1. Resuming business operations
Resuming business operations is a procedure in the bankruptcy process that the court may apply after the decision to open bankruptcy proceedings is made when certain conditions are met to bring enterprises out of insolvency.
Recovering business operations depends largely on the goodwill of creditors, which is closely related to whether the enterprise can apply business restoration procedures or not.
2. Stages of implementing business restoration operations
2.1. Develop and approve a business restoration plan
Each enterprise is the entity that understands its business activities best, so the enterprise must be responsible for developing a plan to restore business activities to submit to the Creditors’ Meeting. This is also stipulated by law in Article 87 of the 2014 Bankruptcy Law as follows:
“1. The insolvent entity must send the plan to resume their business operation to the Judge, creditors, asset management officer, and asset management enterprise for consideration within 30 days from the day on which any creditors’ meeting passes the Resolution that mentions the procedures for resuming their business operation.”
Procedure for developing the plan:
Within 10 working days from the date of receiving the business resuming plan of the enterprise, creditors, asset management officers, and asset management enterprises shall send comments to the enterprise to complete the business resuming plan.
Immediately after receiving the business resuming plan that has been completed by the enterprise, the asset management officer and the asset management enterprise are responsible for reporting to the Judge. Within 15 days from the date of receiving the business resuming plan from the asset management officer or asset management enterprise, the Judge will consider it before bringing the plan to the creditors' meeting for consideration and approval.
Approval of the plan:
Within 10 days from the date of the decision to bring the business resuming plan to the creditors' meeting, the Judge will convene the Creditors' Conference to consider and approve that plan.
Conditions for approval:
Resolution of the creditors’ meeting approving the plan to resume business operations when more than half of the total number of creditors (unsecured debts) are present and represent 65% of the total debt (unsecured debts) or more voted in favor.
After the plan to resume the enterprise's business activities is approved by the creditors' meeting, according to the process, the Judge will issue a decision to recognize the resolution of the creditors' meeting for the plan to resume those business activities. This Resolution is effective for all participants in the relevant bankruptcy proceedings.
Some note:
In case the plan to resume business operations uses secured assets, it must stipulate the period of use of the secured assets, the plan for handling the secured assets, and agreement from the creditor of that secured assets.
In case the creditors' meeting cannot be organized or the creditors' meeting cannot pass a resolution on approving a plan to resume business operations, the Court shall declare the enterprise bankrupt.
2.2. Contents of plans to resume business operations
Article 88 of the 2014 Bankruptcy Law stipulates that the contents of an enterprise's business resuming plan must clearly state the solutions to resume business operations; conditions, deadlines and debt payment plans. Accordingly:
Solutions to resume business operations include:
Ø Capital mobilization;
Ø Debt relief, debt moratorium;
Ø Changing production and goods;
Ø Innovating production technology;
Ø Reorganization of the governing board, merging or separating the production division;
Ø Selling share to the creditors and others;
Ø Selling or lending the assets;
Ø Other solutions under the regulations of the law.
Deadline for implementation of plans to resume business operations
According to the resolution of the creditors' meeting. In case the resolution does not specify a deadline, the implementation period is no more than 03 years from the day on which the creditors’ meeting agrees such plan.
2.3. Supervising execution of business resuming plans
During the period of resuming business and production operations, businesses are under the supervision of relevant responsible people including the asset management officer, asset management enterprise and their own creditors. . This is to ensure that the goals set out in the plan are implemented effectively and that businesses cannot arbitrarily carry out business activities according to their wishes.
In addition, according to the law, every six months, enterprises must make a biannual report on the implementation of their business resuming plan to the asset management officer, asset management enterprise and they are responsible for reporting to the Judge and notifying creditors (Clause 2, Article 93 of the 2014 Bankruptcy Law). This is necessary so that creditors can monitor the progress and implementation of the debtor's business resuming plan.
2.4. Suspension of plans to resume business operations
According to the provisions of Article 95 of the 2014 Bankruptcy Law, the Judge shall issue a decision to suspend procedures for resuming business operations of an insolvent enterprise if it falls into one of the following cases:
a) the entity has completely executed the plan to resume the business operation;
b) or the entity cannot execute the plan to resume the business operation;
c) or the entity is still insolvent after the deadline for the execution of the plan to resume the business operation.
Thus, whether the business resuming succeeds or fails, the decision to suspend the plans will always have to be made to have a basis for implementing the next stages and plans for the business whether it is on the path of resuming operations or going bankrupt.