Legal service

Distinguish between dissolution and bankruptcy of enterprises in Vietnam

You are interested in Distinguish between dissolution and bankruptcy of enterprises in Vietnam so let's go check out the following article!

The current; The number of established enterprises is increasing, making the competition of the market increasingly fierce; requires businesses to always strive to develop. However; in the context of the raging Covid-19 epidemic; It not only claimed many lives, but also resulted in the termination of many businesses. Many businesses had to suspend for a long time to prevent epidemics; now no longer have enough capital to maintain operations or no longer have the capacity to restore production; business, etc. Precisely for that reason; these enterprises have withdrawn from the market by dissolution or bankruptcy. So how is the dissolution and bankruptcy of an enterprise in accordance with the law expressed? LSX Lawfirm will give you an article about: “Distinguish between dissolution and bankruptcy of enterprises”, as follows:

What is Business Dissolution and Bankruptcy?

What is corporate dissolution?

Accordingly the Enterprise Law 2020; Dissolution is the termination of the existence of an enterprise according to the will of the enterprise or a competent authority.

So, Dissolution of an enterprise is a type of administrative procedure conducted by an authorized person in the enterprise to work with the business registration agency.

What is corporate bankruptcy?

Accordingly the Bankruptcy Law 2014; bankruptcy is the state of the business; The cooperative insolvent and declared bankrupt by the People’s Court.

Bankruptcy is a type of judicial procedure decided by a competent court after receiving a valid petition.

Distinguish between dissolution and bankruptcy of enterprises in Vietnam

Causes of dissolution and bankruptcy of enterprises

An enterprise dissolved in the following cases:

So, end of operation term stated in the company’s charter without decision on extension;
Accordingly the resolution; the decision of the business owner for a private enterprise; of the Members’ Council, for partnerships; of the Members’ Council; company owner for limited liability companies; of the General Meeting of Shareholders for joint-stock companies;
So, the company no longer meets the minimum number of members as prescribed by this Law for a period of 06 consecutive months without carrying out procedures for transformation of enterprise type;
The Certificate of Business Registration revoked; unless otherwise provided by the Tax Administration Law.
An enterprise goes bankrupt when simultaneously satisfying two conditions:

So, Enterprises are unable to pay debts; ie the enterprise fails to fulfill the debt payment obligation within 03 months from the payment due date.
The enterprise declared bankrupt by the People’s Court.


So, Bankruptcy is a judicial procedure, conducted at the Court, in accordance with the order and procedures prescribed in the Bankruptcy Law.
So, Dissolution is an administrative procedure, which decided to dissolve by the enterprise itself or by the competent authority that allows the above enterprise established.


Bankruptcy by decision of the Court, conducted at the Court
Dissolution due to decisions of enterprises or competent state agencies

Conduct conditions

Bankruptcy when creditors paid debts according to the order prescribed by law on the basis of the remaining assets of the enterprise, except for the case of the owner of a private business, a general partner of a partnership company. In case the property value is not enough for payment as prescribed, the subjects in the same order of priority shall be paid according to the percentage corresponding to the debt amount; the outstanding debt, the creditors must bear the risk. Thus, a bankrupt enterprise may or may not pay all its debts to its creditors.
Dissolution when the enterprise guarantees to pay all debts and other property obligations of the enterprise; creditors will be paid in full in accordance with the order prescribed by law.

Handle property relations

Bankruptcy when the liquidation of assets, division of values is carried out by the enterprise through an intermediary organization (the asset manager)
Dissolution when the Enterprise directly pays debts with creditors and other financial obligations

Legal consequences

Bankruptcy: Businesses may suffer:

i. Declare bankruptcy, terminate operations, delete business information

ii. Restructuring, changing owners
Termination of operation, deletion of business information in the business registration book

Responsibilities of business owners

Bankruptcy: Business owner – manager restricted freedom of business afterwards (banned from doing business for a certain period of time)
Dissolution: Business owner – manager is not restricted in business freedom thereafter

You can also refer to the article related to Procedures of dissolution of state enterprises in Vietnam.

Related articles:

State management of enterprise registration in Vietnam

Summary of all cases of land expropriation by the State in Vietnam

Related questions 

Can an individual establish multiple private businesses in different locations?

According to the provisions of Article 188 of the Enterprise Law 2020: Each individual can only establish one private enterprise. Therefore, the case where an individual establishes many private enterprises in different areas is a violation, not in accordance with the provisions of law.

Why do private businesses have no legal status?

– Considering the factors to ensure an organization is a legal entity, we compare:
– In terms of the condition “established in accordance with the law”
– In terms of organizational structure conditions
– Finally, in terms of the independence of the property and the responsibility to perform the obligations

What are the contents of an application for business registration?

An application for enterprise registration includes the following principal details:
Company’s name;
Address of the head office of the enterprise, phone number; fax number, email (if any);
Authorized capital;
Tax registration information;
Expected number of employees;
Full name, signature, contact address, nationality, legal document information of the individual, for the owner of a private business and a general partner of a partnership;
Full name, signature, contact address, nationality, information on legal papers of the individual for the legal representative of a limited liability company or a joint stock company.

Contact LSX Lawfirm

Finally, hope this article is useful for you to answer the question about: “Distinguish between dissolution and bankruptcy of enterprises in Vietnam”. If you need any further information, please contact  LSX Law firm : +84846175333 or Email: [email protected]

Conclusion: So the above is Distinguish between dissolution and bankruptcy of enterprises in Vietnam. Hopefully with this article can help you in life, please always follow and read our good articles on the website:

Có thể bạn quan tâm

Back to top button