Vietnam's major builder Coteccons must pay subcontractor $6.55 mln: court

Coteccons, one of Vietnam’s leading construction firms, has been ordered by the Ho Chi Minh City People’s Court to pay nearly VND170 billion ($6.55 million) to its subcontractor Ricons for outstanding debts related to construction contracts and additional interest for late payments.

Ricons announced it had received a court decision rejecting Coteccons’ request to annul an earlier arbitration ruling. The dispute stems from payment obligations under construction contracts for the Regina projects in Hai Phong city and Hung Yen province.

With the court upholding the arbitration ruling, Coteccons is now obligated to pay over VND144.6 billion ($5.57 million) in principal, along with interest for late payment, legal fees, arbitration expenses, and travel and accommodation costs for the arbitrators. The total amount due approaches VND170 billion ($6.55 million).

According to the arbitration ruling, Coteccons was required to settle the debt within 30 days from October 24, 2024. As the company has yet to make the payment, additional interest will continue to accrue until the debt is fully paid.

In response, Coteccons stated that it respects the court’s ruling and is committed to fulfilling its legal obligations. The company added that it is ready to settle its financial responsibilities once all valid legal documents and enforceable contracts are provided.

"Ensuring legality and transparency in business transactions is essential to protecting shareholder interests, maintaining investor confidence, and upholding the company’s reputation," a Coteccons spokesperson said.

The dispute between Ricons and Coteccons dates back to the second half of 2023. In its Q2/2023 financial report, Ricons recorded over VND322.5 billion ($12.42 million) in short-term receivables from Coteccons - a figure that remained unchanged in the Q1/2024 report. Ricons has set aside over VND227 billion ($8.74 million) as a provision for these receivables, classifying them as doubtful debts.

Receivables represent amounts owed by customers for goods or services already delivered but not yet paid for. Short-term receivables are those expected to be collected within 12 months.

Amid Coteccons’s failure to settle the debt, Ricons filed a bankruptcy petition with the Ho Chi Minh City People’s Court in late July 2023, citing the lack of a goodwill response from Coteccons. However, the petition was not accepted by the court.

Coteccons acknowledged the existence of outstanding receivables and payables between the two companies. These financial obligations date back to a period before 2019, when Coteccons and Ricons were part of an ecosystem of seven affiliated companies, including Coteccons, Unicons, Ricons, Newtecons, BM Windows, Sol E&C, and Boho, all under the leadership of Nguyen Ba Duong.

At the time, Coteccons, as general contractor for several projects, subcontracted work to Ricons. This led to unresolved debts on various projects, including Newtaco, Regina phases 4-6, the VinFast factory, and Simco.

During the first half of FY2025, or H2/2024, the firm, listed on the Ho Chi Minh Stock Exchange (HoSE) as CTD, booked VND11.64 trillion ($464.3 million) in net revenue, up 19% year-on-year and meeting 46% of the FYyear's goal.

It secured VND16.8 trillion ($670 million) worth of new contracts during the period, raising its total backlog value to nearly VND35 trillion ($1.4 billion) since the second half of FY2024.

As of end-2024, Coteccons’s total assets reached VND27.08 trillion ($1.08 billion), up 18% from early last year.

Its inventories surged nearly 60% to VND4.99 trillion ($199.3 million), mostly real estate projects for sale such as the Marina Tower apartment complex in the southern province of Binh Duong and the Thanh Do smart city project in the Mekong Delta city of Can Tho.

As of end-2024, Coteccons reported liabilities of VND18.39 trillion ($733.4 million), up 29 percent from the beginning of last year.

On the HoSE, CTD shares closed Tuesday at VND81,700 ($3.15) apiece.