Mortgage or pledge of future assets in Vietnam

The Civil Code 2015 recognises that future assets can be used as security. Future assets are assets which do not exist at the time of creation of the relevant security or which exist at the time of creation of the relevant security but do not belong to the ownership of the relevant mortgagor or pledgor. However, it is not clear how a mortgage or pledge over a future asset which is not owned by the mortgagor at the time of creation of the mortgage or pledge could reconcile with the requirement that the mortgagor or pledgor must own the mortgaged assets under the Civil Code 2015.

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Circular 39/2016 - New Lending Regulations for Banks in Vietnam

The State Bank of Vietnam (SBV) issued Circular 39/2016 in late December 2016 replacing the famous Decision 1627/2001 on lending by banks and other credit institutions in Vietnam which has been in force for more than a decade. Circular 39/2016 contains the following developments, among other things:

To terminate a loan agreement and accelerate the loan, a bank must prove that the borrower has provided inaccurate information or breached the loan agreement or the security agreements. While further clarifications are still required, this limitation may reduce the ability of a bank to call an event of default under the existing loan agreement. For example, defaults caused by a third party (e.g. a guarantor) may not satisfy the new requirement under Circular 39/2016.

Stricter regulations on issuance of Vietnamese Government guarantees

Under Decree 4/2017, the Vietnamese Government imposes stricter regulations on issuance and management of Government guarantees. Government guarantees under Decree 4/2017 are guarantees issued on behalf of the Vietnamese Government (as the guarantor) in favour of foreign lenders to guarantee loans or bonds borrowed or issued by companies in Vietnam. Under Decree 4/2017:

Three issues for secured creditors in a bankruptcy situation in Vietnam

In general, a secured creditor will be given priority over unsecured creditors regarding certain assets of the bankrupt enterprise. However, under Vietnamese bankruptcy law, such priority comes with a cost. In particular:

Vietnam Business Law