On 11 December 2025, the National Assembly adopted the Law on Rehabilitation and Bankruptcy ("New Rehabilitation and Bankruptcy Law"), which will supersede the current Law on Bankruptcy enacted in 2014 ("Bankruptcy Law 2014"). The New Rehabilitation and Bankruptcy Law will take effect on 1 March 2026, except for Article 38.3, which addresses the obligations of the tax authority in filing a bankruptcy petition; this provision will take effect on 1 July 2026. The New Rehabilitation and Bankruptcy Law introduces a rehabilitation process that is separate from the bankruptcy procedure, and it is expected to give more options and opportunities for both creditors and debtors in financial distress situations. Additionally, the New Rehabilitation and Bankruptcy Law includes significant procedural changes that creditors should understand to better protect their rights and assets when facing financially distressed debtors.
Key takeaways
Compared to the draft law that we covered in a previous alert, the adopted version of the New Rehabilitation and Bankruptcy Law is more concise, consisting of eight chapters and 88 articles with the following structure:
- Chapter I (articles 1-23): General provisions
- Chapter II (articles 24-37): Rehabilitation procedures
- Chapter III (articles 38-67): Bankruptcy procedures
- Chapter IV (articles 68-72): Expedited rehabilitation, bankruptcy
- Chapter V (articles 73-75): Requests for assistance from foreign countries on rehabilitation, bankruptcy; assistance with foreign rehabilitation, bankruptcy; recognition and enforcement of foreign court judgments/decisions on rehabilitation, bankruptcy
- Chapter VI (articles 76-82): Enforcement of bankruptcy decisions
- Chapter VII (articles 83-85): Responsibilities of related parties, handling of violations and resolution of complaints
- Chapter VIII (articles 86-88): Enforcement provisions
The key changes under the new law include the following:
1. Separate rehabilitation procedure
Under the current Bankruptcy Law 2014, rehabilitation is part of bankruptcy proceedings. However, the New Rehabilitation and Bankruptcy Law introduces a separate rehabilitation procedure for entities that are "insolvent" or "at risk of being insolvent." Notably, under the new law, an entity is considered "insolvent" if it fails to pay debt for six months (instead of three months under the current Bankruptcy Law 2014). Entities "at risk of being insolvent," a new concept under the new law, are defined as those that are unable to pay debts due in the next six months or have outstanding debts for no more than six months.
The rehabilitation procedure is essentially a voluntary process that financially distressed entities can initiate. If the court receives a rehabilitation request, financially distressed entities may be entitled to reliefs such as a temporary suspension of enforcement of secured assets (Article 27) and a temporary suspension of payment of taxes, pensions, survivor's funds and, notably, debts and interest to creditors (Article 30). The financially distressed entities will then be required to operate under the supervision of a liquidator and the Creditors' Representative Board, based on a rehabilitation plan approved by the resolution of the creditors' meeting and recognized by the court.
Creditors' meetings will be convened and a resolution may be adopted by creditors representing at least 65% of the company's total debt. Creditors' meetings may decide to approve the rehabilitation plan, suspend the rehabilitation procedure, apply the bankruptcy procedure, or address other issues with assets and liabilities.
2. Updated list of parties eligible to file bankruptcy petitions
Article 38 of the New Rehabilitation and Bankruptcy Law specifies which parties can file for bankruptcy. Notably, there are several changes compared to the Bankruptcy Law 2014:
- For joint-stock companies, a shareholder or a shareholder's group holding 20% of shares (or a lower ratio prescribed in the companies' charters) no longer needs to satisfy the six-month consecutive shareholding requirement to file bankruptcy petitions.
- For limited liability companies, a member or groups of members holding 65% (or a lower ratio prescribed in the companies' charters) can now file bankruptcy petitions.
- Tax and insurance authorities are required to file bankruptcy petitions in some circumstances.
3. Shorter time period for creditors to file debt claims
The New Rehabilitation and Bankruptcy Law provides for a shorter timeline for bankruptcy proceedings. Importantly, pursuant to Article 55 of the new law, creditors must file debt claims within 15 days from the date on which the court decides to commence bankruptcy proceedings (rather than 30 days under the current Bankruptcy Law 2014). The new law clearly stipulates that creditors will lose their right to join the bankruptcy proceedings if they fail to promptly serve their debt claims to the court without a valid reason.
4. Expedited rehabilitation and bankruptcy procedures
Chapter IV of the new law provides for the expedited rehabilitation and bankruptcy procedures as follows:
- Expedited rehabilitation will be applicable to: (i) entities with less than 20 unsecured creditors and whose total principal debt is less than VND 10 billion; (ii) small companies and microenterprises; and (iii) other cases provided by laws. Expedited procedures will have a timeline that is 50% shorter than standard procedures.
- Expedited bankruptcy will be applicable to: (i) entities with less than 20 unsecured creditors and whose total principal debt is less than VND 10 billion; (ii) small companies and microenterprises; (iii) entities that do not have any assets or whose assets are insufficient to pay court fee advances for bankruptcy proceedings; (iv) financial institutions; (v) insurance companies and reinsurance companies whose control measures have been terminated by the Ministry of Finance, but which have failed to rectify the situation that led to the application of the control measures as prescribed in the Law on Insurance Business; and (vi) other cases provided by laws.
For expedited procedures, creditors' resolutions can be passed by creditors representing "51% or more of total unsecured debt" — a threshold that is lower than in standard cases
5. Assistance with foreign bankruptcy
Article 74 of the New Rehabilitation and Bankruptcy Law provides that upon receipt of a proper request for assistance by foreign courts or authorities, or representatives involved in foreign bankruptcy proceedings, Vietnamese courts may decide to verify, inventory, value, liquidate and recover the assets of enterprises relevant to foreign bankruptcy proceedings. They may also order payment from debtors in Vietnam or grant other requests necessary for resolving the foreign bankruptcy case. However, this article gives Vietnamese courts the discretion to decline requests for assistance by foreign courts, authorities or representatives in foreign bankruptcy proceedings, if these requests are:
contrary to the fundamental principles of Vietnamese laws; inconsistent with treaties which Vietnam is a party to; prejudicial to the territory, national security or public interests of Vietnam; detrimental to the legitimate rights of creditors in Vietnam.
6. Recognition and enforcement of foreign courts' judgments or decisions on bankruptcy
Currently, under the Bankruptcy Law 2014, there is no guidance on the recognition and enforcement of foreign courts' judgments or decisions on bankruptcy. Article 75 of the New Rehabilitation and Bankruptcy Law now sets out a list of nine (non-exhaustive) grounds according to which Vietnamese courts may refuse to recognize and enforce foreign courts' judgments or decisions on bankruptcy, as summarized below:
i. The recognition and enforcement of the foreign courts' judgments or decisions is contrary to the fundamental principles of Vietnamese laws; inconsistent with treaties to which Vietnam is a party; prejudicial to the territory, national security or public interests of Vietnam; affects the legitimate rights of creditors in Vietnam.
ii. The judgment debtor was improperly notified of the bankruptcy proceedings according to the laws of the jurisdiction where the bankruptcy judgment or decision was issued.
iii. A legally binding judgment or decision has been issued by a Vietnamese court; a Vietnamese court has already accepted and is handling a rehabilitation or bankruptcy case before a foreign court does; or a Vietnamese court has recognized or enforced a judgment or decision from a court or competent authority of a third country.
iv. The judgment or decision does not meet the conditions stipulated in clauses 1 and 2 of Article 75 (i.e., the foreign courts' judgments or decisions have not taken effect, or the foreign courts' judgments or decisions do not relate to the judgment debtor or asset in Vietnam), or the conditions stipulated in an international treaty to which Vietnam is a party.
v. The foreign courts' judgments or decisions seriously infringe the rights of creditors, debtors and related parties.
vi. The foreign courts' judgments or decisions are pending review at the issuance state, or the time limit for review of the foreign courts' judgments or decisions has not lapsed according to the laws of the issuance state.
vii. The foreign courts' judgments or decisions have not yet become legally effective, have been annulled, or their enforcement has been suspended in the issuance state.
viii. The statute of limitation for enforcement under Vietnamese laws has expired.
ix. Other cases may apply as prescribed by relevant laws.
The Supreme People's Court is expected to issue further guidance on various aspects of the new law in the near future.
In conclusion
2025 and 2026 are the years of significant development for Vietnam's insolvency legal framework. The establishment of specialized bankruptcy courts on 1 July 2025, along with the New Rehabilitation and Bankruptcy Law taking effect in 2026, positions Vietnam to tackle increasingly complicated financial distress cases, including those with cross-border elements. Enterprises should closely consider the developments under the new law — either to avail themselves of relief measures under the New Rehabilitation and Bankruptcy Law, if needed from a debtor's perspective, or to better safeguard their rights and assets as creditors.
Tri Quach, Partner, and Duong Vu, Associate, have contributed to this legal update.
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