Currently, debt collection in Vietnam meets many difficulties because the debtors use a variety of sophisticated measures to avoid, prolong the payment period. When enterprises found out, these debtors had already taken measures. This makes the success rate of debt collection plummet. Therefore, identifying the avoidance behavior of the debtor is very important. It helps enterprises to prevent the behavior of debtors early. Therefore, this article will show the avoidance behavior of the debtor as well as solutions for enterprises when facing a similar situation.
1. The debtor hides the actual operating address
This is a behavior usually occurring when an enterprise collects the debt. In many cases, when an enterprise collects the debt, it is found that the debtor had no longer operated at the address stated in the Contract or Agreement; no longer operated at the headquarter address which the debtor registered with the competent authority. When the enterprises work and discuss with the debtor, the debtor is always intentionally hiding the actual operating address for the following reasons:
- Requesting the enterprise to send documents at the registered headquarter address, the debtor will appoint a person to receive;
- Discussing, working through messages and email is enough, does not agree to work directly;
- When the enterprise requests to provide the actual operating address, the debtor is always evasive and does not agree to provide.
When avoidance behavior of the debtor are implemented by hiding the actual operating address as above, the enterprise can collect evidence such as photos, videos to prove that the debtor does not operate at the registered address and submit a denunciation of the act “doing business in contravention of the scope, subjects, scale, time limit, area, location or items stated in the granted business license” to the competent authority (Clause 2 Article 6 Decree No. 98/2020/ND-CP). The enterprise should actively request the competent authority to accept the denunciation and sanction the debtor’s administrative violations. This can put pressure on the debtor, especially when the debtor is administratively sanctioned.
2. The debtor sells assets, withdraws capital of the company, and transfers the owner
Another avoidance behavior of the debtor is that the debtor sells all assets, withdraws capital of the company, and transfers the owner, the legal representative, leaves only the “shell” of the company.
Legally, the company is still operating or just suspended. However, in reality, the company has no longer operated and has no assets to pay the debt. These companies do not carry out dissolution or bankruptcy procedures because if they do it, they will have to pay all debts as well as taxes and financial obligations to the competent authorities. In addition, the information of the owner, the new legal representative is often vague, unclear, and cannot be verified.
This avoidance behavior of the debtor makes enterprises difficult because there is no specific information about the phone number, address of the owner, the new legal representative; unable to find and request the old owner, legal representative to pay the debt because the debtor is a legal entity; the debtor has no assets to pay. In this case, TNTP evaluates the possibility of successful debt collection as low.
To avoid this situation, enterprises need to regularly contact and monitor the debtor’s operating status before the debtor finishes selling assets, withdrawing capital, and transferring the owner, the legal representative. If the enterprise has grounds to believe that the debtor is facing financial difficulties or carrying out procedures to sell the company’s assets, changing the legal representative or the owner, the enterprise should apply the following measures to urge the debtor to pay the debt as quickly as possible because once the debtor has finished selling assets, it will be very hard for the enterprise to collect the debt.
Above are legal sharings that could help enterprises in identifying avoidance behaviors of the debtor, from which to propose appropriate debt collection plans. We hope this article is useful for you.
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TNTP & Associates International Law Firm
Lawyer Nguyen Thanh Ha