Facing Difficulties, Many Business Owners Sell Houses and Land to Cope - Vietnam News

For example, at SMC Trading Investment Joint Stock Company (Công ty cổ phần Đầu tư Thương mại SMC), the board of directors has made consecutive decisions to transfer assets to restructure business operations.

Most recently, the company approved the transfer of land use rights and assets attached to the land at SMC Da Nang One Member Limited Company (Công ty TNHH MTV SMC Đà Nẵng). The mentioned land plot is located in Cam Le district, Da Nang city, with an area of 27,731 square meters. The expected transfer price is over 96 billion VND (about 3.9 million USD).

In the difficult context, SMC has had to sell assets repeatedly. In November 2023, SMC sold land and assets at SMC Binh Duong. In mid-April this year, SMC's board of directors passed a resolution to transfer land use rights, house ownership, and assets attached to the land at 681 Dien Bien Phu street for 170 billion VND (about 6.9 million USD). This is also the company's headquarters. It's important to consider the tax on sale of business assets and factor in liquidation costs when making these decisions.

Regarding the business situation, the 2024 semi-annual financial report shows that SMC's accumulated loss has decreased from 168 billion VND (about 6.8 million USD) at the beginning of the year to 68 billion VND (about 2.8 million USD) at the end of June. Revenue in the first half of this year for SMC still decreased significantly compared to the same period, reaching 4,471 billion VND (about 181.8 million USD). However, thanks to asset liquidation and significantly reduced interest expenses, SMC has made an after-tax profit of 89 billion VND (about 3.6 million USD), while in the same period last year, it lost up to 385 billion VND (about 15.7 million USD).

Another company in garment industry also struggling to survive by liquidation assets is Garmex Saigon Joint Stock Company ( Công ty cổ phần Garmex Sài Gòn) (GMC). The liquidation value formula takes into account the sale of business assets tax treatment and company liquidation cost.

GMC has no source of goods. To have cash flow, the company continuously sells machinery, equipment, and real estate in Quang Nam and Ba Ria - Vung Tau provinces. In the 2024 semi-annual report, the independent auditor stated that Garmex has stopped production and business since May 2023 until now. Currently, the company has restructured its workforce, liquidated unused assets, contributed capital to invest in projects, made efforts to collect debts, and added new business lines to recover production. 

Business owners must understand the tax implications of closing a sole proprietorship.

Up to now, asset liquidation notices are still crowded on Garmex's information page. On the financial report, as of the end of June 2024, Garmex still recorded an accumulated loss of nearly 73 billion VND (about 3 million USD). Revenue continued to decline sharply, only 358 million VND (about 14,600 USD) in the first half of this year. While in good business periods like 2021, revenue exceeded thousands of billions of VND.

The net liquidation value definition is the estimated amount of money that would be realized if a company's assets were sold off in an orderly manner. Knowing how to calculate liquidation value is crucial for businesses considering closing down.

Novaland, a big company, is having a hard time with money. They just told everyone about their money problems for the first half of 2024, and it's really bad. They went from making 345 billion VND (about 14.04 million USD) to losing more than 7,300 billion VND (about 297,04 million USD). This news made many people who own part of the company very surprised and worried.

The company that checks Novaland's money said they are trying to fix their debt problems and keep the business running. Novaland plans to sell some things they own to get money. They want to sell stuff worth 25,439 billion VND (about 1.03 billion USD). They already sold one thing and got 1,000 billion VND (about 40.69 million USD) for it. They also made deals to sell even more things for 9,100 billion VND (about 370.28 million USD). Some people also want to buy three other things from Novaland for 1,982 billion VND (about 80.65 million USD).

Other companies are doing similar things. They're selling parts of their business or changing what they do to make money. 

For example, Duc Long Gia Lai Group is selling all of its part in a company called Mass Noble. They put 249 billion VND (about 10.13 million USD) into this company before. 

Another company, Sai Gon Thuong Tin Real Estate, is closing some of its smaller companies that deal with buildings and land. And a company called Vu Dang Investment and Trading (Công ty cổ phần Đầu tư và Thương mại Vũ Đăng) is starting to work on building projects, but they're also keeping their main job of making thread.

All these companies are trying to find ways to deal with money problems. They're selling things they own, closing some parts of their business, or trying new ways to make money. It's a tough time for many businesses, especially those that work with buildings and land.

References:
[1] 1 VND to USD - Vietnamese Dongs to US Dollars Exchange Rate - Xe
[2] Vietnamese dong to US dollars Exchange Rate History - Wise
[3] VND to USD: Convert Vietnamese Dong to US Dollars
[4] "Gặp khó, nhiều chủ doanh nghiệp bán nhà, đất để xoay xở" - tuoitre.vn

1. The liquidation meaning in accounting terms is the process of selling off a company's assets to generate cash and pay off debts before closing the business.