Should keep the name of the Bankruptcy Law as the current law?

Continuing the agenda of the Tenth Session, this morning, October 23rd, the delegations of National Assembly deputies from Lam Dong province and Nghe An province discussed in their respective groups the draft Law on Bankruptcy (amended) and the draft Law on Deposit Insurance (amended).

Clarify the recovery process before or during bankruptcy proceedings.

Speaking at the discussion session on the draft Bankruptcy Law (amended), the majority of opinions agreed with expanding the scope of the draft law to include the development and improvement of rehabilitation procedures as independent procedures to be carried out before bankruptcy proceedings. However, delegate Nguyen Truong Giang (Lam Dong) suggested that a more thorough review is needed to ensure logic, consistency, and feasibility in practice, especially regarding the scope of application, the relationship between rehabilitation and bankruptcy procedures, as well as the authority and responsibilities of the relevant parties.

Vo Thi Minh Sinh, Head of the National Assembly Delegation of Nghe An Province, delivers a speech. Photo: Pham Thang

Representatives expressed the view that current law already stipulates the rehabilitation procedure as a stage in the bankruptcy resolution process. Therefore, it is necessary to inherit and improve this mechanism by clarifying the rehabilitation process before or during bankruptcy proceedings, instead of separating it into an independent law.

20251023-t7-6(1).jpg — *Delegate Nguyen Truong Giang (Lam Dong) delivers a speech. Photo: Pham Thang*

According to the delegates, the name "Bankruptcy Law" should be retained to ensure the stability of the legal system; in which, the rehabilitation procedure could be regulated in a separate chapter, with specific conditions, procedures, and applicable subjects.

Regarding bankruptcy costs, the delegates argued that if the state budget advances funds for the bankruptcy process, it should only be applied in truly exceptional cases, such as when the party requesting bankruptcy is a tax authority or a social insurance agency. Even in these two cases, a thorough assessment of the impact on the budget is necessary to avoid setting a precedent or placing a burden on the state budget.

Regarding the provision on “prioritizing the application of rehabilitation procedures” (Article 3), delegates noted that this content requires careful consideration. In reality, when different parties have different requests—for example, the tax authority requests bankruptcy proceedings because the business is insolvent, while another creditor requests rehabilitation—applying “prioritizing rehabilitation” mechanically can prolong processing time, affecting the rights of creditors and the budget. Therefore, it is necessary to clearly define the specific conditions for application, determining which cases are considered for rehabilitation and which cases require the application of bankruptcy procedures, helping the courts apply the provisions consistently, objectively, and effectively.

National Assembly deputies from Nghe An province attend the group discussion session. Photo: H. Phong

The delegates also proposed revising the regulations regarding bankruptcy petition documents. Instead of simply stating that "the court may request amendments or additions to the petition," it should be more fully expressed as "the court has the right to request amendments or additions to the accompanying documents," because bankruptcy petition documents include a rehabilitation plan, a list of creditors, financial statements, and debt documents, in order to ensure legal accuracy and suitability for judicial practice.

Regarding the timeframe for implementing the recovery plan, delegates argued that the regulation stating "no more than a certain period" is not specific enough and could lead to indefinite delays, making monitoring difficult. A specific maximum timeframe should be set, for example, no more than 3 years from the date the recovery plan is approved, to ensure transparency and feasibility.

Regarding the authority to request bankruptcy proceedings, delegates agreed with granting this power to the tax authorities, as they are responsible for managing budget revenue and possess sufficient information to monitor the tax obligations of businesses... However, concerning the Vietnam Social Security, some opinions suggested careful consideration, as it is a public service organization with specialized inspection functions, not a direct party to litigation. Granting additional authority to request bankruptcy proceedings requires a solid legal basis and should avoid exceeding its functional scope.

In addition, some opinions suggest researching the role of trade unions or labor rights protection agencies in cases where businesses are late or evade social insurance contributions, in order to ensure that the handling is fair, reasonable, and protects the rights of workers.

20251023-t7-8(1).jpg — *National Assembly Deputy Nguyen Tao (Lam Dong) delivers a speech. Photo: Pham Thang*

Based on the analyses, delegates emphasized that the amendment of the Bankruptcy Law should focus on transparency, clarity, and rationality in the process; clearly distinguish between the recovery and bankruptcy stages; and clarify the authority of the participating entities… To ensure feasibility, the draft law needs to further review the regulations on recovery conditions, time limits, bankruptcy procedures, and financial handling mechanisms, ensuring clarity, transparency, ease of application, giving businesses the opportunity to recover operations, while better protecting the rights of creditors, employees, and the state budget.

The process for adjusting limits requires full consultation with all stakeholders.

Commenting on the draft amendments to the Deposit Insurance Law, National Assembly Deputy Tran Hong Nguyen (Lam Dong) stated that the current regulation applying a uniform deposit insurance premium of 125 million VND as stipulated by the Government is appropriate in the current period. However, international experience shows that there are two mechanisms for calculating premiums: flat-rate premiums and differentiated premiums.

*National Assembly Deputy Tran Hong Nguyen (Lam Dong) delivers a speech. Photo: H. Phong*

The differentiated fee mechanism is applied in many countries, whereby credit institutions with a high level of risk pay higher fees, while those with good creditworthiness are subject to lower fees. Delegates argued that this mechanism accurately reflects market principles and encourages credit institutions to improve their governance capabilities and ensure operational safety. However, in the current context of Vietnam, immediately applying a differentiated fee mechanism could risk capital flow shifts and affect the stability of the system.

Therefore, the delegates agreed with the Government's approach of allowing the parallel application of two forms of fees – uniform or differentiated – depending on the practical conditions of each period; and at the same time, granting the Governor of the State Bank of Vietnam the authority to flexibly regulate and adjust them.

Regarding inspection authority, the delegates argued that assigning the Vietnam Deposit Insurance Corporation to participate in inspections is appropriate, provided that the activities are carried out according to the plan and content assigned by the State Bank of Vietnam.

Citing the practical experience of the period 2019–2025, the State Bank of Vietnam has piloted the Vietnam Deposit Insurance Corporation to inspect 354 people's credit funds, achieving positive results…, the delegate proposed adding the authority to recommend and warn when violations are detected, to help credit institutions rectify the issues themselves before being penalized, while also clearly defining the legal value of inspection results and the coordination mechanism to avoid duplication.

Meanwhile, delegate Trinh Thi Tu Anh (Lam Dong) emphasized that the deposit insurance payout limit is a key issue, directly impacting the rights and confidence of depositors… Currently, according to Decision No. 32/2021/QD-TTg, the deposit insurance payout limit is 125 million VND per person at a credit institution, an increase from the previous 75 million VND. This level protects approximately 92% of depositors, falling within the 90-95% recommendation of the International Association of Deposit Insurers (IADI). However, according to the delegate, with increasingly high incomes and living costs, especially in large urban areas, this limit has revealed clear limitations.

20251023-t7-12(1).jpg — *Delegate Trinh Thi Tu Anh (Lam Dong) delivers a speech. Photo: Pham Thang*

The delegates analyzed that, with the current limit, the percentage of fully insured deposit balances only reaches 8.38% of the total insured deposit balance, much lower than the global average of around 47%. Meanwhile, Vietnam's per capita income is approximately $5,000/year, and according to international practice, the insurance limit is usually equivalent to 2-5 times the per capita GDP… Thus, the current level of 125 million VND only protects a small portion of the total deposit value, especially for individuals and small businesses, leading to the risk of reduced confidence in the banking system.

Compared to international standards, Vietnam's deposit limit (approximately $5,000 USD) is significantly lower than that of the United States ($250,000 USD) or the European Union ($100,000 EUR). Therefore, delegates argued that the deposit limit needs to be adjusted to better reflect reality and align with international practices, thereby maximizing the protection of depositors' rights and strengthening confidence in the financial system.

Expressing strong agreement with the regulation granting the Governor of the State Bank of Vietnam the authority to periodically adjust the payout limit based on criteria such as inflation rate, per capita income, average deposit size, and international standards, delegate Trinh Thi Tu Anh suggested that the limit should be reviewed and adjusted periodically every 3-5 years to ensure that the real value of the insurance coverage does not decrease due to economic fluctuations.

The delegates suggested that the process for adjusting the deposit limit should involve full consultation with relevant parties, including the Vietnam Deposit Insurance Corporation, credit institutions, representatives of depositors, and independent experts, and should be publicly announced for at least 30 days before issuance to gather feedback.

*Members of the National Assembly delegation from Lam Dong province attend the discussion session. Photo: H. Phong*

In addition, delegates proposed a flexible insurance mechanism for different entities – individuals, small businesses, non-profit organizations – to ensure fairness and appropriateness to actual risks. At the same time, it is necessary to strengthen communication and public education about the rights, limits, and procedures of deposit insurance, helping people understand the policy and contributing to strengthening confidence in the banking system.

According to delegate Trinh Thi Tu Anh, adjusting the payout limit must be accompanied by an assessment of the financial capacity of the Vietnam Deposit Insurance Fund, ensuring that the fund is capable of making payments in all situations, including when a credit institution goes bankrupt or becomes insolvent… “This is a key factor in ensuring the sustainability of the deposit insurance system, thereby best protecting the legitimate rights of depositors and contributing to maintaining national financial stability,” delegate Trinh Thi Tu Anh emphasized.

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