VIETNAM Law and Practice Contributed by: Tran Thai Binh and Duong Thi Minh Han, LNT & Partners
• the land-use right may not be retrained for any judgment enforcement; • the right must still be within the land-use term (with at least seven years’ land-use right remaining); • the LUR is not subject to interim injunction; and • no financial obligation related to LUR must be pending. 3.6 Formalities When a Borrower Is in Default When a borrower is in default, the credit institu - tion (lender) is required to consider loan repay - ment restructuring before or within ten days prior to the agreed due date, taking into consideration the financial capacity of the credit institutions and evaluation of the borrowers’ debt repayment capacity. If the lender refuses to execute the debt restructuring and decides to recognise the delayed payment as an overdue debt, a notice must be served to the borrower of its repayment status concerning such overdue debt. The collateral realisation will proceed according to the agreement between the lenders and bor - rowers, and after notice on the same is served to the borrower and other secured creditors within 15 days prior to realisation (if not other - wise agreed). Subject to various factors, the time needed to realise real property security varies. In the event of realisation by way of auction, there are more parties involved, which causes the pro - cedure to be prolonged. It also takes time to find the appropriate buyer to acquire the property at a reasonable price. Generally, the expected range of time to successfully enforce and realise on real estate security is approximately six to 12 months or more. In order to be effective against third parties, the collateral as real estate must be registered
with the Land Registry Office to take priority over unsecured obligations. In respect of other secured obligations on the same collateral, the priority order is based on the chronological order of establishment. Regular valuation of collateral is required to ensure that the property’s value is sufficient to cover the loan principal and interest in the event of the borrower’s default. 3.7 Subordinating Existing Debt to Newly Created Debt Existing secured debt will be subordinated to the newly created debt if the latter is properly reg - istered while the former is not, or if the lenders/ creditors agree on the change of order of priority for repayment. 3.8 Lenders’ Liability Under Environmental Laws See 2.7 Soil Pollution or Environmental Con- tamination . 3.9 Effects of a Borrower Becoming Insolvent The effect on the security interest when the borrower is insolvent and subject to a bank - ruptcy case processed by a competent court is dependent on whether it is subject to the business recovery plan. If not, then the secured assets will be realised in accordance with the agreement between the parties if the secured obligations fall due. If the obligation is not due, the competent court will postpone the security agreement and repayment made by realisation of the secured property if the agreement is con - cluded before it is subject to a bankruptcy case. If the secured property is subject to a business recovery plan, its realisation will be resolved by the general meetings of creditors.
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