Navigating the legal procedures for Debt Recovery from Industrial Park Land Use

Foreword

Leasing land use rights and factories within industrial parks are common activities when entrepreneurs embark on business ventures or expand their operations. The rental fees for land use rights and factories often entail substantial value, along with additional costs such as real estate brokerage fees. During the execution of these leasing agreements, some parties may not comply with their contractual obligations to pay on time and in full. How can such outstanding debts be recovered?

ANHISA has served numerous clients, including industrial park developers, industrial parks lessees, and real estate brokers as providing services related to debt recovery and dispute resolution. Based on our experience, businesses would need to pay attention to a professional and effective process as below.

Maintaining communication and regularly monitoring partners: Ensuring regular communication is crucial, as it keeps track of business conditions and cash flows of your Clients. Pursuing outstanding debts from partners with good business results and continuous cash flows is often more favorable, whereas demanding repayment from partners facing liquidity issues may not yield favorable results.

Reminding and requesting payment (pre-litigation or before action) is an effective method for businesses to recover debts by exerting pressure, while also opening opportunities to renegotiate repayment schedules and processes, as well as offsetting remaining balances between parties. Many debts have been successfully recovered during our involvement in debt collection support. However, the success rate at this stage depends largely on the debtor’s goodwill. Reminders and payment requests can be conducted via email, formal written letters, or even with the involvement of lawyers to increase pressure on debtors.

Mediation: Mediation, as an alternative dispute resolution method, is also a suitable solution for effective debt recovery in Vietnam. Currently, mediation is widely chosen by business parties for dispute resolution and reconciliation. Through mediation, creditors can assess the debtor’s ability to pay and liquidity, design repayment schedules, and reach highly enforceable mediation agreements.

Litigation and dispute resolution at Court or Arbitration: In cases where debtors refuse to pay, creditors can file lawsuits with dispute resolution authorities, including arbitration (if parties have a valid arbitration agreement) or Vietnamese courts. Litigation stages generally have higher effectiveness in increasing pressure and achieving a solid legal basis for debt recovery. Nonetheless, high legal costs, including lawyer fees, procedural costs, notarization, authentication, and travel expenses, pose considerations for creditors when deciding to litigate.

Apart from the above issues, conducting corporate searches will also help creditors accurately assess the debtor’s operational status. The asset structures of each debtor are quite distinctive; hence, handling methods for debtors will also vary. For debtors being industrial park developers (with debts often being brokerage fees, tenant introduction fees), they typically have fixed headquarters as their main assets are fixed assets within industrial parks. On the contrary, if the debtor is a lessee (such as a manufacturing enterprise), they may relocate factories elsewhere, or only place factory addresses (branches) within industrial parks while their main headquarters may be located in other provinces or cities, complicating the debt recovery process.

With ANHISA’s experience in similar cases, we are always ready to support our valued partners, whether they are real estate brokers, industrial park developers, or lessees in resolving outstanding debts. We can participate with our clients from the corporate search stage to assess the overall situation, conduct reminders, payment requests through lawyer letters, or support clients in the dispute resolution process, especially in commercial arbitration or court.

ANHISA LLC AND OUR EXPERTISE

ANHISA LLC is a boutique law firm specializing in Dispute Resolution, Shipping and Aviation. Being the leading lawyers in various fields of law, our qualified, experienced, and supportive team of lawyers know how to best proceed with a case against or in relation to Vietnamese parties and are well equipped to provide clients with cost-effective and innovative solutions to their problems.

Regarding dispute resolution, we have represented Vietnamese and foreign clients in the resolution of disputes involving maritime, construction, commercial and civil matters. Our lawyers are well-equipped to offer services on a wide range of disputes and conflicts, whether cross-border or purely domestic, to appear before any Judges or Arbitral Tribunals. The firm is prepared to assist clients in designing the appropriate dispute resolution procedure to help resolve conflicts as efficiently and cost effectively as possible, which may involve combining elements of mediation and other methods such as arbitration.

AUTHORS

DANG VIET ANH

Managing Partner

Mobile: (+84) 983 467070

Email: anh@anhisa.com

NGUYEN THI TUYET MAI

Senior Associate

Mobile: (+84) 939 117398

Email: mai@anhisa.com

TRAN DUC MANH

Associate

Mobile:  (+84) 337 649204

Email: manh@anhisa.com

This article aims to furnish our clients and contacts with general information on the relevant topic for reference purposes only, without creating any duty of care on the part of ANHISA. The information presented herein is not intended to serve, nor should it be considered, as a substitute for legal or other professional advice.