Under the Law on Bankruptcy 2014, creditors (chủ nợ) of a bankrupt enterprise include unsecured creditors, partially secured creditors (chủ nợ có bảo đảm một phần) and secured creditors (chủ nợ có bảo đảm). While it is not entirely clear, it appears that partially secured creditors are considered as a separate class of creditors and have their own rights during a bankruptcy proceeding.

Under the Law on Bankruptcy 2014,

a secured creditor is defined as a creditor having the right to require the relevant bankrupt enterprise to perform an obligation to repay a secured debt with the assets of the enterprise or a third party; and
a partially secured creditor is defined as a creditor having the right to require the relevant bankrupt enterprise to perform an obligation to repay a secured debt with the assets of the enterprise or a third party “where the value of such assets is less than that debt”.

The definition of a secured creditor does not clearly refer to “fully secured creditors” since it does not require the value of the secured assets is equal or more than the debt owed to a secured creditor. Accordingly, technically, the term “secured creditor” could cover both partially secured creditor and fully secured creditor. That said, a more in-depth reading of the Bankruptcy Law 2014 suggests that partially secured creditors are treated as a separate class of creditors. However, it is not clear whether this distinction is created by design or by chance by the draftsman of the Bankruptcy Law 2014.

In particular, the table below shows the differences between rights of partially secured creditor and secured creditors:

Rights under the Bankruptcy Law 2014	Partially secured creditor	Secured creditors
To request for documents and evidences	x	x
To receive notice in order to exercise its rights	x	x
To defend its rights and legitimate interests on its own or by another person	x	x
To participate in the management, liquidation of assets at the request of the judge, enforcement agencies, liquidators or liquidator.	x	x
To submit a request for commencement of bankruptcy proceeding; To amend the request for commencement of bankruptcy proceeding; To appeal a decision to reject the request for commencement of bankruptcy proceeding.	x
To propose to the court the liquidator provider before commencement of bankruptcy proceedings	x
To request the court to apply, amend or cancel interim measures	x
To participate in negotiation with the insolvent enterprise	x
To request a review of the decision to commence (or not commence) the bankruptcy proceeding	x	x
To request the court to suspend performance of contracts which may be disadvantageous to the enterprise	x	x
To request the liquidator to be removed in specific cases.	x	x
To request the court to declare a transaction invalid or to review a decision invalidating a transaction.	x	x
To set off obligations under contracts which are entered into before commencement of a bankruptcy proceeding.	x	x
To send payment demand notice to the liquidator	x	x
To be recorded in the list of creditors	x	x
To request the liquidator to supplement the creditor to the list of creditors	x	x
To request the judge to review the list of creditors	x	x
To participate the meeting of creditors (Hội nghị chủ nợ)	x	x
Its presence is used to determine the quorum of a meeting of creditors	x
To speak and discuss at a meeting of creditors	x	x
To vote at a meeting of creditors including decisions on (1) suspending the request to commence bankruptcy proceedings, (2) proposal to apply business recovery plan, or (3) request for a declaration of bankruptcy	N/A	N/A
To establish creditor representative committee	N/A	N/A
To request the chief judge to review the resolution of the meeting of creditors	x	x
To request a review of the decision to suspend the bankruptcy proceeding	x	x
To give opinion on the business recovery plan	x	x
To approve the business recovery plan including subsequent amendment	N/A	N/A
To monitor the enterprise’s operation after the business recovery plan is approved	x	x
To get priority in payment from the secured assets	x	x
To request a review of the decision to declare the enterprise bankrupt	x	x
To be allocated with assets after there is a decision declaring the enterprise bankrupt.	x

This post is written by Tran Duc Long and Nguyen Quang Vu.

Vietnam Business Law