Vietnam collection profile

There is limited publicly available financial information in Vietnam. Only listed companies are required by laws to publish audited financial statements, while private companies are not obliged to publicly disclose their financial data. For these entities, only basic corporate information, such as company name, registration number, legal representative, charter capital, and registered address, can be obtained through the National Enterprise Registration Portal managed by the Ministry of Finance. However, the financial information of enterprises in Vietnam can still be obtained through specialized research and investigation companies through their own private channels.

According to the 2020 Enterprise Law, enterprises in Vietnam are classified into four main types, including:

• Joint-stock company (JSC): A joint-stock company is an enterprise whose charter capital is divided into equal portions called shares. Shareholders may be organizations or individuals, with a minimum of three shareholders and no restriction on the maximum number. This type of company has a high and flexible capital-raising capacity as it is permitted to issue shares to the public and accept an unlimited number of shareholders.
• Limited liability company (LLC): Limited liability companies are divided into single-member limited liability companies and limited liability companies with 2 or more members. The LLC is the most common business model among small and medium-sized enterprises (SMEs) in Vietnam, due to its flexible organizational structure and the limited liability of its members, which is confined to the value of their capital contribution.
• Partnership: A partnership is an enterprise established by at least two general partners, who are jointly and severally liable for all obligations of the company. In addition to general partners, a partnership may also have capital-contributing members, who are only liable within the scope of their capital contribution. General partners have the right to manage and conduct business activities on behalf of the company, representing it in all transactions.
• Sole proprietorship: A sole proprietorship is a business owned and operated by one individual, who is personally liable for all debts and obligations arising from its operations. The owner of a sole proprietorship must be an individual, and this form of enterprise does not have legal personality. Due to its simplicity but unlimited liability, the sole proprietorship is less commonly chosen for large-scale or high-risk business activities.

Vietnam operates under a civil law system, which is much influenced by the French legal tradition. In 2025, Vietnam has implemented several impactful policy changes, marking a step towards the country’s broader economic reform and regulatory modernization agenda. In addition, Vietnam has undertaken a comprehensive restructuring of its administrative and judicial systems to enhance governance efficiency, transparency, and consistency. Notably, as of 1 July 2025, the organizational structure of the People’s Court system has been reformed into three tiers, consisting of the Supreme People’s Court, provincial-level People’s Courts, and regional-level People’s Courts.

Currently, there is no legal requirement compelling debtors to reimburse creditors for debt collection costs incurred due to delayed payments under Vietnamese law. Consequently, creditors typically bear these costs themselves, which may include legal, administrative, and enforcement-related expenses.

Vietnamese law permits the inclusion of retention of title clauses in contracts, under which the seller retains ownership of goods until full payment is received from the buyer. However, the practical enforceability of such clauses remains limited. In practice, RoT clauses are primarily used as a preventive measure, and businesses often combine them with other forms of security, such as deposits, guarantees, or advance payments, to safeguard their interests.

Bank transfer remains the most prevalent payment method in domestic B2B transactions while cash payments are generally limited to low-value transactions or dealings with smaller partners. For international trade, letters of credit (L/C), telegraphic transfers (T/T), and documentary collection methods such as Documents against Payment (D/P) or Documents against Acceptance (D/A) are commonly used.

Before initiating legal proceedings, creditors in Vietnam often seek to resolve payment disputes through direct negotiation with debtors. Such negotiations may involve restructuring payment schedules, extending payment deadlines, or offering partial discounts to facilitate prompt settlement. The outcome of these negotiations largely depends on the debtor’s financial capacity, willingness to cooperate, and the creditor’s intention to preserve the business relationship.

Depending on the parties’ agreement, the applicable dispute resolution mechanism may vary. In most cases where the parties choose to resolve disputes before a competent court in Vietnam, the creditor must file a lawsuit with the competent People’s Court, which is typically the court where the debtor is domiciled or has its registered head office.

To initiate court proceedings, the claimant is required to submit a statement of claim, accompanied by the underlying contract or invoice, evidence of delivery and payment, and any correspondence demonstrating the debtor’s default or acknowledgment of debt. All documents prepared in a foreign language must be translated into Vietnamese and duly notarized and legalized to be accepted by the court.

Under Vietnamese civil law, the statute of limitations for claims arising out of commercial contracts is two (02) years from the date the of infringment of the rights and interests of the claimant.

Under Vietnamese law, creditors may request the court to apply provisional measures once the court has accepted the lawsuit for handling. Such measures may include freezing the debtor’s bank accounts, seizing property, or prohibiting the transfer of assets. To obtain a provisional measure, the applicant must provide sufficient evidence demonstrating the necessity of such action and furnish a security deposit as required by the court.

In court proceedings in Vietnam, parties to a dispute have the right to appeal a first-instance court judgment if they disagree with the decision. An appeal must be lodged within 15 days from the date the judgment is pronounced, or within 15 days from the date of receipt of the written judgment for parties who were not present at the hearing.

Once a court judgment becomes final and legally binding, the winning party may request the competent civil judgment enforcement agency to execute the decision. Initially, the debtor is granted a period for voluntary compliance. If the debtor fails to perform the judgment within this period, the enforcement authority will proceed with compulsory enforcement measures. In practice, the enforcement process in Vietnam may encounter delays, particularly in cases where the debtor lacks sufficient assets or intentionally evades enforcement.

For debt recovery litigation in Vietnam, the duration of proceedings depends largely on the complexity of the case and the level of cooperation from the debtor. In general, first-instance proceedings before the competent court may take approximately six to twelve months from the date of filing the lawsuit to the issuance of a judgment. If the case is appealed, appellate proceedings may further extend the process. In practice, the overall timeframe for debt recovery may be longer, particularly in cases involving uncooperative debtors, asset verification difficulties, or delays during the enforcement stage.

The cost of debt recovery litigation in Vietnam varies depending on the value of the claim. For disputes brought before Vietnamese courts, the minimum court fee is VND 3 million for disputes valued at up to VND 60 million, while the maximum rate applies to claims exceeding VND 4 billion, for which the fee is VND 112 million plus 0.1% of the portion of the claim exceeding VND 4 billion. In addition to court fees, creditors should also anticipate other costs, including lawyer’s fees, translation and notarization expenses, and costs incurred for evidence collection or enforcement activities.

In addition to pursuing legal action before domestic courts, parties in Vietnam may also consider incorporating alternative dispute resolution (ADR) mechanisms in their contracts, including mediation, arbitration and other ADR methods. In recent years, arbitration has emerged as an increasingly preferred method for resolving commercial disputes, offering several advantages such as simplified procedures, shorter resolution timeframes, flexibility in language and venue selection, and respect for party autonomy. Meanwhile, though being highly promoted recently, commercial mediation has not yet gained much attention among businesses due to limited awareness and understanding of mediation procedures.

Parties to contracts involving foreign elements are generally free to agree on a foreign governing law and jurisdiction. Accordingly, disputes may be referred to foreign courts or arbitral tribunals, provided that such arrangements are explicitly stipulated in the contract. In Vietnam, foreign court judgments and arbitral awards are not automatically enforceable. They must undergo a formal recognition and enforcement process before the competent Vietnamese court, in accordance with the Civil Procedure Code and relevant international treaties to which Vietnam is a party.

Vietnamese courts may recognize and enforce foreign court judgments and arbitral awards under certain conditions provided by Vietnamese law and international treaties to which Vietnam is a signatory. In particular, the People’s Courts of Vietnam will consider the recognition and enforcement of foreign judgments and decisions relating to civil, marriage and family, commercial, or labor matters, as well as decisions on property contained in criminal or administrative judgments or decisions of foreign courts, where such recognition is provided under an international treaty to which both Vietnam and the foreign country are members. In cases where no such treaty exists, Vietnam may still recognize and enforce foreign judgments and decisions on the basis of the principle of reciprocity.

With respect to foreign arbitral awards, Vietnam is a member to the 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Award. Accordingly, the arbitral awards issued in other countries members of New York Convention can be considered for recognition and enforcement in Vietnam.

Accordingly, the party seeking enforcement (of foreign judgment or foreign arbitral award) must submit an application to request for recognition and enforcement to the competent Vietnamese court. Once the application is granted and foreign court judgments or arbitral award is recognized, it becomes enforceable in Vietnam in the same manner as a domestic court judgment.

While creditors may attempt to negotiate repayment out of court, formal insolvency proceedings in Vietnam must be initiated and handled through the court system. Upon receiving an application to commence bankruptcy proceedings, the court will set a deadline for the parties to conduct negotiations or reach a settlement before proceeding with the formal adjudication process. However, the Law on Bankruptcy does not preclude out-of-court restructurings or consensual workouts from being undertaken during insolvency proceedings.

During bankruptcy proceedings, a creditors’ meeting is convened, which may adopt a resolution proposing the implementation of a business recovery plan for the insolvent enterprise. Following this, the enterprise must prepare a recovery plan in collaboration with its creditors, the liquidator, or the asset management and liquidation enterprise. If the creditors’ meeting passes a resolution approving the proposed recovery plan, the judge will issue a decision recognizing such resolution, thereby allowing the implementation of recovery measures. Accordingly, the business recovery measures may include raising additional capital; reducing, cancelling, or deferring debts; and adopting other lawful measures aimed at restoring the debtor’s solvency and ensuring the continuation of its business operations.

Regardless of the type of winding-up procedure a company in Vietnam undergoes, the process is generally complex, particularly due to the requirement that all financial obligations of the company must be fully settled. In the case of bankruptcy proceedings, the application to commence bankruptcy can be filed by a creditor, an employee, a trade union representative, or the insolvent company itself. The time required to complete the process varies depending on the company’s asset value and complexity. In some cases, it may take only a few months, while in others, it can extend to one or two years.

The distribution of proceeds from asset liquidation follows a strict statutory order under the Law on Bankruptcy 2014. When the judge issues a decision declaring the enterprise or cooperative bankrupt, its assets are distributed in the following order of priority:

(i) Bankruptcy expenses;

(ii) Outstanding wages, severance allowances, social insurance, health insurance, and other benefits owed to employees under employment contracts and collective labor agreements;

(iii) Debts incurred after the commencement of bankruptcy proceedings for the purpose of restoring the enterprise’s business operations; 

(iv) Financial obligations to the State, unsecured debts owed to creditors listed in the creditors’ register, and the unpaid portion of secured debts where the value of the secured assets is insufficient to cover the debt.

Transactions carried out with the intent to conceal or dissipate assets may be annulled upon the request of the liquidator, the creditors’ representative, or by the court’s own initiative. Assets recovered through clawback actions are added back to the bankruptcy estate for distribution.

Insolvency and liquidation proceedings in Vietnam are lengthy, depending on the case complexity and cooperation of the parties. Cases involving multiple creditors, disputed debts, or asset tracing issues can extend significantly longer.

When a creditor files an application to initiate bankruptcy proceedings, it must be supported by evidence demonstrating that the debt has become due and remains unpaid, such as contracts, invoices, or written acknowledgments of debt.