Key changes benefiting enterprises and creditors under the Law on Recovery and Bankruptcy 2025 compared with the Law on Bankruptcy 2014

The Law on Recovery and Bankruptcy 2025 (“LRB 2025”) was officially adopted by the 15th National Assembly on 11 December 2025. The LRB 2025 takes effect from 01 March 2026 and replaces the Law on Bankruptcy 2014. LRB 2025 restructures the legal framework governing bankruptcy procedure and introduces business recovery as a separate procedure. Through this approach, the legislative focus is shifted from liquidation to encouraging recovery under controlled supervision.

This article highlights several new provisions of the LRB 2025 that are more favorable to enterprises facing insolvency or already insolvent, as well as to creditors seeking more effective debt recovery.

1. Change No. 1: Change to the criteria for determining insolvency for opening the bankruptcy procedure.

The Law on Bankruptcy 2014 defines an enterprise or a cooperative as insolvent when it fails to perform its obligation to pay a debt within 03 months from the due date of payment. However, practical implementation shows that this period is too short compared to the normal business operating cycle of the enterprise.

Therefore, LRB 2025 has extended this term to 06 months. According to the Supreme People’s Court, this period represents the average time necessary for enterprises and cooperatives to determine their ability to settle due debts, and it is also consistent with international practices.[i]

2. Change No. 2: Jurisdiction over recovery and bankruptcy procedures.

LRB 2025 has adjusted the regulations on jurisdiction for resolving bankruptcy and recovery cases to conform with the three-tiered model of the People’s Courts of Vietnam, effective from 1 July 2025[ii], regulated by Article 6 as follows:

• The Regional People’s Court has jurisdiction to settle recovery and bankruptcy procedures, as determined by one of the following places:
• The location of the head office of the enterprise or cooperative;
• The place where the judgment debtor resides or works, has its head office, or where assets related to the enforcement of the judgment or decision are located;
• The place where the person related to a request for assistance in a foreign proceeding resides, works, or has its head office;
• The place where assets related to a request for assistance in a foreign proceeding are located.
• The Provincial People’s Court has jurisdiction to consider requests for review and appeals or protests against decisions of the Regional People’s Court;
• The Supreme People’s Court has jurisdiction to issue decisions on review, decisions on the settlement of protests, and to resolve disputes over jurisdiction among Regional People’s Courts.

3. Change No. 3: The recovery procedure is separated as an independent procedure.

According to the Law on Bankruptcy 2014, recovery was merely a step carried out after bankruptcy procedures had been commenced and was implemented only upon approval by the creditors’ meeting. By contrast, LRB 2025 provides for the business operation recovery procedure as an independent procedure, with its own structure, process, and mechanisms, and treats it on the same level as the bankruptcy procedure. This reflects a shift in legislative approach, recognizing recovery as an option that may be applied independently of bankruptcy.

The separation of the recovery procedure into an independent procedure enables enterprises and cooperatives to proactively seek restructuring solutions as soon as the risk of insolvency arises, thereby enhancing the prospects of restoring production and business operations and reducing bankruptcy.

4. Change No. 4: Addition of eligible applicants entitled to file petitions for the application of recovery and bankruptcy procedures.

4.1. Persons entitled to file a petition for the application of the recovery procedure:

As set out in Section 3, the recovery procedure has been separated into an independent procedure under LRB 2025. Therefore, to ensure consistency within the regulatory framework governing the recovery procedure, Article 24 of the LRB 2025 stipulates the persons entitled to file a petition for the application of this procedure, including:

• The Legal representative of the enterprise or cooperative;
• The Board of Directors of a joint stock company; the Members’ Council of a two-member or more limited liability company or a partnership;
• The Members’ General Meeting of a cooperative;
• The owner of a private enterprise;
• The owner of a single-member limited liability company.

4.2. Persons entitled and obliged to file a petition for the application of bankruptcy procedures:

Article 38 of the LRB 2025, inheriting from the Law on Bankruptcy 2014, provides for the persons entitled and obliged to file a petition for the commencement of bankruptcy procedures, with clearer classification and broader coverage to better reflect practical needs.  

(i) Right to file a petition for the commencement of bankruptcy procedure:

• Unsecured creditors and partially secured creditors;
• Employees and trade unions, who may file a petition after the expiry of 06 months (instead of 03 months as provided under the Law on Bankruptcy 2014) from the date on which the obligation to pay wages and other due amounts to employees arises;
• Shareholders or groups of shareholders holding 20% or more of ordinary shares, or a lower percentage as prescribed in the company’s Charter; 
• Members or groups of members holding 65% or more of the charter capital of a two-member limited liability company, or a lower percentage as prescribed in the company’s Charter;
• Members of a cooperative, or the legal representative of a cooperative or a cooperative union;
• The social insurance authority, where payment reminder notices for overdue or evaded contributions have been issued but no response has been received for 03 consecutive years.

(ii) Obligation to file a petition for the commencement of bankruptcy procedure:

• The following persons are required to file a petition for the application of the bankruptcy procedure when an enterprise or cooperative becomes insolvent, except where a petition for the application of the recovery procedure has already been filed, to encourage enterprises and cooperatives to opt for recovery.
• The Legal representative of the enterprise or cooperative;
• The Board of Directors of a joint-stock company; the Members’ Council of a two-member or more limited liability company or a partnership;
• The Members’ General Meeting of a cooperative;
• The owner of a private enterprise;
• The owner of a single-member limited liability company.
• The tax administration authority, in cases where the taxpayer is subject to the enforcement of an administrative decision (Article 49.1g of the Law on Tax Administration 2025).

Overall, these new provisions expand and clarify the rights and obligations to file petitions, thereby enhancing the regulatory role of the State while safeguarding the rights and decision-making role of members and shareholders within enterprises, rather than focusing solely on internal management bodies as under the previous legal framework.

5. Change No. 5: Enhancement of the role of the Creditors’ Meeting and establishment of a voting mechanism.

The LRB 2025 establishes the Creditors’ Meeting as the central decision-making body in both the recovery procedure and the bankruptcy procedure, with its powers clearly prescribed in Article 33 (Creditors’ Meeting in recovery procedure) and Article 61 (Creditors’ Meeting in bankruptcy procedure). Compared with the Law on Bankruptcy 2014, the new law strengthens the role of the Creditors’ Meeting, shifting it from a consultative body to a decision-making mechanism directly involved in approving the recovery plan, converting procedures, or terminating the procedure.

The LRB 2025 clearly and consistently sets out the voting threshold for the approval of resolutions of the Creditors’ Meeting. Accordingly, a resolution must be approved by creditors representing at least 65% of the total outstanding debts of the creditors participating in the vote. This value-based voting mechanism under the LRB 2025 reflects the creditors’ actual economic interests and helps prevent a small number of minority creditors from blocking collective decisions.

6. Change No. 6: Recovery and bankruptcy cases are resolved under simplified procedure.

6.1. Application of the simplified recovery procedure:

According to Articles 68 and 69 of the LRB 2025, the simplified recovery procedure is a newly introduced legal framework and shall be applied in the following cases:

• Enterprises or cooperatives having no more than 20 unsecured creditors and with a total amount of principal debts payable not exceeding VND 10 billion;
• Small-sized and micro-sized enterprises or cooperatives; and
• Other cases as prescribed by law.

Once the simplified recovery procedure is applied, the time limit for the procedure is reduced by half compared with the ordinary recovery procedure. A resolution of the Creditors’ Meeting is adopted upon approval by creditors representing at least 51% of the total outstanding debts of those participating in the vote.

6.2. Application of the simplified bankruptcy procedure:

Articles 70 and 71 of the LRB 2025, compared with the Law on Bankruptcy 2014, provide more detailed provisions on cases eligible for the simplified bankruptcy procedure, including:

• Enterprises or cooperatives eligible for the summary recovery procedure;
• Enterprises or cooperatives that have no remaining assets, or have assets that cannot be liquidated or recovered, or have assets that are insufficient to pay the bankruptcy filing fee, advance payment of bankruptcy expenses, or bankruptcy expenses;
• Credit institutions;
• Insurance enterprises and reinsurance enterprises for which the Ministry of Finance has issued a decision terminating the application of supervisory/control measures, but the adverse situation has not been remedied; and
• Other cases as prescribed by law or as guided by the Supreme People’s Court.

This classification helps clearly distinguish between simple and complex bankruptcy cases, allowing the appropriate procedure to be applied and improving the efficiency of case resolution. Once the simplified bankruptcy procedure is applied, similar to the simplified recovery procedure, the time limit for resolving the case is reduced by one-half compared with the ordinary procedure. Under the simplified procedure, a resolution of the Creditors’ Meeting is adopted upon approval by unsecured creditors representing at least 51% of the total unsecured debts participating in the vote (instead of 65% under the ordinary procedure).

The above summarizes the main changes introduced by the LRB 2025 in comparison with the Law on Bankruptcy 2014. In general, the LRB 2025 establishes a clearer and more effective framework for handling recovery and bankruptcy for both enterprises and creditors.

---

[i] Vietnam Bar Association Journal: The Supreme People’s Court proposes regulations on the insolvency status of enterprises.

[ii] From 01 July 2025, following the merger, the organizational structure of the People’s Courts of Viet Nam has been restructured from a four-tier court system to a three-tier system, comprising the Supreme People’s Court, the Provincial People’s Court, and the Regional People’s Court.