Bankruptcy Law

Purpose and scope

• Gives a struggling debtor, or one expecting difficulty, legal routes to deal with its finances while protecting creditors and maximising the value of the assets.
• It applies to sole traders, companies and licensed foreign investors, and to those carrying on a professional or profit-making activity as set by the law.

Key rules, rights and obligations

• The procedures are: preventive settlement, financial reorganisation, liquidation, simplified procedures for small debtors, and administrative liquidation.
• Preventive settlement and financial reorganisation let the debtor keep operating while reaching a proposal approved by the creditors and ratified by the court.
• Opening some procedures suspends claims against the debtor, so enforcement stops temporarily to allow a solution.
• In liquidation the debtor's assets are sold and the proceeds distributed to creditors by rank, under a licensed trustee.
• The Bankruptcy Commission supervises the profession, regulates trustees and keeps the register of procedures.

Violations, penalties and common problems

• Delaying the right procedure until debts pile up and assets vanish wastes the chance of reorganisation.
• A debtor's dispositions that harm creditors before or during the procedure may be annulled and expose him to liability.
• The law criminalises acts such as hiding or smuggling assets, false statements and favouring some creditors to the harm of others, with penalties up to imprisonment and large fines.

Procedures and key deadlines

• The request is filed with the competent commercial court by the debtor, or by a creditor or competent authority where the law allows.
• Deadlines for filing claims and voting on the proposal are set in the opening decision and the implementing regulation.
• It is best to consult a specialised lawyer before filing to choose the right procedure.

An advisory summary prepared by Al-Bayan Al-Wadih Law Firm. It is not an official text and does not replace the law, its implementing regulations, or advice from a specialised lawyer. The official published text and its amendments prevail.