Unlike other jurisdictions, the treatment of guarantees in the context of a corporate insolvency under Vietnamese bankruptcy law is quite different. Under the Bankruptcy Law,

• If the guarantor is insolvent and the court notifies the guarantor that the court has accepted an application to commence the liquidation procedures of the guarantor, the guarantor must notify the principal obligor and the beneficiary within five days after receipt of the court’s notification;
• If the guarantor is insolvent, the principal obligor must perform the obligations guaranteed by the guarantor in favour of the beneficiary;
• If the guarantor and the principal obligor are both insolvent at the same time then the guarantor must perform the guaranteed obligations in favour of the beneficiary;
• If the guarantor performs the guaranteed obligations in favour of the beneficiary, the guarantor will become an unsecured creditor of the principal obligor;
• If the guarantor is insolvent and the principal obligor is not insolvent then the principal obligor must perform the guaranteed obligations in favour of the beneficiary. The beneficiary will not be considered as a creditor of the guarantor and may not claim the guaranteed obligations against the guarantor;
• If the principal obligor is insolvent and the guarantor is not insolvent or if the guarantor and the principal obligor are both insolvent at the same time then the guarantor must perform the guaranteed obligations in favour of the beneficiary. The beneficiary will not be considered as a creditor of the principal obligor. This is different from other jurisdictions whereby the beneficiary could become a creditor of the principal obligor.