THE MINISTRY OF JUSTICE
SOCIALIST REPUBLIC OF VIET NAM
Hanoi, August 15, 2017
To: Directors of Departments of Civil Judgment Enforcement of provinces and central-affiliated cities
On June 21, 2017, during the 3rd session, the 14th National Assembly has passed Resolution No. 42/2017/QH14 on pilot settlement of bad debts of credit institutions (hereinafter referred to as Resolution No. 42/2017/QH14) and Directive No. 32/CT-TTg dated July 19, 2017 of Circular on initiation of Resolution No. 42/2017/QH14. With a view to apply consistently regulations of Resolution No. 42/2017/QH14, with consultation of Department 11 affiliated to the Supreme People’s Procuracy, the Legal Department affiliated to the State bank of Vietnam and the Tax Policy Department affiliated to the Ministry of Finance, General Department of Civil Judgment Enforcement provides guidelines for settlement of bad debts and collateral of credit institutions, branches of foreign banks, state-owned organization which is established by the Government to settle bad debts of credit institutions (hereinafter referred to as credit institutions) as follows:
1. Rules for application
Resolution No. 42/2017/QH14 comes into force from August 15, 2017 and implements within 5 years from the date of entry into force. Accordingly, from August 15, 2017 to expiry date of this Resolution, civil enforcement agencies shall apply regulations of Resolution No. 42/2017/QH14 to settle bad debts and dispose of collateral tied to bad debts of credit institutions.
If the settlement of bad debts or disposal of collateral tied to bad debts of credit institutions have been enforced partly or have not been enforced yet before August 15, 2017 but procedures for judgment enforcement are gone through in accordance with the Law on Civil Judgment Enforcement and its guiding documents, the judgment enforcement procedures and results still be recognized. Subsequent judgment enforcement procedures regulated by Resolution No. 42/2017/QH14 shall comply with this Resolution.
2. Guidelines for Resolution No. 42/2017/QH14 in respect of civil judgment enforcement
2.1. Rules for determining bad debts (Article 4)
Bad debt prescribed in Article 4 of Resolution No. 42/2017/QH14 refers to: Any debt which has incurred and been considered as bad debt before August 15, 2017; or any debt which has incurred before August 15 and been considered as bad debt during the effective period of the Resolution.
Consequently, the credit institution must send a report on bad debts mentioned in the court’s judgments and decisions in order for the civil enforcement agency to apply Resolution No. 42/2017/QH14 during the judgment enforcement.
2.2. Seizure of collateral (Article 7)
Pursuant to Article 7 of Resolution No. 42/2017/QH14, a credit institution may not seize the collateral tied to bad debt which has been attached or apply measures to ensure execution of judgments as per the law. Accordingly, although the civil enforcement agency enforces the attachment of collateral (including attachment prescribed in Article 90 of the Law on civil judgment enforcement) or applies measures to ensure execution of judgments, the credit institution still is not entitled to seize the collateral.
If involved parties have agreed upon judgment self-enforcement, the civil enforcement agency shall enforce civil judgments in accordance with law on civil judgment enforcement (for example: if involved parties have agreed upon requesting the enforcement agency to partly or wholly suspend rights and interests received from the judgment/decision, the civil enforcement agency shall apply Point c Clause 1 Article 50 of the Law on Civil Judgment Enforcement to make corresponding suspension if the agreement does not prejudice a third party's rights and legitimate interests).
2.3. Attachment of collateral of judgment debtor (Article 11)
From August 15, 2017, the civil enforcement agency shall attach the collateral tied to bad debts as prescribed in Article 90 of the Law on Civil Judgment Enforcement only if: (i) a court’s judgment/decision on financial support or indemnities in terms of life and health is enforced; or (ii) the credit institution has given a written consent of attachment.
If the civil enforcement agency has already enforced the attachment as prescribed in Article 90 of the Law on Civil Judgment Enforcement before August 15, 2017, it shall keep further enforcement as prescribed in law on civil judgment enforcement.
2.4. Debts’ priority over disposal of collateral (Article 12)
From August 15, 2017, with the sum of money derived from disposal of collateral tied to bad debts the civil enforcement agencies shall give payment of secured debts priority over unsecured debts to credit institutions after deducting from enforcement costs as prescribed in law on civil judgment enforcement. Judgment debtor’s other debts only be repaid in the aforesaid sum of money is greater than the sum of the secured debts and enforcement costs.
With regard to court fees, the civil enforcement agency shall enable involved parties and persons with relevant interests and obligations to reach an agreement to ensure the amounts payable to government budget and finish the judgment enforcement.
Directors of Departments of Civil Judgment Enforcement of provinces and central-affiliated cities shall provide guidelines in this Official Dispatch for executors, officials and sub-departments in administrative divisions to ensure the consistent implementation nationwide. The difficulties that arise during the implementation must be reported to General Department of Civil Judgment Enforcement for consideration./.
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