The failure of the bankruptcy law People’s courts, management agencies, relevant institutions -- when asked about the 2004 Bankruptcy Law, have suggested amending 57 out of the 95 articles of the law, according to the Vietnam Chamber of Commerce and Industry (VCCI).    Dau Anh Tuan, Deputy Head of the VCCI’s Legal Department, said that the number of businesses leaving the market in the last two years is equal to the total number of businesses declared as bankrupted over the last 10 years. Economists agree that the 2004 Bankruptcy Law does not have much significance, because the number of bankrupt businesses declared by the courts is very low. While having businesses declared is a normal formality for businesses in other countries to follow to protect the interests of business owners and creditors, this is an indisposed thing that Vietnamese businesses have to do when they have no other choice. In general, Vietnamese remain very allergic to the word “bankruptcy” because in their thought, this relates to the “crimes.” However, Tuan believes that the most important reason behind the low number of bankrupt businesses is the complicated procedures businesses have to follow to have their businesses declare bankruptcy. “The Bankruptcy Law is of too much perfectionism,” Tuan noted. Meanwhile, businessmen always want everything to go in a convenient way, and they would hesitate to follow a thorny path just to have their businesses to be declared as bankrupt. “In order to create favorable conditions for businesses to go bankrupt, Vietnam needs a good system of executive bodies. For example, it needs to have high qualified judges. Meanwhile, these are the things Vietnam is still lacking,” Tuan said. Dr. Le Dang Doanh, a well-known economist, has also noted that the number of bankrupt businesses is too small if compared with the number of dead businesses. The Bankruptcy Law requires very complicated procedures and comprises of the provisions which cannot be applied in reality. This makes businesses’ owners feel tired and reluctant to file for bankruptcy, even though they can receive the legal support from law offices. The Ministry of Planning and Investment has released a report showing that 86,000 businesses have stopped their business so far, but they have not fulfilled the legal formalities as required by the laws to declare the bankruptcy. Doanh has pointed out that the high percentage of the businesses which “are dead but cannot be buried” has led to very serious consequences to the national economy. Especially, this has created a business environment which lacks transparency. In the business environment, the bad debts cannot be settled, while a lot of businesses have run away or ignored the duty of paying debts to the State or to commercial banks. The debtors have become the criminals instead of the subjects in civilian cases. Tuan has noted that the current laws comprise of the unreasonable provisions which “discourage” unprofitable businesses to declare bankruptcy.  Commercial banks don’t want to see businesses, or their debtors, to go bankrupt. If the businesses go bankrupt, the loans provided by the banks to the businesses would be listed as bad debts, for which the senior executives of the banks have to take responsibility. Businesses’ owners also don’t want to see their businesses bankrupt, because under the current laws, they would only start up a new business after 1-3 years after the day the businesses are declared bankrupt. Source: Tien Phong