Business Recovery
Business Recovery
Conditions for business resumption
The business has the ability to pay off its debts or to remedy its insolvency.
The business recovery plan was deemed feasible and approved by the debtors' meeting with:
- The number of unsecured creditors representing at least 65% of the total unsecured debt approved.
- The number of secured creditors representing at least 65% of the total secured debt approves.
The judge accepted the rehabilitation plan and decided to temporarily suspend the bankruptcy proceedings to implement the rehabilitation plan.
Business recovery plan
Contents of the recovery plan
1. Analyze the financial situation and the causes of insolvency.
- Conduct a comprehensive assessment of the company's financial situation, identify the causes of insolvency, and develop appropriate solutions.
2. Measures to reorganize business operations:
- Restructuring the organization and management of the enterprise.
- Changes to business models, products, and services.
- Technological innovation and production processes.
3. Methods of raising capital:
- Issuing additional shares and bonds
- Borrowing capital from credit institutions and investors.
- Convert debt into equity or shares.
4. Method and deadline for debt repayment:
- Repayment period (can be extended or deferred)
- Partial debt waiver or reduction (if agreed upon by the creditor)
- The order of priority for paying those debts.
5. Timeline and progress of plan implementation:
- The implementation period for the plan shall not exceed 3 years from the date the plan is approved.
- Progress of each phase and specific objectives
Procedure for approving the rehabilitation plan
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STEP 1: Develop a recovery plan
This is the beginning of the entire bankruptcy process. According to Articles 12 and 13 of the 2014 Bankruptcy Law, In this case, the business or creditor files an application with the competent court. The application must contain complete information about the applicant, the business being prosecuted for bankruptcy, the reasons for insolvency, and supporting documents.
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STEP 2: Present the plan at the Creditors' Meeting
Base Articles 14 and 16 of the 2014 Bankruptcy Law, The court reviews the file and decides whether to accept it if it is valid. This decision is communicated to the business and creditors and publicly posted, marking the official start of bankruptcy proceedings.
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STEP 3: Vote to approve the plan
According to Article 18 of the Bankruptcy Law 2014, The court appoints a receiver or asset management unit to preserve, inventory, value, and manage the company's assets during bankruptcy proceedings, ensuring the rights of creditors are protected.
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STEP 4: The judge issues a decision to temporarily suspend bankruptcy proceedings.
Base Articles 19 and 20 of the 2014 Bankruptcy Law, The receiver conducts an inventory, assesses the value of assets, and compiles a list of creditors and outstanding debts, laying the groundwork for subsequent steps such as creditor meetings, asset recovery, or liquidation.
Successful case studies
- Initial situation: Debt of 50 billion VND, unable to repay due to market downturn.
- Solution: Restructure debt, convert 30% debt into equity, and redirect business.
- Result: After 2 years, the business became profitable again, paid off all debts according to schedule, and continued to grow.
- Initial situation: Debt of 50 billion VND, unable to repay due to market downturn.
- Solution: Restructure debt, convert 30% debt into equity, and redirect business.
- Result: After 2 years, the business became profitable again, paid off all debts according to schedule, and continued to grow.
- Lesson: Leadership determination and creditor cooperation are key factors for success.
Business recovery consulting services from MAN
MAN provides comprehensive advisory services on business recovery during bankruptcy proceedings., include:
- Develop a viable business recovery plan.
- Explore to reach consensus.
- Support in presenting proposals at corporate creditor conferences and effective credit management.
- Support for the implementation of the approved recovery plan.
