Group assignment subject legal english advanced 1

BỘ TƯ PHÁP TRƯỜNG ĐẠI HỌC LUẬT HÀ NỘI GROUP ASSIGNMENT SUBJECT: LEGAL ENGLISH ADVANCED TOPIC: BANKRUPTCY GROUP : 02 CLASS : N03 Hà Nội, 2022 BIÊN BẢN XÁC ĐỊNH MỨC ĐỘ THAM GIA VÀ KẾT QUẢ THAM GIA LÀM BÀI TẬP NHÓM Ngày: 08 / 03 /2022 Địa điểm: Trường Đại học Luật Hà Nội Nhóm số: 02 Lớp: N03 Khoa: Ngơn Ngữ Anh Khố: 44 Tổng số sinh viên nhóm: 04  Có mặt: 04  Vắng mặt… Có lý do:… Khơng có lý do…  Nội dung: Bankruptcy Tên tập: Bài tập nhóm Môn học: Legal English Advanced Xác định mức độ tham gia kết tham gia sinh viên việc thực tập nhóm với kết sau: ST MÃ T SV HỌ VÀ TÊN ĐÁNH GIÁ SV KÝ ĐÁH GIÁ CỦA GV CỦA SV A B C TÊN ĐIỂ ĐIỂM GV M (Chữ) (Ký tên) (số) 44301 Đỗ Thùy Dương  2 44301 Nguyễn Thị Hải Yến  44302 Nguyễn Nhật Quang  44302 Bùi Hương Giang  Hà Nội, ngày 08 tháng Kết điểm viết: Kết điểm thuyết trình:…………… NHĨM TRƯỞNG Điểm kết luận cuối cùng:……………… Nguyễn Nhật Quang 03 năm 2022 Quang INDEX INTRODUCTION CONTENT .4 I AN OVERVIEW OF BANKRUPTCY Definition of insolvency Features of insolvency Definition and legal consequences of winding up .5 II In the UK Types of insolvency proceedings 1.1 Liquidation or Winding up 1.2 Administration 1.3 Receivership 1.4 Company voluntary arrangements and schemes .8 Winding up proceedings .9 2.1 Voluntary Liquidation .9 2.2 Compulsory Winding-up 11 III IN VIETNAM .11 Voluntary liquidation outside insolvency proceedings .12 Voluntary liquidation in insolvency proceedings .12 IV UK Similarities and Differences between bankcruptcy in Vietnam and in the 15 Similarities 15 Differences 16 CONCLUSION 17 REFERENCES 18 INTRODUCTION Bankruptcy is a status in which a company or enterprise has financial difficulties, suffers losses or liquidates the enterprise, which cannot guarantee to pay the total amount due At that time, a court or a competent jurisdiction will declare the company or enterprise bankrupt Bankruptcy in companies and businesses across countries, especially the UK and Vietnam, is not strange, even happens a lot Thus, there are many ways that lead to these situations such as insolvency and winding up However, there are many differences in these actions in certain countries, especially in the UK and in Vietnam CONTENT I AN OVERVIEW OF BANKRUPTCY Definition of insolvency Insolvency is a term for when an individual or company can no longer meet their financial obligations to lenders as debts become due Before an insolvent company or person gets involved in insolvency proceedings, they will likely be involved in informal arrangements with creditors, such as setting up alternative payment arrangements Insolvency can arise from poor cash management, a reduction in cash inflow, or an increase in expenses According to another opinion, insolvency is defined as a financial condition in which the total liabilities of an individual or enterprise exceed the total assets so that the claims of creditors cannot be paid There are essentially two approaches in determining insolvency: insolvency in the equity sense and under the balance-sheet approach Insolvency in the equity sense denotes the inability of the debtor to pay his debts as they become due in the ordinary course of business Insolvency under the balance-sheet approach means that the total liabilities of the debtor exceed his total assets See: https://www.britannica.com/topic/insolvency (Accessed on March 6th 2022) Features of insolvency Firstly, insolvency is a state of financial distress in which a person or business is unable to pay their debts; Secondly, insolvency in a company can arise from various situations that lead to poor cash flow; when faced with insolvency, a business or individual can contact creditors directly and restructure debts to pay them off Definition and legal consequences of winding up Winding up is a means by which the dissolution of a company is brought about and its assets realized and applied in payment of its debts, and after satisfaction of the debts, the balance, if any, remaining is paid back to the members in proportion to the contribution made by them to the capital of the company The liquidation or winding up of a company is the process whereby its life is ended and its property is administered for the benefit of its creditors and members.2 Thus, winding up ultimately leads to the dissolution of the company In between winding up and dissolution the legal entity of the company remains and it can be sued in a court of law II In the UK Types of insolvency proceedings Insolvency proceedings3 are formal measures taken to deal with company debt It’s important to note that not all companies involved in insolvency proceedings are insolvent There are four principal types of insolvency proceedings applicable to corporations in the UK – administration, receivership, liquidation, and company voluntary arrangements and schemes formal insolvency processes, including liquidation, administration and company voluntary arrangement (CVA), which are governed by the Insolvency Act 1986 (the Insolvency Act) and the Insolvency Rules (England and Wales) 2016 (the Insolvency Rules); 1.1 Liquidation or Winding up4 Compulsory liquidation is liquidation by order of the court and is the only method by which a creditor can initiate liquidation Creditors’ voluntary liquidations (insolvent) and members’ voluntary liquidations (solvent) are also possible but require shareholder approval Once the liquidation has been completed, the company is dissolved There are three types or winding up: compulsory liquidation and Members and Creditors voluntary liquidation All three types are designed to bring the existence of a company to an end and to distribute its assets to those entitled to them There are two forms of liquidation, also known as winding-up, under the Insolvency Act: (1) compulsory liquidation, by order of the court; and (2) voluntary liquidation, which is divided into a members' voluntary liquidation (MVL) or a creditors' voluntary liquidation (CVL) An MVL is a solvent liquidation and requires a statutory declaration of solvency from the company's directors within the five weeks immediately preceding the date of the resolution for winding-up A CVL can be a solvent or insolvent liquidation, but is subject to some degree of control by creditors Liquidators (and administrators) have the ability to challenge various payments or transfers of interests in property of the debtor within certain periods prior to the insolvency to ensure the equality of distribution to creditors of the debtor The periods are typically between six months and two years, depending on the nature of the challenge Court proceedings are generally required to reverse the transactions 1.2 Administration5 Administration is the most common of the insolvency procedures Administration provides breathing space to allow a rescue package or more advantageous realization of assets to be put in place An administrator is appointed to manage a company’s affairs, business and property for the benefit of the creditors The person appointed must be an insolvency practitioner and have the status of an officer of the court Insolvency Act, Section 89 Insolvency Act, Schedule B1 Paragraphs 43 and 44 Exceptions include contractual set-off rights (at least until the administrator makes an authorised distribution) and secured creditors' rights to enforce against certain collateral to which the Financial Collateral Arrangements (No 2) Regulations 2003 (SI 2003/3226) apply, including shares The objective of administration is to: Firstly, rescuing a company as a going concern; Secondly, achieving a better price for the company’s assets or otherwise realizing their value more favorably for the creditors as a whole than would be likely if the company were wound up (without first being in administration); Thirdly, in certain circumstances, realizing the value of property in order to make a distribution to one or more preferential creditors – receivers An administration can, depending on the circumstances, be initiated by application to the court or by an out-of-court procedure The company or its directors, the company’s creditors and certain other stakeholders can, subject to various conditions, initiate the process A company need only show it is, or is about to become, unable to pay its debts Because commencement of administration proceedings imposes a moratorium on all claims against a company, it is frequently used as a restructuring tool ‘Pre-pack’ administrations, in which a pre-negotiated sale of a company’s business and assets is effected immediately on commencement of the process, are commonly used to salvage value from insolvent companies 1.3 Receivership6 Receivership is technically an out-of-court enforcement mechanism generally used by a secured creditor when a company is insolvent rather than an insolvency proceeding or a method of restructuring There are two types of receiverships under UK law - Administrative receivership This method is not offered for most types of transaction An administrative receiver is a receiver or manager of the whole, or substantially the whole, of a See: https://www.lexisnexis.com/uk/lexispsl/construction/document/391372/56NS-GV31-F186-30M6-0000000/Types%20of%20insolvency%E2%80%94overview (Accessed on March 08th 2022) company’s property They’re appointed by, or on behalf of, the holders of any debentures of the company secured by a floating charge They have the power to sell the assets covered by the floating charge and apply the proceeds to the debt owed to the charge-holder Receivers who are not administrative receivers may be appointed in other circumstances For example, under powers contained in an instrument or document creating a charge over a company’s property, a receiver or manager may be appointed until the debt is recovered The function of an administrative receiver is to realise the charged assets and to repay the chargeholder An administrative receiver can, and often will, take over the management of a company and sell the charged assets as a going concern for the benefit of the charge holder The remaining company will then be liquidated or dissolved - Fixed charge receivership The second type of receivership proceeding is also known as the Law of Property Act (LPA) receivership as the powers and duties of this type of receiver are still governed by the Law of Property Act 1925 It is an enforcement mechanism used by holders of fixed charges, principally over real estate, to sell the charged assets and repay the chargeholder The powers of an receiver are more limited than an administrator or administrative receiver but given that their duties are less extensive and there is no court involvement, they can often be appointed more quickly and cheaply 1.4 Company voluntary arrangements and schemes A company voluntary arrangement (CVA) is an arrangement that a company enters into with its creditors under the supervision of an insolvency practitioner, the nominee The aim of this is to prevent the company entering liquidation and ultimately being dissolved The company will still exist and usually continue to trade The aim of the CVA is to prevent the company entering liquidation and ultimately being dissolved.7 Moreover, consensual out-of-court restructurings are common in the UK Company voluntary arrangements (CVAs) or schemes of arrangement (Schemes) may See: https://www.companydebt.com/whats-the-insolvency-process/ (Accessed on March 08th 2022) also be used with the approval of the requisite majorities Both of these require filings at court, and the latter also requires court hearings Once put to a vote, a CVA proposal will be implemented if: a approved by 75 per cent or more (by value) of the company's creditors; and b not rejected by more than 50 per cent (by value) of the company's creditors admitted for voting who are “unconnected creditors”.8 A CVA or Scheme does not trigger a moratorium on creditors’ actions (except, in the case of a CVA in respect of a small company and certain other exceptions) A CVA or Scheme is sometimes combined with the administration to take advantage of the moratorium provided on administration CVAs have been used very effectively in distressed retail insolvencies to limit exposure to landlords of overrented and superfluous premises Winding up proceedings 2.1 Voluntary Liquidation9 There are two main types of voluntary liquidation and it is imperative to understand which applies to the company's situation If a company is insolvent, which is known as Member Voluntary Liquidation (MVL), however, if the business cannot hope to pay its debtors, the procedure will be known as Creditors’ Voluntary Liquidation (CVL) - Members’s Voluntary Liquidation (MVL) When it is deemed that the directors have made a full enquiry into the company’s financial affairs and the company is in fact solvent, the first step in winding up a company is to hold a meeting of the board From there, there are several phases leading up to liquidation and striking a business off the register The process generally follows these steps: Insolvency Act, Section 5(2)(b); the Insolvency Rules, Rule 15.34 Insolvency Act, Section 89 Step 1: Meeting of the Board of Directors to resolve to draw up a Declaration of Solvency Step 2: Extraordinary General Meeting of shareholders with 14 days notice Step 3: Liquidator is appointed and will handle statutory filings and notices Step 4: All taxes are prepared and filed throughout the winding up process through to liquidation Step 5: Assets are liquidated per schedule Step 6: Shareholder meeting for the final report - Creditors’ Voluntary Liquidation (CVL) If the company is insolvent or the majority of directors cannot agree on a Declaration of Solvency, winding up would utilize a Creditors’ Voluntary Liquidation procedure They are quite similar in terms of time constraints and statutory filings, but the emphasis throughout a CVL is on the creditors There may be nothing left at the end of liquidation to distribute to shareholders simply because an insolvent company sought to be wound up Also, there are times when a majority of directors have signed the Declaration of Solvency only to find out later in the process that the company was not in fact solvent In this case an MVL would automatically become a CVL The main difference in procedure is that there must be a meeting with the creditors in a CVL since the company is insolvent and cannot satisfy its debts.10 2.2 Compulsory Winding-up11 A company can be legally forced to wind up by a court order In such cases, the company is ordered to appoint a liquidator to manage the sale of assets and distribution of the proceeds to creditors Compulsory winding up involves the following: See: https://www.ukliquidators.org.uk/company-liquidation/creditors-voluntary-liquidation-cvl#:~:text=A%20CVL%20is %20a%20director,placing%20it%20into%20a%20CVL (Accessed on March 08th 2022) 11 Insolvency Act, Section 10 10  all the company's contracts - including employee contracts - are completed, transferred or ended  the company ceases to business  outstanding legal disputes are settled  all of the company's assets are sold  any money owed to the company is collected  any funds are distributed to creditors  surplus funds - after the repayment of all debts - and share capital can be distributed to shareholders The court order is often triggered by a suit brought by the company's creditors They are often the first to realize that a company is insolvent because their bills have remained unpaid In other cases, the winding-up is the final conclusion of a bankruptcy proceeding, which can involve creditors trying to recoup money owed by the company In any case, a company may not have sufficient assets to satisfy all of its debtors entirely, and the creditors will face an economic loss III IN VIETNAM There are two different procedures for the voluntary liquidation of a company: voluntary liquidation in accordance with the Enterprise Law 2020 and the charter (equivalent to the memorandum and articles of association) of the company; and voluntary liquidation in accordance with the bankruptcy law by filing a petition Voluntary liquidation outside insolvency proceedings A company established in Vietnam can be liquidated and dissolved in accordance with the decision of its owners, members or shareholders The requirements for passing a liquidation or dissolution decision are subject to the company’s charter The winding up of a company will generally be carried out as follows: Step 1: the owners, members or shareholders of the company will pass a decision on liquidation and dissolution of the company; 11 Step 2: the company will notify the business registration body of the decision on liquidation and dissolution within seven business days of the issuance of the decision; Step 3: the owners, members or the board of directors (as the case may be) of the company will be responsible for liquidating the company, or, if the company’s charter so provides, a liquidation board will be established to carry out the liquidation of the assets of the company; Step 4: after completion of liquidation and payment of all outstanding debts and liabilities, the company will prepare a report and submit the dissolution file to the business registration body; and Step 5: the business registration body will deregister the company from the company registry (ie, the National Registration Portal) within five business days of the receipt of the complete dissolution file or 180 days of the receipt of the decision on liquidation and dissolution unless otherwise objected by relevant parties Voluntary liquidation in insolvency proceedings If a company becomes insolvent, the company can be liquidated under the Bankruptcy Law 2014 according to the following steps (the insolvency process): Step 1: Filling bankruptcy petition The bankruptcy proceeding of a company begins with the filing of a petition to the competent Court by a concerned person who believes the company to be insolvent If the Court determines that the company is insolvent, the company will go through a Recovery Procedure and/or a Bankruptcy Declaration A company is deemed to be insolvent when it fails to repay a debt within three months following the due date of such debt The legal representative of a company in any form, the owner of a private enterprise, the chairman of the board of management of a JSC, the chairman of the Member’s Council of a Multiple-Member LLC, the owner of a One-Member LLC, or 12 partners of a partnership, is required to file a bankruptcy petition upon observing that the company has become insolvent In addition, the following persons have the rights (but are not required) to file a petition for bankruptcy upon observing that the company has become insolvent: (i) unsecured/partially secured creditors; (ii) an employee, the grassroots trade union or immediately higher grassroots trade union in a place where a grassroots trade union has not been established, where the company fails to make payment of wages and other employment-related debts; or (iii) a shareholder or group of shareholders of a JSC holding 20% or more of ordinary shares for at least six consecutive months or those holding less than 20% of ordinary shares for at least six consecutive months so entitled by the corporate charter The Court’s decision on the commencement of bankruptcy procedures does not prohibit the company from conducting its business activities but certain acts of asset disposal are restricted or subject to approval of the asset management officer or asset management and liquidation enterprise to ensure the preservation of the assets of the company Step 2: Rehabilitation Procedure The first creditors’ meeting shall be held in order to decide whether to allow the rehabilitation of the company’s business (“Rehabilitation Procedure”) The resolution must be approved by more than half of the number of unsecured creditors representing at least 65% of the value of the unsecured debts The resolution of the creditors’ meeting shall be binding on all creditors If the business restructuring is approved, the company must formulate and submit to the Judge, creditors and the asset management officer or asset management and liquidation enterprise a rehabilitation plan within thirty days from the date on which the resolution of the creditors’ meeting is passed The rehabilitation plan shall subsequently 13 be presented at the second creditors’ meeting and shall be passed by the same requisite quorum for the resolution of the first creditors’ meeting The Rehabilitation Procedure shall be initiated by the decision of the Judge after the rehabilitation plan has been approved at the second creditors’ meeting Once the rehabilitation plan has been completely implemented, the company is deemed to be no longer insolvent Step 3: Bankruptcy Declaration In contrast, the Bankruptcy Declaration shall be made by the decision of the Court if the first creditors’ meeting fails to be convened or fails to pass a resolution on initiating the rehabilitation plan, or the first creditors’ meeting pass a resolution on bankruptcy declaration, or the second creditors’ meeting fails to be convened or fails to pass a resolution on the rehabilitation plan; or the company fails to formulate the rehabilitation plan within the statutory time-limit, or the company fails to implement the rehabilitation plan, or the court implements the simplified bankruptcy procedure Where the Court issues a decision on bankruptcy declaration, the assets of the company shall be distributed in the following order: (1) Bankruptcy fees; (2) Wages, severance allowances, social insurance, health insurance, and others payable to the employees; (3) Debts arising after commencement of bankruptcy procedure which serve the Rehabilitation Procedure (4) Financial obligations to the State; unsecured debts payable to the creditors named in the list of creditors; secured debts which remain unpaid due to the insufficient value of the secured assets 14 If the value of the assets is insufficient to make the payments in accordance with the abovementioned order, each entity having the same priority shall be paid the corresponding proportion of his or her debt Simplified Bankruptcy Procedure: If the Court finds that the company is unable to pay bankruptcy fees, it may declare bankruptcy in the initial stage of the bankruptcy proceedings IV Similarities and Differences between bankcruptcy in Vietnam and in the UK Similarities Firstly, individuals, companies and other legal entities declare bankruptcy when they are insolvent, unable to pay their debts Follow the process of declaring bankruptcy procedure according to each country's law Secondly, after fulfilling bankruptcy procedures, the enterprise officially ceases to exist legally in both countries In addition, the court in the UK as well as in Vietnam must send a decision to the business registration office to remove the business name from the business registration book Thirdly, in two countries, the relationship between shareholders and management is very important during the operations of a company and comes into stark lighting during the bankruptcy process This is emphasized by the seniority of debt to be paid by the sale of assets of the enterprise Secured debts are settled by sale of the secured assets Any remaining assets will go to pay creditors in the following order: bankruptcy costs; labour costs including wages and social insurance payments; debts that arose as a result of efforts to recover the business during bankruptcy proceedings; unsecured debts, government payments, secured debts that were not satisfied completely by the sale of the secured assets, shareholders of the enterprise Fourth, once bankruptcy procedures have been commenced, the enterprise will continue to operate under the supervision of the judge and the asset manager Differences 15 In general, there are many differences between winding up as well as insolvency in Vietnam and in the UK Firstly, in Vietnam, there are not many kinds of bankruptcy or liquidation as in the UK The procedure for these actions are enacted in law and resolution such as: bankruptcy law and it must follow the order that are stipulated in law On the other hand, in the UK, there are many types of procedures to follow, each of them has its own benefits for companies and enterprises Secondly, the methods to insolvency and winding up in both countries are also different While in the UK, to bankruptcy, a person must be chosen in order to save the company in breathing time In addition, the breathing time is not stipulated in law Otherwise, in Vietnam, the breathing time according to Bankruptcy Law 2014, is months If the company or enterprise could not pay its debts, it would be out of business As for the winding up process, in the UK there are many types to start this action, however, people mainly use voluntary liquidation which has two main kinds are MVL and CVL In contrast, when an enterprise nearly winds up, it must follow the order set in law Thirdly, in the UK, the fee for going bankruptcy is £680 in England and Wales 12 In contrast, It costs VND 1.5 million for filing a request to open bankruptcy proceedings in Vietnam.13 Lastly, the procedures in both countries are completely different In UK, the winding up procedure order is: Meeting of the Board of Directors to resolve to draw up a Declaration of solvency; then, extraordinary General Meeting of shareholders with 14 days notice: next, Liquidator is appointed and will handle statutory filings and notices; afterwards all taxes are prepared and filed throughout the winding up process through to liquidation; then assets are liquidated per schedule; finally, shareholder meeting for the See: https://www.gov.uk/apply-for-bankruptcy (Accessed on March 08th 2022) See: https://www.toaan.gov.vn/webcenter/portal/tatc/chi-tiet-thu-tuc?dDocName=TAND022542 (Accessed on March 08th 2022) 12 13 16 final report Meanwhile, in Vietnam, the orders basically are: passing the winding up decision; then Sending the decision on liquidation and meeting minutes and related documents (if required) to business registration authority, tax authority, and employees of the enterprise; Performing public notification procedures on the commencement of liquidation; Liquidating residual assets and settling pecuniary debts of which employment-related payments and taxes must be put in top priority; Updating by the competent authorities of the legal status of the company on the national business registration database CONCLUSION To sum up, bankruptcy in Vietnam and the UK have many differences in terms of insolvency and winding up proce, which represent the fundamental characteristics of the two legal systems The two countries established their own legal principles to fit the domestic and international social and economic status The world economic conditions continue their slow and laborious recovery process, insolvency proceedings in Vietnam and in the UK will remain a vibrant and busy area of the legal landscape 17 REFERENCES Krois-Lindner, A (2006) International Legal English Cambridge University Press Linh, H T (2019) Personal bankruptcy in VietNam: the necessity and possibility Gillespie, J (2003) Receiving Bankruptcy Law into Vietnam Asia Pacific Law Review, 11(1), 81-110 Gillespie, J (2016) Insolvency law in Vietnam In Insolvency Law in East Asia (pp 249-280) Routledge Phong, T T., Duyen, V H., Hung, N Q., & Evans, F (2015) Vietnam: New Bankruptcy Law 2014 Pratt's J Bankr L., 11, 52 Franks, J R., & Torous, W N (1993) A comparison of the UK and US bankruptcy codes Journal of Applied Corporate Finance, 6(1), 95-103 Chapter 33: Winding Up in the UK: https://rajdhanicollege.ac.in/admin/ckeditor/ckfinder/userfiles/files/Winding %20up%20of%20the%20Company%20(1).pdf (Accessed on March 08th 2022) Guide to Bankruptcy: https://www.gov.uk/government/publications/guide-tobankruptcy/guide-to-bankruptcy (Accessed on March 08th 2022) 18