Due Diligence serves as a crucial legal shield when businesses face dissolution or bankruptcy. This article provides a detailed due diligence framework that closely follows the latest legal changes effective from the beginning of 2026.
What is Due Diligence?
Due Diligence, also known as in-depth due diligence, is the process of comprehensively investigating, reviewing, and analyzing a business or transaction before deciding to sign a contract or carry out important legal procedures. This term originates from the legal and financial fields, aiming to ensure that all parties involved have complete and necessary information, thereby accurately assessing the risks and true value of the subject.
In corporate governance, a standard due diligence process typically includes examining the following key aspects:
- Legal due diligence aims to examine compliance with legal regulations and identify existing or potential risks of disputes.
- Financial due diligence aims to verify the accuracy of figures in financial reports, cash flows, and undisclosed debt obligations.
- Operations and personnel audits aim to assess the effectiveness of the organizational structure, corporate culture, and commitments to employee rights.
Overview of appraisal in a special context
The concept of due diligence at the end of a business's lifecycle differs significantly from typical mergers and acquisitions. Instead of seeking growth value or competitive advantage, the central focus of due diligence at this stage is to accurately determine debt obligations, manage the risk of transaction invalidation, and protect the legal rights of creditors and stakeholders. In the context of a volatile economy in 2026, transparent due diligence helps parties avoid protracted legal disputes and the risks of personal liability for business managers.
Determine the legal status of the target business.
Before delving into the detailed steps, the Due Diligence specialist needs to accurately determine the legal status of the business within the national regulatory system. Confusing a normally operating business with one under special monitoring can lead to serious errors in valuation and risk assessment.
To accurately determine this status, experts need to perform the following specialized procedures:
- Check the status on the National Business Registration Database as prescribed. Decree 168/2025/ND-CP Effective from July 1, 2025.
- Categorize the specific legal status of a business, such as undergoing dissolution procedures, undergoing bankruptcy procedures, or having ceased to exist.
- Compare internal records with court documents and tax authority documents to identify discrepancies that could lead to legal risks after the transaction.
| Legal status | Actual identifying characteristics | Consequences for Due Diligence |
|---|---|---|
| In the process of dissolution. | A resolution/decision to dissolve has been sent to the business registration authority. | Focus on reviewing asset liquidation records and verifying tax debts. |
| Currently undergoing bankruptcy proceedings. | The court has issued a decision to accept the application for initiating bankruptcy proceedings. | Closely monitor transactions restricted under the Bankruptcy and Recovery Act. |
| Dissolved or bankrupt | The name has been removed from the business registry and a public announcement has been made. | Review archived records and legal liabilities after termination of existence. |
Please note that information on the national portal may have a certain time lag compared to the actual documents generated at the business; therefore, direct comparison with original documents from the Court and business registration authority is a mandatory principle in the Due Diligence process.
In-depth assessment for business dissolution cases.
Business dissolution is a process that requires a company to ensure it has the financial capacity to fulfill all its debt obligations before officially closing down. A thorough due diligence process will help stakeholders determine whether the company is intentionally concealing potential debts or other financial obligations.
Conditions and legal capacity for dissolution
During this phase, Due Diligence needs to focus on reviewing the following key legal elements:
- Checking compliance with Article 207 Enterprise Law 2020 and the amendments and supplements in Law No. 76/2025/QH15, effective from July 1, 2025.
- The core verification condition is that the business must ensure that all debts and financial obligations are fully paid and that it is not involved in any ongoing disputes in judicial bodies such as courts or arbitration as stipulated in Clause 2 of Article 207.
Check the debt payment priority order.
Debt payments during the liquidation process cannot be made arbitrarily but must adhere to a strict order as stipulated by corporate law. Experts conducting Due Diligence need to review the list of creditors based on the following priority order:
- Wage arrears, severance pay, social insurance contributions as required by law, and other employee benefits.
- Tax obligations and other payments due to the state budget are governed by the Law on Tax Administration.
- The remaining unsecured debts are then divided among the owners after all debt obligations have been fulfilled.
Risk indicators and prohibited behaviors
A crucial part of Due Diligence is the early detection of fraudulent or misappropriation of assets by managers. Experts should pay particular attention to the following behaviors:
- Review transactions since the dissolution decision to detect any concealment, disposal of assets, or abandonment of debt claims as per Article 211 of the 2020 Enterprise Law.
- Risk assessment from signing new contracts is not intended to directly contribute to the dissolution of the target business.
Assessment in the business recovery and bankruptcy process.
From March 1st, 2026, bankruptcy-related activities must strictly comply with the Bankruptcy and Recovery Law No. 142/2025/QH15. This is the latest legal document completely replacing the old law; therefore, due diligence needs to be conducted based on these latest regulations to ensure accuracy.
Monitoring transactions after the court accepts the application.
After the court issues a notice of acceptance of the bankruptcy petition, the business will have its autonomy in asset management restricted. Due Diligence needs to perform supervision:
- Check the list of restricted or absolutely prohibited acts in Articles 31 and 42 of the Bankruptcy and Recovery Law 2025.
- Particular attention should be paid to the risk of legal invalidity for unsecured debt payments made immediately before the court accepts the case.
Assessing the risks of void transactions
A void transaction is the biggest legal risk for parties who have transacted with a business before a bankruptcy decision. A professional Due Diligence process requires:
- Review the entire transaction history within the 6 months prior to the date the court issues the decision to open bankruptcy proceedings, as stipulated in Article 49 of the Bankruptcy and Rehabilitation Law 2025.
- For transactions involving related parties, the Due Diligence assessment period needs to be extended to 18 months to control the risk of asset dissipation.
Analyzing the actual order of asset distribution
When a business is declared bankrupt, the distribution of assets will be organized and carried out by the Receiver and the Civil Enforcement agency. Due Diligence needs to focus on analyzing:
- Simulating the actual cash flow based on the order in Article 46 of the Bankruptcy and Recovery Law 2025: bankruptcy costs are given top priority, followed by wage debts, and finally tax obligations.
- Determine the expected rate of return for different groups of creditors based on a realistic assessment of the company's remaining asset value.
In-depth assessment of tax obligations and accounting records.
Tax obligations are often the biggest obstacle that can stall the dissolution process. Experts conducting a Due Diligence audit should perform the following checks:
- Verify and confirm the tax debt status of the target enterprise in accordance with the provisions of Article 67 of the 2019 Tax Administration Law.
- Verify the legality of closing the accounting books, conducting asset inventory, and preparing financial statements at the time of cessation of operations in accordance with Article 48 of the Accounting Law 2015.
| Type of accounting record | Inspection objectives | Applicable legal basis |
|---|---|---|
| Tax settlement notification | Confirmation that all tax obligations have been fulfilled up to the time of assessment. | Tax Administration Law 2019 |
| Final financial statements | Determine the actual cash balance, inventory, and accounts payable. | Accounting Law 2015 |
| Inventory record | Compare the physical presence of the asset with the records. | Decree 168/2025/ND-CP |
The absence of any confirmation documents from the tax authorities in Due Diligence can lead to unforeseen legal and financial risks.
List of necessary documents and assessment report templates
To create a complete and highly useful Due Diligence report, experts need to gather the following key documents:
- The legal documents include the dissolution resolution, the court's notice of acceptance, the decision to initiate bankruptcy proceedings, and the list of creditors.
- The financial documentation includes asset liquidation reports, independent valuation contracts, and bank statements verifying debt payments.
- The group of labor records includes minutes of social insurance debt settlement and employee benefit settlement documents.
Responsibilities and limitations of business managers
A comprehensive due diligence process cannot overlook assessing the personal qualifications and responsibilities of the target company's executives.
- Assessing cases where individuals are restricted from holding office or establishing new businesses after bankruptcy, in accordance with Article 84 of the Bankruptcy and Recovery Law 2025.
- Assess the risks of personal liability for managers when serious financial losses result from mismanagement during a period of financial hardship.
Assessment and dissolution services at Master Accountant Network
To ensure a rigorous risk control process and compliance with the latest regulations of the Bankruptcy and Recovery Act 2025, many businesses have opted for support from professional consulting firms. MAN – Master Accountant Network is a leading network of experts providing comprehensive solutions in accounting, tax, and corporate legal services.
The team of experts at MAN not only reviews documents but also directly supports clients through practical solutions. You can learn more about our capabilities and in-depth processes at [link/website]. Due Diligence is a comprehensive assessment by MAN.. With a thorough understanding of the Vietnamese legal system, MAN is committed to providing clients with complete peace of mind in mergers, acquisitions, or business dissolution transactions.
Conclude
Conducting Due Diligence professionally in the context of business dissolution and bankruptcy in 2026 requires a deep understanding and continuous updating of the latest legal regulations. Adhering to legal checklists and thoroughly reviewing financial records not only helps protect the legitimate interests of all parties but also contributes to the transparency of the mergers, acquisitions, and liquidation market.
If you require in-depth due diligence or assistance with safe dissolution or bankruptcy procedures, contact MAN today for advice from leading experts. For any questions or support requests, please visit [website address]. Contact Master Accountant Network To receive the quickest response.
Contact information for Man – Master Accountant Network
- Address: No. 19A, Street 43, Tan Thuan Ward, Ho Chi Minh City
- Mobile/Zalo: 0903 963 163 – 0903 428 622
- E-mail: man@man.net.vn
Content is moderated by: Mr. Le Hoang Tuyen – Founder & CEO of Man, CPA Vietnam Auditors With over 30 years of experience in accounting, auditing, and financial consulting...
