The Bankruptcy Recovery Law 2025 (Law No. 142/2025/QH15) carries a strong message about protecting the Vietnamese business community. The most crucial point of this legal document is the principle of prioritizing business recovery before considering liquidation procedures. In the context of numerous small and medium-sized enterprises (SMEs) facing cash flow difficulties after 2024-2025, correctly understanding the principle of prioritizing business recovery is no longer just legal knowledge but a vital factor for the revival of legal entities.
The humanitarian significance of the principle of prioritizing business recovery.
The change from the 2014 Bankruptcy Law to Law 142/2025/QH15 is not just a change in wording, but a revolution in economic management thinking, approaching the rescue culture of developed economies around the world.
Shifting from liquidation to business rescue
In the past, bankruptcy was generally understood as the end of a legal entity. However, according to the spirit of the new law, bankruptcy declarations are only made when a business is truly beyond recovery. The principle of prioritizing business recovery affirms that the State and the law always create conditions for businesses to start over through a mechanism of asset self-management (debtor-in-possession) with close supervision by competent authorities.
Protecting jobs and value chains
The successful recovery of a business has extremely significant implications for social stability. According to economic reports at the end of 2025, this restructuring effort helps achieve the following values:
- Maintaining jobs for thousands of workers reduces pressure on the social security system.
- Maintaining the stability of the supply chain prevents chain-reaction economic disruptions or domino effects within the same industry.
- Protecting the long-term interests of creditors is more important than recovering only a small portion of the asset's value through forced liquidation.
Content of the principle of prioritizing recovery according to Law 142/2025/QH15
The principle of prioritizing business recovery is concretized through strict regulations, forcing prosecuting authorities to prioritize constructive solutions rather than immediately enforcing business closure.
Mandatory provisions in Article 3 of the Bankruptcy Recovery Law 2025
Clause 1, Article 3 of Law No. 142/2025/QH15 establishes the priority of applying the rehabilitation procedure to enterprises and cooperatives as the number one fundamental principle. This is a mandatory guideline for all subsequent steps in the litigation process. The court is not allowed to skip the rehabilitation review stage and proceed directly to declaring bankruptcy if the enterprise's file still shows signs of feasible restructuring.
Responsibilities of the Court and the parties involved
The courts now play a central role in guiding businesses in developing recovery plans. Instead of being a punitive body, the courts act as a facilitator, helping creditors reach agreements on debt restructuring plans. This allows creditors to receive longer-term benefits as businesses return to stable operations and begin paying off their debts as scheduled.
How the principle of prioritizing recovery works in practice.
For the principle of prioritizing business recovery to be effective, Law 142/2025/QH15 They have established flexible enforcement mechanisms, emphasizing the proactive role of debtors and providing support from experts.
The right to take initiative and a hypothetical illustrative scenario.
Businesses subject to these regulations have the right to develop their own business recovery plans or hire experts to do so. Consider the following comparison table to see the differences between the two scenarios for handling a struggling business:
| Criteria | Liquidation Script (Old) | Recovery Scenario (2025 Law) |
|---|---|---|
| Property status | Forced sale, low value | Retain for production, maintain value. |
| Business operations | Immediate suspension | Continued operation under supervision |
| Creditor's rights | Receive the remaining amount after selling the carcass. | Receive debt according to the cash flow from production schedule. |
| Human Resources | Mass contract termination | Preserve the core team. |
Please note that the table above is for reference only, based on the general provisions of Law 142/2025/QH15. Actual results will depend on the enterprise's governance capacity during the restructuring phase.
The professional support role of the Receiver.
The trustee acts as an intermediary supervisor and professional risk advisor. Their responsibilities during this phase include:
- Monitor the use of company assets to ensure there is no misappropriation or personal gain.
- Assess the transparency and feasibility of the recovery plan before presenting it to the creditors' meeting.
- Connecting and coordinating the interests of businesses and various groups of creditors.
Why do some recovery plans still fail?
Although the law gives it top priority, in practice, a recovery plan can still be rejected by the creditors' meeting or the court if the business commits the following offenses:
- The business is unable to demonstrate sufficient cash flow to sustain minimum operating activities for the next 12 months.
- Lack of commitment from strategic investors or no concrete plan for injecting new capital into the system.
- The business plan is unrealistic, lacks a target market, or its management model is outdated compared to the trends of 2026.
The practical benefits businesses receive when applying this principle.
Adhering to the principle of prioritizing business recovery offers enormous strategic advantages, helping businesses avoid negative external impacts.
Suspend enforcement and protect legal reputation.
As soon as the recovery process officially begins, individual debt collection pressures from creditors will be temporarily suspended by court order. This helps businesses maintain their legal credibility with existing partners, preserve important business licenses, and avoid the situation of partners unilaterally canceling contracts due to prolonged debt disputes.
Increase access to restructuring capital.
The ongoing recovery process under Law 142/2025/QH15 serves as legal evidence that the business is under risk control by the Receiver and the Court. This acts as a "certificate of credibility," giving financial institutions or venture capital funds more confidence in:
- Provide short-term working capital loans to help businesses maintain production.
- Participate in share buybacks or carry out debt-to-equity conversion transactions.
- Strategic cooperation to completely overhaul the operational system.
Conclude
The principle of prioritizing business recovery in 2026 is not just a rigid regulation of Law 142/2025/QH15, but a real opportunity for legal entities to be reborn from the ruins of the financial crisis. Understanding this principle correctly helps business owners proactively cooperate with relevant authorities to find the safest and most humane way out.
To better understand the specific steps and requirements, you should refer to additional articles on this topic. Subjects to which the Bankruptcy Rehabilitation Law 142/2025 applies Alternatively, seek assistance from professional restructuring consulting firms to protect your business most effectively.
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Content production is overseen by: Mr. Le Hoang Tuyen – Founder & CEO of MAN – Master Accountant Network, CPA Vietnam with over 30 years of experience in accounting, auditing, and financial consulting.
