New regulations for bankruptcy asset caretakers in the third draft of the Law on Bankruptcy were discussed in Hanoi on December 17 by the International Finance Corporation and the Vietnam Business Forum.

According to the drafting committee, under the current law the members of an asset liquidation team held multiple tasks at the same time and were ineffective in overseeing bankruptcy assets.

"The ineffectiveness is because there are too many parties on the team, plus they have limited knowledge, mostly having few skills in statistics and liquidation," stated Nguyen Thi Dieu Hong from the Vietnam Chamber of Commerce and Industry's legislation committee.

This is the first time the concepts of a bankruptcy asset caretaker have been put into the law, replacing the asset liquidation team. The draft added Article 12, stating that an asset caretaker is defined as a lawyer chosen by the court.

However, KPMG's director of restructuring services Phil Smith recommended the expansion of conditions for the asset caretaker, such as being a qualified accountant.

In many places around the world, professionals in practicing bankruptcy were normally those in the legal and accounting industries, said Smith.

The draft also regulates that an asset caretaker has the responsibility of helping businesses restructure. Therefore, he must have considerable knowledge and experience in corporate governance.

In addition, the Vietnam International Law Firm said that other legal documents did not define how a lawyer could perform the jobs of an asset caretaker. The drafting committee should consider carefully not creating conflicts between the Law on Bankruptcy and the Law on Lawyers.

Enterprises and creditors can negotiate about the filing for bankruptcy is the content of a new provision that is not included by the current law.

According to the law firm, this would allow the parties to agree on a solution to handle debts without jeopardising business operations.-VNA