One major key points of Vietnam Assets Management Company (VAMC) is its power to enforce security (e.g. mortgages or pledges of assets) used to secure bad debts of credit institutions. This feature is very important to resolve the bad debts situation in Vietnam. In essence, the setting up of VAMC is for the VAMC to take over “secured” bad debts from credit institutions for 5 years and to try to recover debts from, among other things, enforcing the relevant security interests of such bad debts during such period. In particular, VAMC has the following powers to enforce security interests:

• VAMC will become the secured party when it takes over a secured bad debt from a credit institution without having to sign or amend the secured agreements.
• VAMC is entitled to auction the secured assets directly in case there is no agreement in the secured agreements about the methods of enforcing a security.
• The auction result and the sale instrument signed by VAMC will constitute the evidence of legal title over secured assets for the persons who purchase the secured assets. In particular, relevant Government authorities may rely on the auction result and sale instrument signed by VAMC to issue title documents (e.g. Land Use Right Certificates) to the persons who purchase the secured assets.
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Various ministries are instructed to cooperate with VAMC in the process of enforcing security over bad debts. For example, the Ministry of Justice is required to cooperate with VAMC regarding registration of secured transactions and auctioning methods. The Ministry of Natural Resources and Environment is required to cooperate with VAMC regarding the transfer of land use rights in the process of enforcing a mortgage. Various people’s committee and local polices are also required to cooperate with VAMC.

While VAMC may have substantial legal support in enforcing security used for bad debts, it is not clear VAMC will have sufficient personnel and other resources to take actions in practice. Decree 53/2013 seems to address such concern by allowing VAMC to “authorise” the relevant credit institutions to enforce security used for bad debts.