Comprehensive Checklist for the Dissolution of an Enterprise: Ensuring a Smooth and Compliant Termination Process

1. Comprehensive checklist for the dissolution of an enterprise: Ensuring a smooth and compliant termination process

The aftermath of the Covid-19 pandemic has presented numerous challenges and opportunities for businesses worldwide. As enterprises strive to regain their footing and resume normal operations, there's also a growing concern regarding those that choose to dissolve their businesses to avoid debt repayment. This practice, known as the illegal dissolution of the business to evade debt obligations, has significant implications for creditors. This article delves into the complex issue of debt recovery from dissolved debtors, shedding light on the legal aspects and potential solutions.

2. Enterprise dissolution check

The main concept of an "enterprise dissolution check" is a thorough and systematic review or checklist of tasks and requirements that need to be completed when dissolving a business or enterprise.

3. Legal Conditions for Enterprises to Dissolve

Before we explore debt recovery, it's essential to understand the legal framework for enterprise dissolution. According to Clause 2, Article 207 of the 2020 Law on Enterprise, businesses may only be dissolved when they ensure the payment of all debts and obligations, among other criteria. This condition aims to protect the rights of various stakeholders, including employees, creditors, business partners, and state agencies. Whether a business chooses voluntary or forced dissolution, this condition must be met to proceed legally.

However, the reality is that many debtors dissolve their enterprises without meeting these conditions, fail to pay their debts, and intentionally omit outstanding debts when submitting dissolution documents to evade their financial obligations. This poses challenges as dissolution dossiers may lack accuracy, honesty, and legality.

4. Can Debts be Recovered When the Debtor Has Dissolved?

Creditors often wonder if it's possible to recover debts from a debtor that has declared dissolution. According to Clause 3, Article 210 of the Enterprise Law 2020, if the dissolution dossier is inaccurate or forged, the individuals specified in Clause 2 of this Article bear responsibility for paying unresolved employees' rights, unpaid taxes, other outstanding debts, and are personally accountable before the law for any consequences. This includes members of the Board of Directors of joint-stock companies, members of the Board of Members of limited liability companies, company owners, directors, partnership members, and legal representatives.

Furthermore, Clause 1, Article 288 of the Civil Code 2015 establishes the obligation of solidarity between parties, allowing the right party to request any of those who are obliged to fulfill the full obligation. In the case of dissolved debtors, the individuals holding key positions must collectively assume responsibility for the debts.

In light of this, creditors who haven't received payment when the debtor has dissolved have the right to request individuals in key positions of the debtor, as specified in Clause 2, Article 210 of the Law on Enterprise 2020, to pay the full debt. If the debtor fails to comply, creditors can initiate legal action to protect their rights and interests. Additionally, parties with related interests can report the illegal dissolution of the debtor to the appropriate state agency.

5. Collecting Information on Responsible Enterprise Heads

One challenge in debt recovery is the lack of information about the key managers of the enterprise responsible when it dissolves. Enterprises often focus on the legal representative but may overlook collecting details about the head manager. This can complicate the process of suing the debtor, especially if the debtor has hired a legal representative and terminated their labor contract or if the legal representative is a foreign national who has left the country.

To mitigate this, when establishing and conducting transactions with partners, enterprises should gather more information about the personal details and addresses of enterprise managers, in addition to the legal representative. They can also verify information about partners through The Electronic Statement on the National Business Registration Portal page.

This article provides valuable legal insights on debt collection from dissolved debtors, offering guidance to creditors facing such situations. Understanding the legal framework and potential recourse is crucial for safeguarding your rights and interests.

6. Conclusion

The dissolution of enterprises without debt repayment poses challenges for creditors. However, the legal framework provides avenues for debt recovery, ensuring that creditors can pursue their rights and interests, even when debtors have dissolved their businesses.

FAQs

1. Can a creditor initiate legal action against a dissolved debtor to recover unpaid debts?

   • Yes, if the debtor has dissolved the enterprise without paying debts, creditors can take legal action against key individuals responsible for the dissolved enterprise.

2. What is the legal basis for debt recovery from dissolved debtors?

   • The legal basis is provided in the Enterprise Law 2020 and the Civil Code 2015, which outline the responsibilities of key individuals in dissolved enterprises.

3. How long is the period during which creditors can request debt repayment from dissolved debtors?

   • Creditors have a period of 5 years from the date the debtor submits the dissolution dossier to request debt repayment.

4. What information should enterprises collect about responsible enterprise heads?

   • Enterprises should gather personal information and addresses of enterprise managers, in addition to the legal representative, to facilitate debt recovery if necessary.