Saudi Arabia
JordanTHE LAW FIRM OF HAZIM AL MADANI ATTORNEYS AND LEGAL CONSULTANTS
Preventive Settlement of Bankruptcy in the Kingdom of Saudi Arabia
The law and procedures of bankruptcy were organized for the first time by Royal Order No. (32) dated 15/1/1350 and from the articles regulating the special provisions related to bankruptcy from (103)-(137), and the Saudi legislator realized the seriousness of bankruptcy, especially on good faith traders who may be exposed to bankruptcy and its risks that lead to the death of the merchant despite the possibility of giving him an opportunity to pay off the full debt in full and survive bankruptcy completely, so the Saudi legislator developed the tools and regulatory provisions necessary to restructure the debtor.
What is Preventive Settlement from Bankruptcy?
Protective settlement is the first procedure which to survive bankruptcy, and it is a procedure that gives the debtor a major advantage, as it facilitates him to reach an agreement with his creditors to settle their debts while retaining his management over own his business.
What is the purpose of the bankruptcy preventive settlement law?
- • Business Protection
- • Supporting credit and speed for their intrinsic importance in business activities
What is Preventive Settlement from Bankruptcy?
The bankruptcy law contains seven procedures that are indispensable to regulating the bankruptcy process in Saudi law:
- • Preventive settlement: It is a procedure which first and last objective is to facilitate the debtor's reaching an agreement with his creditors to settle his debts and the debtor retains the management over his own business.
- • Financial Restructuring: It is a procedure which first and last objective is to facilitate the debtor's reaching an agreement with his creditors to restructure his financial system over his business under the supervision of the Financial Restructuring Trustee.
- • Liquidation: It is a necessary and important procedure which first and last objective is to limit the claims of creditors, inventory, and selling of the bankruptcy assets, and distribute the liquidation proceeds to creditors by the liquidation trustee.
- • Administrative Liquidation: It is a procedure aimed at selling the Bankruptcy Estate that is not expected to result in sufficient proceeds to meet the expenses of the Liquidation Procedure, and this procedure is carried out under the management of the Bankruptcy Commission.
What is the deadline for considering the application for protective settlement when submitted by the debtor trader?
- • The date within which the court considers the settlement request is forty days and the debtor is notified of the hearing within five days.
The importance of preventive settlement from bankruptcy?
- • One of the most important steps that make it easier for the financially troubled debtor to manage his business activity normally.
- • It allows the defaulting debtor to arrange his financial conditions.
- • Preserving the rights of creditors.
Who is responsible for considering the preventive settlement procedures against bankruptcy?
The competent court is often the commercial court and is subject to the discretionary court authority, whether by rejection or approval and in the case of approval, the court is ordered to take bankruptcy action, whether financial restructuring or liquidation.
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