Q&A · Dissolution and bankruptcy · Comparison
Bankruptcy or dissolution in Vietnam? Comparison under the 2025 law
Translated from the Vietnamese original; where they differ, the Vietnamese text and the law prevail.
Awaiting review by a lawyer. Each rule cites its source; where the texts are unclear, the page says so.
Short answer: Dissolution (giải thể) is an enterprise ending itself when it can pay all its debts (clause 2, Article 207 of the Law on Enterprises (Luật Doanh nghiệp)), handled at the Business Registration Office (Phòng Đăng ký kinh doanh). Bankruptcy (phá sản) is the status of an enterprise that is insolvent (mất khả năng thanh toán) (it has not paid a debt 06 months after the due date) and against which a court has issued a decision declaring bankruptcy (clauses 2 and 4, Article 5 of the Law on Rehabilitation and Bankruptcy 142/2025/QH15 (Luật Phục hồi, phá sản 142/2025/QH15)). The new law takes effect from 1/3/2026, replaces the Bankruptcy Law 51/2014/QH13 (Luật Phá sản 51/2014/QH13) (Article 87(1) and (2) of the Law on Rehabilitation and Bankruptcy), and adds a rehabilitation (phục hồi) procedure for enterprises at risk of insolvency (Article 24 of the Law on Rehabilitation and Bankruptcy). The legal representative (người đại diện theo pháp luật), the owner, the Members' Council (Hội đồng thành viên) and the Board of Directors (Hội đồng quản trị) are obliged to file a petition when the enterprise is insolvent (clause 2, Article 38 of the Law on Rehabilitation and Bankruptcy).
Comparison table: dissolution and bankruptcy
| Criterion | Dissolution | Bankruptcy |
|---|---|---|
| Condition | All debts paid, no dispute at a court or arbitration (Article 207(2) LDN 2020) | Insolvent: has not paid a debt 06 months after the due date (Article 5(2) LRB 2025) |
| Deciding body | Provincial Business Registration Office where the head office is located (Article 64(1) and (3) Decree 168/2025) | Regional People's Court (Tòa án nhân dân khu vực) where the head office is located (Article 6(2)(a) LRB 2025) |
| Who starts it | The owner, Members' Council, General Meeting of Shareholders (Đại hội đồng cổ đông) (Article 207(1)(b) LDN 2020); or because the certificate is revoked (Article 207(1)(d) LDN 2020) | Unsecured creditors, partly secured creditors, employees, shareholders and members have the right; the legal representative, owner, Board of Directors (HĐQT) and Members' Council (HĐTV) have the obligation; the tax authority must file under the Law on Tax Administration (Article 38(1), (2) and (3) LRB 2025) |
| Who handles the assets | The owner, HĐTV or HĐQT liquidates them itself (Article 208(2) LDN 2020) | An asset administrator (Quản tài viên) or asset management and liquidation enterprise (Article 5(9) and (10) LRB 2025); an enforcement officer (Chấp hành viên) enforces the decision declaring bankruptcy (Article 76(2) and (3) LRB 2025) |
| Order of payment | Employees, tax, other debts (Article 208(5) LDN 2020) | Bankruptcy costs, wages, insurance, allowances, debts incurred for rehabilitation, obligations to the State, unsecured debts (Article 46(1) LRB 2025) |
| Insufficient assets | Cannot dissolve (Article 207(2) LDN 2020) | Divided pro rata among creditors of the same rank (Article 46(3) LRB 2025) |
| Costs | The texts cited here do not set a fee for registering dissolution | Bankruptcy fee and advance on bankruptcy costs; some petitioners do not have to pay (Article 19 and Article 20(2) LRB 2025) |
| Earlier transactions | From the dissolution decision, concealing assets, mortgaging and signing new contracts are prohibited (Article 211(1) LDN 2020) | Certain transactions in the 06 months before the date proceedings open are deemed void (Article 49(1) LRB 2025) |
| Consequences for managers | If the file is false, joint liability for debts for 05 years (Article 210(3) LDN 2020) | May be barred from founding or managing enterprises for 03 years if the breach was intentional (Article 84(3) LRB 2025) |
In the table: LDN 2020 is the Law on Enterprises 59/2020/QH14 (Luật Doanh nghiệp); LRB 2025 is the Law on Rehabilitation and Bankruptcy 142/2025/QH15 (Luật Phục hồi, phá sản); Decree 168/2025 is Decree 168/2025/NĐ-CP (Nghị định 168/2025/NĐ-CP).
When must an enterprise file for bankruptcy?
When the enterprise is insolvent, that is, it has not performed its obligation to pay a debt 06 months after the due date (Article 5(2) of the Law on Rehabilitation and Bankruptcy). At that point the legal representative; the Board of Directors of a joint-stock company; the Members' Council of an LLC with two or more members or of a partnership; the owner of a private enterprise; and the owner of a single-member LLC are obliged to file a petition to open bankruptcy proceedings, unless a petition for rehabilitation has already been filed (Article 38(2) of the Law on Rehabilitation and Bankruptcy). Failing to file means being answerable before the law, and if damage arises after the time of insolvency because no petition was filed, compensation must be paid (Article 38(5) of the Law on Rehabilitation and Bankruptcy).
In other words: the dissolution procedure cannot be used to "close" an enterprise that cannot pay its debts, because the dissolution file must include a list of creditors and amounts paid (point b, clause 1, Article 210 of the Law on Enterprises), and the tax authority will refuse if tax is still owed (Article 64(5) of Decree 168/2025/NĐ-CP (Nghị định 168/2025/NĐ-CP)). The Law on Enterprises refers on: bankruptcy is carried out under the law on bankruptcy (Article 214 of the Law on Enterprises).
What is the new rehabilitation procedure?
The Law on Rehabilitation and Bankruptcy 2025 allows an enterprise at risk of insolvency (unable to pay a debt falling due within 06 months, or a debt that is due but not yet more than 06 months overdue) or already insolvent to petition for the rehabilitation procedure (Article 5(1); clause 1, Article 24 of the Law on Rehabilitation and Bankruptcy). Those entitled to petition: the legal representative, the Board of Directors, the Members' Council, the owner of a private enterprise, and the owner of a single-member LLC (Article 24(1)). The petition must come with a business rehabilitation plan (Article 25(1)); the enterprise completes the plan within 30 days from the date the petition is accepted (Article 28(3)), and the creditors' meeting (Hội nghị chủ nợ) then considers and approves it (Article 33(7)(a) of the Law on Rehabilitation and Bankruptcy).
Is there a simplified procedure for small enterprises?
Yes. Simplified rehabilitation and simplified bankruptcy procedures apply to enterprises with 20 or fewer unsecured creditors and total principal debt of VND 10 billion or less, or to small and micro enterprises (Article 68(2); Article 70(1) of the Law on Rehabilitation and Bankruptcy); the time limits are half those of the ordinary procedure (Article 69(1); Article 71(1)). If the enterprise has no assets left, or its assets are not enough to pay the fee and the advance on bankruptcy costs, the court considers declaring bankruptcy within 30 days from accepting the petition (Article 70(1)(c); Article 71(2)). In the ordinary procedure, the judge decides whether or not to open bankruptcy proceedings within 30 days from accepting the petition (Article 41(1) of the Law on Rehabilitation and Bankruptcy).
After bankruptcy, does the business owner still owe debts?
A decision declaring bankruptcy does not release the owner of a private enterprise or the general partners of a partnership from their property obligations to creditors who have not been paid, unless otherwise agreed or provided by law (Article 66(1) of the Law on Rehabilitation and Bankruptcy). For LLCs and joint-stock companies, only what remains after all debts are paid (if anything) belongs to the owner, members or shareholders (Article 46(2) of the Law on Rehabilitation and Bankruptcy). As for tax, an enterprise declared bankrupt that has paid under the law on rehabilitation and bankruptcy and has no assets left has its tax debts written off (Article 21(1)(b) of the Law on Tax Administration 108/2025/QH15 (Luật Quản lý thuế 108/2025/QH15)).
After the court opens bankruptcy proceedings, the Business Registration Office changes the enterprise's status to "in bankruptcy proceedings" (đang làm thủ tục phá sản) within 03 working days; when there is a decision declaring bankruptcy, it changes to "bankrupt" (đã phá sản) (Article 72(1)(a) and (b) of Decree 168/2025/NĐ-CP (Nghị định 168/2025/NĐ-CP), as amended by Article 14 of Decree 296/2026/NĐ-CP (Nghị định 296/2026/NĐ-CP)).
When to ask a lawyer or tax agent
- The enterprise has a debt nearly 06 months overdue with no source to pay it.
- You are weighing rehabilitation, bankruptcy and selling the enterprise.
- Assets have been sold or a debt paid to one creditor in the last 06 months.
- Creditors or employees are threatening to petition to open bankruptcy proceedings.