Lawmakers get report on Vinashin; shipbuilder sued in London

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The government says it has submitted a "detailed report" about Vinashin to lawmakers during the National Assembly's ongoing session.

Meanwhile, it has been reported that one of its creditors has filed a lawsuit against the debt-ridden state-owned shipbuilder in London.

Finance Minister Vuong Dinh Hue told the media Wednesday (November 16) that the report submitted to the parliament contained evaluations and proposals relating to its financial problems. He did not elaborate further.

Vinashin, or Vietnam Shipbuilding Industry Group, nearly went bankrupt last year after piling up debts of US$4.5 billion.

According to a BBC report, the Commercial Court under the Court Queen's Bench on November 1 received a lawsuit filed by Elliott VIN Netherlands BV against Vinashin and 21 of its Vietnamese subsidiaries.

The content of the lawsuit will be kept confidential until the defendants confirm that they are being sued, a source told the news site on November 10.

Observers said that the lawsuit could be about a loan of approximately $600 million in bonds that Vinashin had borrowed from the UK-based hedge fund Elliott Advisors, which was supposed to be paid back in 10 semi-annual installments until 2015.

But the group missed the first installment of $60 million on December 20, 2010.

The creditor said it would sue the shipbuilder, according to a Financial Times report on October 17, which cited the global debt news online publisher Debtwire.

The Elliott lawsuit, according to the Debtwire report, could put more pressure on the group's restructuring efforts.

In June 2011, Elliott Advisors had asked other Vinashin creditors to join in the lawsuit but later changed its mind.

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Another Debtwire report in May said that while a London court order cannot be carried out in Vietnam, the foreign creditors can intervene in overseas loan transfers and make it impossible for Vinashin to do business abroad.

On November 14, Deputy Prime Minister Vu Van Ninh said "Vinashin has to handle [its debt]. It borrowed the loans itself and will have to repay on its own." The government will not pay that debt, he stressed.

Nguyen Duc Kien, deputy chairman of the National Assembly's Economic Committee, said the case of Vinashin being sued is not surprising because disputes over debt are common when doing business.

He said the government is only responsible for $750 million in international bonds sold in New York to Vinashin investments.

He said the government has supported Vinashin's restructuring process in allocating 30 percent of its debt to PetroVietnam and Vinalines.

"We will have to wait until the year end when Vinashin balances its profits and losses and negotiates with creditors. Besides, we have to evaluate a year of the restructuring for future steps," he told VnExpress on November 16.

Relating to lawsuit in London, Kien said that Vinashin should negotiate with its creditors to find solutions.

In case its creditors do not agree on a solution, they should begin the legal process of filing for bankruptcy, he said.

At a recent seminar on restructuring state-owned enterprises held by the Academy of Finance on November 15, Vo Tri Thanh, vice director of the Central Institute for Economic Management said Elliott VIN has only nine percent of Vinashin's total debt abroad of $600 million that it bought from other creditors.

However, Thanh said the lawsuit could affect obtaining future loans from abroad.

"The government did not secure the loan, but it should offer Vinashin loans to pay its debt," he told the Sai Gon Tiep Thi newspaper.

Thanh said another possible solution was to negotiate and ask a new partner to buy the debt from the Dutch creditor.

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