations, the fees for the Receiver, the asset management and liquidation company are based on the time, effort, and results of performing the task. |
How are advance payments for bankruptcy costs paid and determined?
According to Article 20 of the Bankruptcy and Recovery Law No. 142/2025/QH15 and updated judicial practice at Supreme People's Court Electronic Portal, The judge, based on legal regulations, determines the amount of advance payment for recovery and bankruptcy costs. The applicant requesting the procedure is obligated to pay the advance payment as notified by the People's Court, except in cases where exemption is granted according to regulations.
Who is responsible for paying the bankruptcy deposit?
According to Article 20 of the Law on Bankruptcy and Rehabilitation No. 142/2025/QH15, applicants requesting the application of bankruptcy and rehabilitation procedures are obligated to pay an advance deposit for the costs of bankruptcy and rehabilitation, except in cases where the law stipulates that payment is not required or is covered by the state budget.
The judge decides the amount of the advance payment.
The amount of advance payment for costs is not fixed for all cases. The judge assigned to handle the case will determine the amount of advance payment for recovery and bankruptcy costs, and the specific costs in each case according to the law, in order to ensure sufficient funds to cover initial litigation expenses.
Cases covered by the state budget.
The law stipulates several cases where applicants are not required to pay an advance, and the state budget guarantees the advance payment of costs; this includes cases where employees or trade unions representing employees request the application of bankruptcy procedures under legally defined conditions when the enterprise or cooperative no longer has money or assets.
Where are bankruptcy costs paid from?
Based on Article 20 of the Law on Bankruptcy and Recovery No. 142/2025/QH15, the costs of bankruptcy and recovery are paid from the asset value of the insolvent enterprise or cooperative. If the enterprise or cooperative no longer has money or assets, the bankruptcy costs are covered by the state budget in accordance with the law.
Payment from the asset value of the enterprise or cooperative.
The primary source of payment for recovery and bankruptcy costs is the asset value of the enterprise or cooperative. When distributing assets according to Article 46 of the Law on Recovery and Bankruptcy No. 142/2025/QH15, recovery and bankruptcy costs are given top priority.
In cases where businesses or cooperatives no longer have money or assets.
In cases where businesses or cooperatives are completely bankrupt and have no money or assets left to pay, the Bankruptcy and Recovery Law No. 142/2025/QH15 stipulates a mechanism whereby the state budget guarantees bankruptcy costs in accordance with the law. This provision ensures that the case is resolved according to proper legal procedures even when the business no longer has financial resources.
In what order are bankruptcy costs paid?
According to Article 46 of the Law on Bankruptcy and Recovery No. 142/2025/QH15, bankruptcy and recovery costs are given priority in payment when the People's Court issues a decision declaring bankruptcy and proceeds with the distribution of assets of the enterprise or cooperative.
The order of asset distribution for enterprises and cooperatives declared bankrupt is carried out specifically according to Article 46 as follows:
- Recovery and bankruptcy costs: This includes the costs of the receiver, the asset liquidation management company, auditing fees, enforcement fees, and other reasonable expenses.
- Wage arrears: Wage arrears owed to employees under employment contracts and collective bargaining agreements.
- Mandatory insurance debt: Compulsory social insurance, unemployment insurance, health insurance, and insurance against work-related accidents and occupational diseases.
- Severance pay and other benefits: Severance pay and other employee benefits as stipulated in the signed employment contract and collective bargaining agreement.
- Business recovery debt: The debts incurred are for the purpose of restoring business operations as required by regulations.
- Financial obligations to the State: Tax debts and other financial obligations to the state budget.
- Other debts: Unsecured debts must be paid to creditors on the list of creditors, and secured debts remain unpaid because the value of the collateral is insufficient to cover the payment.
Examples of how to determine bankruptcy costs in practice.
To illustrate the mechanism for generating and paying bankruptcy costs, consider a hypothetical example at Company A Limited, which becomes insolvent and the People's Court accepts the application:
- Pay the fees and deposit the costs: The applicant fulfills the obligation to pay the bankruptcy fees and advance bankruptcy costs into the account designated by the Court as notified by the Judge.
- Costs incurred during processing: The bankruptcy administrator conducts an inventory and preserves the assets; the auditing firm reviews the financial statements and records as required. The sum of these reasonable expenses constitutes the official bankruptcy costs.
- Payment will be made in the following order of priority: When processing and auctioning off Company A's assets, the proceeds will first be used to pay bankruptcy costs (repaying advances and covering outstanding expenses). The remaining funds will then be distributed to cover outstanding wages, insurance, employee benefits, tax obligations to the State, and other debts in the order stipulated in Article 46 of the Bankruptcy and Recovery Law No. 142/2025/QH15.
Common misconceptions about bankruptcy costs
From experience in handling bankruptcy In fact, MAN – Master Accountant Network has found that many business owners and accountants often encounter the following four basic misunderstandings:
Bankruptcy fees are not the same as bankruptcy costs.
Fees are charges collected according to the law on court fees and charges when filing an application. Meanwhile, bankruptcy costs include many actual expenses incurred throughout the process of resolving the case, such as the costs of the bankruptcy administrator, auditors, and enforcement of decisions.
There is no fixed cost for all businesses.
The total cost of recovery and bankruptcy varies among businesses. The actual cost depends on the size of assets, the number of assets to be liquidated, and the complexity of each specific case.
The advance payment is not necessarily the final total cost.
The advance payment initially determined by the judge is a provisional amount to cover the initial litigation costs. The total actual cost to be paid later may vary depending on the amount of work that arises during the proceedings.
Just because a business has no assets doesn't mean it can't be resolved.
When a business's assets are depleted, the law provides for mechanisms to ensure state budget funds cover costs or waive advances for employees. Therefore, the depletion of assets does not prevent the initiation of bankruptcy proceedings as prescribed by law.
MAN provides consulting services on the costs and procedures of corporate bankruptcy.
Assessing cost structures, developing asset disposal plans, and settling outstanding tax obligations require in-depth knowledge of both litigation law and accounting/tax practices. A small error in asset identification or payment order can lead to disputes or legal risks for management.
MAN – Master Accountant Network provide pandemic business dissolution and bankruptcy profession. MAN's team of legal and accounting experts is ready to assist your business:
- Review the financial situation, accounting records, and outstanding tax obligations.
- Estimate the fees, deposits, and expenses that may be incurred when carrying out the procedure.
- Providing advice on working procedures with Receivers, People's Courts, and tax authorities.
- Assist in developing a plan for asset distribution that adheres to the legally prescribed priorities.
If your business is facing cost issues or needs a secure legal solution, contact us today. MAN – Master Accountant Network For in-depth consultation.
Conclusion regarding the costs of corporate bankruptcy
Understand the regulations regarding business bankruptcy costs This helps business owners and accountants proactively plan their finances and ensure the cessation of operations proceeds legally. Based on the Law on Bankruptcy and Recovery No. 142/2025/QH15, Decree 65/2026/ND-CP, and Decree 64/2026/ND-CP, understanding the cost components, advance payment obligations, and payment priority order is crucial for businesses to definitively resolve their legal obligations.
Frequently Asked Questions about Business Bankruptcy Costs
What are the costs involved in a business bankruptcy proceedings?
Business bankruptcy costs include the costs of the bankruptcy administrator, the asset liquidation management company, independent audit fees, costs of enforcing court decisions, and other necessary and reasonable expenses as stipulated in Article 3 of the Bankruptcy and Recovery Law No. 142/2025/QH15.
Who is responsible for paying the advance bankruptcy costs?
According to Article 20 of the Bankruptcy and Recovery Law No. 142/2025/QH15, applicants requesting the application of the procedure are obligated to pay an advance deposit of costs as notified by the Court, except in cases where exemptions are granted or the costs are covered by the state budget.
If a business no longer has money or assets, how are bankruptcy costs handled?
In cases where a business or cooperative no longer has money or assets, the bankruptcy costs shall be covered by the state budget as stipulated in Article 20 of the Law on Bankruptcy and Recovery No. 142/2025/QH15.
