“Dead businesses” suddenly become valuable

“Dead businesses” suddenly become valuable

Many investors are buying “dead or inactive businesses” instead of setting up new businesses, as this allows them to save time and dodge legal procedures.

Nguyen Hung Nam in Hoang Mai District in Hanoi once ran a small business in 2008. However, since he repeatedly took losses, he decided to shut down the business but did not declare bankruptcy.

Nam has been working for a big group as an employee for several years and he nearly forgot about his dormant business.

He revived his business recently when receiving a call from a stranger who said he wanted to buy the business. However, the caller said he only wanted the legal status of the business, while refusing to buy fixed assets, offices and other items.

Nguyen Trung Thanh, the owner of a business in Cau Giay District in Hanoi, also said he sold his business, an ad and media firm which had operated for a few years, for VND300 million.

Thanh said his business was small but it was attractive to investors because it did not have any outstanding debts.

An analyst noted that dead businesses have become more valuable since the beginning of the year, when the Ministry of Finance’s Circular No 219 took effect. The circular stipulates that new businesses must have fixed assets worth over VND1 billion.

Economists said the new regulation on the minimum fixed asset value of VND1 billion aims to restrict the establishment of “bogus companies”.

Many businesses were registered in the past, but they never became operational in reality. The owners of the “bogus companies” just wanted to have legal status to conduct illegal acts, such as trading financial invoices.

The regulation has not been applauded by investors, who believe that it would hinder the development of small businesses.

Investors do not want to spend over VND1 billion to buy fixed assets and would prefer using it as working capital.

To avoid the regulation, they can buy businesses which are inactive, but still alive on paper.

When an investor takes over a business, he can inherit all the business assets, legal status and liabilities.

The high demand for dead businesses has created a new job – trading dead businesses and business licenses.

Nguyen Quoc Trung in Thanh Xuan District in Hanoi, who is a founding shareholder of a business now on the verge of bankruptcy, has bought back the capital contribution from other shareholders. He wants to become the only owner of the business, and plans to sell the business later if he can find buyers who will pay reasonable prices.

Lawyer Truong Thanh Duc from Basico Law Firm noted that in these cases, buyers could face risks because they may not have sufficient information about the debts the dead businesses have incurred.

vietnamnet