Order of payment priority between unenforceable secured transactions

Under Article 308 of the Civil Code 2015, where all secured transactions relating to the same assets are not enforceable against a third person (unenforceable secured transactions), the order of payment will be determined according to the order in which the unenforceable secured transactions were established. Article 47a of Decree 163/2006 contains a similar provision governing the order of payment priority between the beneficiary of a guarantee and other unenforceable secured transactions. In particular,  the order of payment priority among the beneficiary of a guarantee and other unenforceable secured transactions will also be determined according to the order in which these transactions are established.

These provisions give rise to the following issues:

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Written by Lawyers VNLaw On In

New measures to address non-performing loans in Vietnam

The National Assembly has just passed an important resolution specifically addressing non-performing loans (NPLs) held by credit institutions (NPL Resolution). The NPL Resolution takes effect for a period of five years from 15 August 2017. The NPL Resolution only applies to (1) NPLs arising before 15 August 2017 or (2) NPLs arising after 15 August 2017 from loans which have been extended before 15 August 2017. The NPL Resolution does not make clear whether a credit institution may acquire NPLs from other non-bank entities and use the powers under NPL Resolution to enforce such NPLs.

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Written by Nguyen Quang Vu On In

Classification of non-performing loans in Vietnam

A foreign investor interested in investing in non-performing loans (NPL) in Vietnam should at first know which type of NPL exists in Vietnam. Depending on the types of the existing lenders, NPLs can be classified into:

  • NPLs held by onshore credit institutions (Bank NPL). A foreign entity may acquire and transfer Bank Loans in general. The legal framework for investing in Bank NPLs is most advanced. There are separate regulations of the State Bank of Vietnam (SBV) on transfer of bank loans and there has just been a special resolution of the National Assembly dealing with Bank NPLs incurred before 15 August 2017 (NPL Resolution). In theory, a Bank Loan transferred to a foreign entity could be considered as a foreign loan and be subject to foreign loan regulations. However, the SBV has indicated that a Bank NPL sold to a foreign entity is not regarded as a foreign loan;
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Written by Lawyers VNLaw On In ,

New limitation on foreign loans and grant of guarantees by Vietnamese Governments

Under Decision 544/2017, the Prime Minister has approved the program for management of Government loans for the period 2016 – 2018. The Prime Minister is exercising his authority under the Law on Management of Public Debts 2009. Decision 544/2017 contains various limitations on the ability of Vietnamese companies to obtain foreign loans under this period. In particular,

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Written by Nguyen Quang Vu On In