Under what circumstances can the Court suspend the bankruptcy proceedings?

Question

If after initiating bankruptcy proceedings, the petitioner requests withdrawal of the bankruptcy petition, may the Court suspend the progression of the bankruptcy proceedings?

Answer:

According to Clause 1, Article 86 of the Law on Bankruptcy regarding the suspension of bankruptcy proceedings, from the date the People’s Court makes a decision to initiate bankruptcy proceedings until the date of the decision to declare bankruptcy for the enterprise or cooperative, if the enterprise or cooperative is not insolvent, the People’s Court shall make a decision to suspend the bankruptcy proceedings. Therefore, if the petitioner initiates bankruptcy proceedings and subsequently requests to withdraw the bankruptcy petition, we will resolve it as follows:

When the petitioner requesting bankruptcy proceedings is the sole debtor or all creditors unanimously agree to withdraw the bankruptcy petition, the Court shall contemplate suspending the bankruptcy proceedings as per Clause 1, Article 86 of the Bankruptcy Law. This consideration comes into play when there is substantial evidence demonstrating that the enterprise or cooperative, which is the subject of the bankruptcy request, has completely settled all debts with every creditor, or when a consensus exists among the creditors and the enterprise or cooperative concerning the restructuring of debt payments. In this case, we consider the enterprise or cooperative not insolvent due to the absence of outstanding debts.

If the enterprise or cooperative has other creditors, the Court shall base its decision on the results of summoning the creditors’ meeting and the resolutions of the creditors’ meeting to determine whether the enterprise or cooperative is truly insolvent or not, in accordance with Article 86 of the Law on Bankruptcy.

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Harley Miller Law Firm “HMLF”

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