Vehicle dispute leaves firms on a collision course

Red Star Transport and Forwarding Company Limited on October 23 filed suit against Chailease Vietnam in  the Economic Court of Ho Chi Minh City People’s Court. Chailease Vietnam is a subsidiary of Chailease Finance, the largest leasing company in Taiwan with market share more than 40 per cent.  

In the disputed transaction, Chailease served as an intermediary to enable Red Star to lease five vehicles from foreign-backed Chien You Vietnam.

According to Red Star, Red Star intended to purchase five trailers totally worth VND815 million ($39,182) in November 2008. But due to tight finances, it opted instead to sign a finance lease agreement with Chailease Vietnam.

VIR could not contact Red Star executives last week for comments, but the firm’s general director Pham The Hung was quoted by local press as saying Chailease Vietnam had paid Chien You only VND267 million ($12,836) to support Red Star although the due payment was  VND615 million ($29,567).

“Besides, because of Red Star’s late payments, Chailease Vietnam self-willingly terminated the contract and sold two trailers for debt amortisation, which contributed to bringing Red Star to the edge of bankruptcy,” Hung claimed.

Hoang Hoa Thom, a representative of Chailease Vietnam’s legal and collection department, rejected Red Star’s arguments. Thom said according to the contract among Chien You Vietnam as the seller, Chailease Vietnam as the buyer and Red Star as the end-user, the total value of the transaction was VND1.025 billion ($49,288), not VND815 million as Hung of Red Star told local press. Of the larger amount, Red Star was expected to pay VND410 million and Chailease to pay VND615 million.

Thom said because Red Star had been late in payment for seven months, Chailease Vietnam had to terminate the finance lease agreement and asked for the company to render the leased assets as regulated in the contract.

“Chailease Vietnam also reclaimed two among five trailers but in fact, these two trailers did not have much existing-use value due to being not in use for a long time. Therefore, it is unreasonable to conclude that Chailease’s asset disposal made Red Star go into bankruptcy,” she said.

Thom told VIR that Chailease Vietnam had required Red Star many times to render the assets, but this firm intentionally ignored the requests and did not cooperate. “Red Star could not pay but it also did not want to render the leased asset. So, after Chailease is successful in asset disposal and debt collection, Red Star felt unsatisfied and sued in order to lower our prestige,” she added.

Chailease Vietnam is  a 100 per cent Taiwanese-invested leasing company with charter capital $10 million and operates in finance leasing as its core business, mainly vehicles and machines.