Overview of the legal basis for business bankruptcy and dissolution services.

Ceasing business operations is never an easy decision, but carrying out this procedure incorrectly can lead to even more serious consequences for the business owner's assets and personal life. According to data from the General Statistics Office, in the first six months of 2024 alone, over 110,000 businesses withdrew from the market, demonstrating the immense legal pressure in handling debts and tax obligations. This article provides an in-depth analysis of current legal regulations, helping businesses safely and properly carry out bankruptcy and dissolution services while maximizing the protection of the legal representative's interests.

The concept and legal differences between dissolution and bankruptcy.

Misidentifying the nature of the procedure not only wastes time but also puts businesses at risk of litigation if they are unable to pay their debts but still proceed with dissolution. The core difference lies in the financial conditions and the competent authority to handle the case.

Below is a technical analysis of legal differentiation criteria to help business owners choose the right path:

It should be noted that, if during the dissolution process, the enterprise discovers that it does not have sufficient assets to pay its debts, according to the provisions of Decree 01/2021/ND-CP, the enterprise must immediately stop the dissolution procedure and proceed to file an application for bankruptcy proceedings.

Dissolution of a business in accordance with the provisions of the Enterprise Law.

The legal basis for bankruptcy and dissolution services, particularly in the area of dissolution, is strictly regulated to protect the rights of third parties:

• Voluntary dissolution cases: These are carried out when a business's operating period, as stated in its charter, expires without a decision to extend it, or by resolution of the business owner. Article 207 of the 2020 Enterprise Law emphasizes that a business can only be dissolved when it ensures the full payment of all debts and other financial obligations (such as tax debts, salary debts, and debts to partners).
• Mandatory dissolution: Occurs when a business's business registration certificate is revoked or by a court decision. In this case, the legal representative and members of the Board of Members/Board of Directors are jointly liable for debts if they fail to liquidate assets in accordance with the law.
• Responsibility of managers: Article 210 of the 2020 Enterprise Law clearly stipulates that the managers of the relevant enterprise are personally responsible for damages caused by the failure to comply with or the improper implementation of regulations on enterprise dissolution.

Business bankruptcy as regulated by the Bankruptcy Law.

Bankruptcy is not simply the cessation of existence, but rather a process of debt restructuring or asset liquidation under the supervision of the Court.

• Definition of insolvency: According to Article 4 of the 2014 Bankruptcy Law, an insolvent enterprise is one that fails to fulfill its debt payment obligations within three months of the due date. This is a crucial legal timeframe for determining the creditor's right to file a petition and the enterprise's obligation to do so.
• Judicial nature: The bankruptcy process requires the participation of a Receiver or a company managing and liquidating assets. According to Decree 22/2015/ND-CP, the Receiver has the right to control all books and assets of the enterprise to ensure that there is no concealment or misappropriation of assets.
• Legal protection: One of the advantages of bankruptcy over debt liquidation is that after a bankruptcy declaration is issued, outstanding debts are suspended and the business is considered to have fulfilled its debt obligations, except in certain special cases involving criminal liability.

The system of legal documents regulating bankruptcy and dissolution services.

By 2025, the legal framework will not only include major laws but will also expand to include decrees on administrative penalties and regulations on tax management.

The 2020 Enterprise Law and its guiding documents on dissolution.

This is the legal framework for businesses that are operating normally and wish to withdraw from the market:

• Decree 01/2021/ND-CP: Provides detailed regulations on dissolution documents, from the dissolution decision and debt plan to the list of employees.
• Decree 122/2021/ND-CP: Regulations on administrative penalties in the field of planning and investment. Businesses may be fined from 20 to 30 million VND if they do not follow the correct dissolution procedures or do not notify the business registration authority.

Bankruptcy Law 2014 and its detailed supporting regulations

When a business faces financial difficulties, the following documents serve as a guide:

• The Bankruptcy Law of 2014: Comprising 14 chapters and 133 articles, it regulates all aspects from filing applications and creditors' meetings to asset distribution.
• Resolution 03/2016/NQ-HĐTP of the Council of Judges: Provides detailed explanations on how to determine unsecured debts, partially secured debts, and the procedures for handling applications when enterprises have assets abroad.
• Law on Enforcement of Civil Judgments: Regulations on the forced liquidation of assets after a court decision.

Regulations regarding taxes and related financial obligations.

This is the most complex aspect of implementing bankruptcy and dissolution services:

• The 2019 Tax Administration Law and Circular 80/2021/TT-BTC stipulate the procedures for terminating a tax identification number. Businesses must report on the use of invoices and finalize corporate income tax and personal income tax returns up to the time of dissolution.
• Temporary travel ban: According to Article 66 of the Tax Administration Law, the legal representative of a business subject to enforcement of an administrative decision on tax management (overdue tax debt) will be temporarily banned from leaving the country. This is an extremely harsh penalty that will be applied aggressively in 2024 and 2025.
• Insurance obligations: Businesses must complete the procedures for closing the insurance accounts for their employees. According to the Social Insurance Law, outstanding insurance contributions are among the debts prioritized for payment, equivalent to outstanding wages.

Legal basis regarding the professional practice requirements for service providers.

To ensure the quality of consulting services, the law stipulates strict conditions for units providing these services.

Requirements for professional dissolution consulting organizations

A legally compliant dissolution consulting firm must meet the following requirements:

• Legal advisory function: According to the Lawyers Law, only law firms are permitted to provide legal advice and represent clients in proceedings before state agencies.
• Tax agent certification: For tax settlement, personnel performing the task must possess a professional certification for tax procedure services issued by the General Department of Taxation to ensure the accuracy and validity of the data.

Requirements for the services of a Receiver in bankruptcy proceedings

Bankruptcy proceedings require the involvement of a Bankruptcy Administrator with stringent qualifications:

• Article 12 of the 2014 Bankruptcy Law stipulates that the bankruptcy administrator must be a lawyer, auditor, or a person with a bachelor's degree in law, economics, or finance, with at least 5 years of experience and holding a bankruptcy administrator's practice certificate.
• The bankruptcy administrator is responsible for safeguarding assets and preventing their dissipation during the six months prior to the commencement of bankruptcy proceedings (the period of doubt). If the administrator discovers any suspicious transactions, they have the right to request the court to declare the transactions invalid.

Standard legal procedures for businesses in 2025

This process is designed to ensure that all creditors are treated fairly and that the state's obligations are fully fulfilled.

The steps for dissolution should be followed in the correct order.

Businesses need to strictly follow these steps to avoid having their applications suspended:

• Step 1: Pass the dissolution resolution. Within 7 working days, the resolution and meeting minutes must be submitted to the Business Registration Authority and the tax authority.
• Step 2: Publish a dissolution notice (at least 3 consecutive issues) in a print or online newspaper as required, so that creditors are aware and can verify outstanding debts.
• Step 3: Fulfill tax and social insurance obligations. The tax authority will issue a decision to conduct a tax audit at the company's headquarters.
• Step 4: Submit the official dissolution documents, including: a list of creditors and the amount of debt paid, a list of employees and their entitlements settled, and a confirmation from the tax authority regarding the closure of the tax identification number.

The procedure for liquidating assets during bankruptcy is governed by Article 54 of the Bankruptcy Law.

When a business is declared bankrupt, the remaining assets are distributed in the following order of priority:

• First: Bankruptcy costs (court fees, receiver fees).
• Secondly: Outstanding wages, severance pay, social insurance, and health insurance contributions for employees.
• Thirdly: Debts incurred after the commencement of bankruptcy proceedings for the purpose of business recovery.
• Fourth: Financial obligations to the State (taxes, fines); unsecured debts to creditors on the list of creditors.

Note: If the asset value is insufficient to cover the payment for the same priority category, payment will be made proportionally to the value of the debt.

Legal risks and crucial considerations when exiting the market.

A lack of understanding of the legal basis of bankruptcy and dissolution services can lead to unintended consequences for business owners.

Businesses should pay particular attention to the following points:

• Criminal liability: Article 226 of the 2015 Penal Code stipulates the crime of violating bankruptcy regulations. Anyone who disposes of assets or makes false declarations about assets during the bankruptcy process, causing damage to creditors, may be sentenced to imprisonment for up to 5 years.
• Void transactions: Transactions involving the gifting of assets, payment of debts before due, or improper mortgage of assets within six months prior to the court's acceptance of the bankruptcy petition may be declared void and the assets seized.
• Prohibition from holding office: A business manager who fails to file their application on time after being declared bankrupt may be prohibited from holding a business management position for a period of 1 to 3 years, as stipulated in Article 130 of the Bankruptcy Law.

Conclude

Considering the complexity of the regulations, it's clear that handling the paperwork yourself without expertise is a risky gamble. A professional legal consulting firm will act as an objective third party, reviewing all accounting records, reconciling debts, and representing you in dealings with tax authorities and courts. This not only shortens the processing time from several years to just a few months but also ensures the legal representative's personal and financial safety. In the digital economy era of 2026, professionalism in the exit process is the foundation for a smoother and more sustainable business restart.

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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.